Financial wellbeing has come to the forefront as a major banking trend in recent years. Momentum has been accelerated as a result of COVID-19 and banks are looking for the right way to support people in taking control of their finances.
There is certainly work to be done. 47% of UK adults do not feel confident making decisions about financial products and services and 63% do not feel they can determine what happens in their lives when it comes to money. Furthermore, in a study of employees in the US, 54% said that financial or money matters or challenges cause them the most stress, the largest percentage of any stress factor.
Improvements have been made
I remember the days of trying to take control of my finances and that involved downloading a CSV file of my bank statement, opening it in excel, starting to categorise my spending and frankly getting very bored and giving up halfway through, another nail in the coffin of my financial disinterest at university.
Then, out of the financial crash, the neobanks started to change the game. Suddenly I could see my spending aggregated automatically, I spent a lot of money in Pret (no not on coffees but even if I did that’s ok - read Sallie Karchecks piece on buy the f*** latte).
I started making more of my lunches, I ate better, I ate cheaper and I had a certain smugness to being part of the “meal prep” revolution...Yes I even took some pictures of my lunches… you can find them on a very dormant instagram account called @mellyskitchen…
Then came roundups. Taking the customer pain point of putting money away for the future, rather than spending it all at the pub while you pretend to convince yourself you will save whatever is left over at the end of the month, which lets face it, never happens.
Investing is the new frontier
For many, investing is a dreaded word with connotations of complexity, opaqueness and downright confusion...
One that robo-advisors intend to change. We’ve all seen the tube ads of Nutmeg, Moneyfarm and Wealthify, well we did prior to COVID-19 anyway.
But let’s leave the words and mechanisms aside for a moment.
What do I as the customer really want?
I want to know that I will have a comfortable retirement, I want to be able to buy a house, I want to be able to support my future children’s education.
All of these things are a lot harder to achieve without investing, but not enough people understand it.
A PLSA survey revealed that approximately half of millennials are saving and the majority say they get more satisfaction from saving than spending. But, 66% of people aged 18 to 29 say investing in the stock market is scary or intimidating, this only drops to 65% for those 30 to 39, 58% for those aged 40 to 54 and 57% of those 55 and older.
So what can banks do?
Bringing the saving and investment journey together, rather than treating them as two different things is so critical to this, because money is a journey and is one that I could feasibly expect to be engaged with and supported through by my bank, right?
I wrote about this in my last blog but I want my bank to encourage me to invest rather than offering me loans - and I get it, that’s where they make money… but that’s not going to keep me loyal (and banks need customers).
As we move into the age of customer experience, doing what they’ve always done just isn’t going to cut it.
- Am I on track for retirement?
- Am I saving a good amount based on my salary?
- How much more could I be making if that £5000 that’s been sat there for 6 years had been invested?
They say loyalty is dying and hey I’m not one to complain about the free £150 I get for switching current account, or the full transparency I get with Monzo, I love it.
But, I’m still waiting for that seamless journey from saving through to investing that’s truly personalised for me. So my question to banks is, what are you going to do? Let us know!