Focusing on the thinking before transactions
Given the current pandemic facing the world today, it's no surprise that a snowball of finance related anxiety is gaining momentum and it's not just debt related. Contrary to popular belief, it really isn't exclusively an issue affecting millennials or individuals working in hard hit sectors such as retail.
The world has been crying out for financial wellbeing help
I once sat in a room full of bankers to discuss some ideas on how to leverage open-banking for customer value. Raising the need and opportunity in helping people with financial wellbeing was met with blank stares and on obvious scramble to put the ideas I shared in a box alongside the downstream of ‘fintech innovation’.
The things is this. As far back as 2018, in the UK alone 12 million people were financially over-stretched contributing to heightened stress related concerns related to money and demotivating them in general. I’m no behaviour psychologist (though I work with one) but philosophically I have always questioned the dominant tendency in tech to root what is effectively financial services delivered digitally, in transacting and money management almost exclusively. Value seems consistently framed as more information, more data, more screens, more button, more icons and…colourful cards. Sadly behaviour psychology is largely utilised as a tool to increase sales or maintain engagement, yet could hold the key to long term impact for the financial anxious.
Financial anxiety is certainly as an issue that cuts across all ages with low income households and early millennial particularly experiencing increased wellbeing issues related to money as their relationships with money changes in general. People express an array of anxieties and concerns due to economic factors and their changing view of money, work and life. This is compounded by the perception that gaining financial aptitude is unattainable and based entirely on circumstance. Many who know that they should make adjustments just don’t and many who seek specific help to figure things out are left to public sector organisations.
One 2020 Survey by the Organisation for Economic Cooperation and Development on Adult Financial Literacy revealed that 42% of the 125,787 adults polled showed they were worried about meeting everyday expenses; 40% were concerned about their financial situation; and 37% reporting they were just getting by. (Bloomberg Quint, 2020).
It’s affecting employers too?
Even employers are waking up to this issue and its impact on their workforce concerned that over half (51%) of millennial employees have a high rate of stress and anxiety when it comes to finances and debt (Group Risk Development, 2019). This is evidenced by the fact that over 500,000 private-sector employees have taken time off in the last year due to financial concerns (Money Marketing, 2019).
6 factors to think about when innovating for financial wellbeing
So what can the tech community and financial specialist do to help their customers? It’s worth noting that despite the seeming boom in Fintech innovation, this appears highly focused on optimising consumer transactions and money management, valuable for consumers yet to some extent limited in scope.
We’ve come up with 6 areas to think about when developing products and services to support your customers with financial wellbeing:
Excited to see more companies developing solutions to help address this problem!
Money Story is a research partner with Exeter Smartline. More information can be found here: https://www.smartline.org.uk/main-content-area/money-story