Financial well-being and the rise of empathy in sustainable banking
‘Financial well-being’ is an extremely precious aspect of life. It has received unparalleled attention in this unprecedented time of the pandemic and empathy is the precursor to financial well-being.
Since the outset of this pandemic, mankind has realized that nothing is more precious than well-being. Staying physically and mentally fit is not just a choice, but a priority. Through helping customers in their well-being organizations can uplift their social image and this improves their ESG (Environmental, Social and Governance) score. Contributing towards customers’ financial well-being will create a differentiating factor for banks and financial institutions and improve NPS (Net Promoter Score).
Neuroscience has proven how one reacts differently under stress, anxiety, and depression. More importantly, neural circuits in our brain get altered if these conditions persist for a long time and become chronic. Financial well-being is closely related to physical and mental health. When these facets of well-being are placed in the right coordinates, it can form an everlasting circle of happiness. Banks and financial institution can play a major role in this.
Finance is often an area of stress. 41% of US adults and 47% of UK adults lack confidence when taking financial decisions. 77% of British residents are facing stress while managing their finances. In fact, the majority of the population in the Middle East, Asia Pacific and African countries have subpar financial conditions. In the Middle East, the top 10% of people account for 64% of wealth. Wealth inequality cuts across all the geographies resulting in vulnerabilities in large segments of population with regard to maintaining financial well-being.
Financial well-being is often subjective unless drilled down to a granular level and compared at the right scale. Financial well-being is the outcome of financial habits. Habits are developed by individual personality traits consciously or unconsciously. Over time, these financial habits formulate financial behaviors. These financial behaviors are evident from day-to-day transactions and account history. These transactions are sheer numbers and may not make sense much if analyzed in silos. However, with careful consideration and all-inclusiveness, these numbers can unearth evidence that reveals insightful stories. These stories build an individual’s financial identify, indicating whether someone is financially distressed, fit, or free.
Banks and financial institutions (FI) can leverage evidence from financial behavior as critical leads to proactively help customers when they are in need. Nothing is better than engaging customers through helping them. This not only creates an engaging experience but also builds an everlasting connection. This can be achieved through embracing empathy at every touch point of customer connect. Empathy shifts the mindset of banks or FIs from ‘I know how you feel’ to ‘I feel you’. However, customer expectations have risen and proactive rather than reactive action is expected from services today. Thus, banks or FIs who are able to adopt compassion in their approach to engaging customers are highly valued. Being compassionate is easier said than done as it signifies ‘I want to help you’. Helping others requires passion and assertiveness to build awareness and confidence in the customer, rather than being forceful. Empathy leads to compassion, and this is a significant differentiator in the banking and financial industry.
Often, customers tend to shy away from sharing their financial status with banks and FIs. In fact, four out of five individuals prefer to stay away from financial status related conversations and hesitate to share such details with others. Although financial well-being can be measured scientifically it is quite tricky. Detecting financial distress accurately and engaging customers in this sensitive topic becomes challenging for banks and FIs. Thankfully, technology can play a vital role in detecting and engaging customers proactively who are in financial distress. Artificial Intelligence and Machine Learning (AI/ML) can build a universe of empathy, compassion, and happiness. This goes beyond engaging customers digitally; it will also enable employees to be empathetic and react appropriately based on a specific situation. The time is not far when customers will experience the universal virtual world of the metaverse filled with empathy and compassion. Then the path to financial well-being will be more interactive, gamified, and available at their fingertips.
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