According to a 2017 Fed Report, 40% of adults still can’t cover a $400 emergency expense, and 60% have little to nothing saved, putting them at risk of retiring with no financial security. For all the work that we’ve done to try and help people achieve the American dream, we’re clearly failing. It’s time to open the aperture and realize that financially healthy behaviors are interrelated with healthy lives. To this end, financial services institutions should be leveraging external connectivity, AI and machine learning, not just to serve financial needs, but to create holistically healthy behaviors to help their customers be happier, healthier financial citizens, while also linking itself to the 3.7 trillion-dollar wellness industry.
We are experiencing a moment where people are more connected and engaged than ever. It’s about time that we find a way to use that constant engagement to cater to human well-being, and not simply to our smartphone addictions. With a generation of millennials now growing up and beginning to contend with financial well-being of their families, how can the financial services industry help these customers achieve their financial goals without it feeling like all stick and no carrot?
Consumers may be engaged with your brand, but the long game is about making their lives healthier. Engagement is your metric, but it’s not the desired outcome of those you serve.
Simply going after financially healthy behaviors is too myopic because finances are only one part of the picture. People are complex beings. We are not mere numbers on paper and our finances do not exist in a vacuum. If we want to help create financial health, we need to look at financial services within the lens of the wider ecosystem of what brings greater health and stability to people’s lives.
The answer may lie in reimagining the tools we use for financial services. Building ecosystems of fin-tech that utilize AI, machine learning and connected services can offer experiences that help people increase their health both financial and otherwise, which will in turn increase their share of wallet. In this sense, technology is used as a force for good, removing the burden of negotiating finances and freeing people up to enjoy their lives to the fullest.
Just imagine how an ecosystem like this might work: Instead of a traditional banking app, you have a fully integrated AI assistant, which may be licensed from any of the major providers by your financial institution. Let’s call it, “Assistant.”
You wake up in the morning to the buzz of your smartwatch and step out of bed. When you check your smartphone, Assistant has a simple message for you, “reflect on what you want to accomplish today.” This is because your bank knows that having a plan and sticking to it can help you achieve your financial goals—a 2015 study found that participants who wrote down goals were 33% more successful. Throughout the morning, Assistant continues to lead you through a guided meditation based on your sleep data, plays music based on your preferences and provides menu choices based on the healthy ingredients in your fridge. With no chance to surf news or social feeds, Assistant guides you on a healthier start to your day.
You decide to meet a friend for lunch, but rather than picking a spot, Assistant recommends a restaurant based on the data it has collected about your preferences and health plan. You enjoy your lunch, and in exchange for clicking on a rating following our meal, the bill is slightly discounted. This is because your financial institution has partnered with thousands of restaurants and food shops like this one to create APIs that share the small amounts of data needed to recommend the right place at the right time.
That night you are browsing the web and doing some online shopping at home. You come across a pair of jeans you like and add them to your cart. But before you can ‘check out,’ Assistant advises you that since you’re saving for a family vacation next month, perhaps it’s best to hold off. You agree, and a percentage of the cost is then added to your vacation budget. This kind of behavioral economics removes the burden for unpleasant things like traditional budgeting, and allows people to learn new behaviors around spending and saving.
This proposed financial service tracks both health and spending in order to make precise calculations on how to best advise the customer, because as we know from conducting extensive human-centered design research, all aspects of our complex modern lives are inextricably intertwined. This data, which is passively collected over the course of a day, is then able to help the customer make smarter decisions about how they spend. If after a month they’ve spent 4% less on non-essential items like clothing, the Assistant will automatically put that percentage towards savings, which can be set up in discrete funds for different goals, like buying a house or taking a vacation. In this way, the data collected is taking the burden off of the customer to make those decisions consciously. Rather than agonizing over what to spend money on and what to cut down on, you can answer a series of empathetic questions about what brings you joy, what are your and your family’s needs, what makes you feel healthy, and the service does the budgeting for you.
Charlie is one service that is breaking into the AI game in order to provide more empathetic responses to help people save. Rather than an app or an AI assistant, Charlie functions on a messaging bot system—in either SMS or Messenger. The idea is that you have a conversation with Charlie, tell it your goals and needs, and it sends you texts with gentle reminders to stick to your plan.
frog can help banks take this idea one step further by designing products and services that take the cognitive load off their customers by working in the background to inform a more holistic view of financial wellbeing. For the financial services sector, there are many benefits. Having customers who are more financially healthy brings higher average savings and investing balances. These clients also typically pay their loans on time and do a better job of sticking to a budget.
In total, by collecting information about the complexity of our lives, banks would be able to provide customers with the kind of insights that would allow them to make smarter, healthier choices for years to come. These services would create value for the customer by helping them make healthier, more informed decisions in order to save enough for a few rainy days (should they happen), while not cutting out the things that bring them joy.