Financial wellness products have become a buzzword in the banking industry, with many institutions touting their benefits to attract and retain customers. However, a closer look reveals that these products may not be as impactful as they seem. Despite the potential benefits, a significant portion of customers do not actively use the financial health tools provided by their banks. This raises the question: are financial wellness products merely window dressing for banks?
The Promise of Financial Wellness Products
Financial wellness products are designed to help customers manage their finances more effectively. These tools can include budgeting apps, savings programs, debt management resources, and financial education materials. Banks promote these products as a way to support their customers’ financial health, which in turn can lead to higher customer satisfaction and loyalty.
According to a 2023 Forrester Research survey commissioned by Personetics, 88% of banks and credit unions reported that less than half of their customers actively use the financial health tools they provide. This statistic highlights a significant gap between the availability of these tools and their actual usage. For financial wellness products to have a meaningful impact, customers need to be aware of them and find them useful in their daily lives.
Heidi Johnson, senior director of behavioral economics at the Financial Health Network, emphasizes the importance of integrating these tools into the customer experience. “A consumer may not be aware of what their bank offers to help address their financial needs if these resources are siloed on their bank’s website,” she says. By embedding financial wellness tools within the customer journey, banks can better deliver on the value these resources offer.
The Reality of Customer Engagement
Despite the potential benefits, many customers remain disengaged from the financial wellness tools offered by their banks. The Forrester survey found that almost a third of respondents said only 5% to 24% of their customers use the tools they offer, while over half said 25% to 49% of their customers use them. Only 12% of banks and credit unions reported that more than half of their customers actively use these tools.
This lack of engagement can be attributed to several factors. First, customers may not be aware of the available tools or understand how to use them effectively. Second, the tools may not be integrated seamlessly into the banking experience, making them less accessible and convenient. Finally, customers may not see the immediate value in using these tools, especially if they do not perceive themselves as having financial difficulties.
The Financial Health Pulse report from the Financial Health Network found that the overall financial health of Americans has declined year-over-year between 2023 and 2024. This decline underscores the need for effective financial wellness tools that can help customers manage their finances better. However, for these tools to be effective, banks must find ways to increase customer awareness and engagement.
The Business Case for Financial Wellness
Supporting the financial health of customers is not only beneficial for individuals but also for banks. The Financial Health Network found that when consumers view their primary financial institution as contributing to their financial health, they are three times more likely to say they are “very satisfied” with their bank. Additionally, they are three times more likely to recommend their bank to friends and family and five times more likely to be interested in purchasing additional products and services.
These findings highlight the potential business benefits of offering effective financial wellness tools. By helping customers achieve financial stability, banks can build stronger relationships, increase customer loyalty, and drive cross-selling opportunities. However, to realize these benefits, banks must ensure that their financial wellness products are more than just window dressing.
To achieve this, banks need to focus on integrating financial wellness tools into the overall customer experience. This includes making the tools easily accessible, providing clear instructions on how to use them, and demonstrating their value through personalized recommendations and insights. By doing so, banks can help customers take control of their finances and improve their financial health.
