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The Future of Money Requires Digital Deconstruction


Our latest study reveals the next digital imperative for financial services firms: focusing on “slow money” to make consumers more loyal, less price sensitive and more inclined to do more business with your organization.

In the wake of the fintech threat and other digital disruptions, financial services executives are thinking long and hard about how to deepen their customer relationships. The problem is, many don’t understand their customers’ relationship with money — and neither do consumers, themselves. 

Indeed, while plenty of research has focused on what customers want from their financial services providers, most consumers simply don’t know; in fact, many are often unaware of why they act how they do with their money.

Given how much the financial services industry plans to spend on digital (estimated at more than $310 billion annually by 2020), it’s crucial that executives better understand where to focus their investments to meet their acquisition, retention and revenue goals. In conjunction with our partner ReD Associates, we’ve uncovered  new insights into just that by studying people in their real environments — and under­standing how they make sense of money, invest­ments, pensions, savings, credit and wealth preservation.

People and Money: A Broken Relationship

In the fall of 2016, we embarked upon the most comprehensive anthropological study un­dertaken in recent times on the future of money. The study closely followed the lives of people in the U.S., the UK and Germany, uncovering hidden truths about their behaviors, emotions and habits around dealing with finance and financial institutions. We also conducted a survey of 3,000 consumers and multiple interviews with academics, financial services execs and fintech industry players. (See our infographic for a study summary.)

Our uber finding: People’s relationship with money is broken. Over half of the study respondents said money and finances are a big stressor in their lives today, and well over one-third (37%) said money was the biggest source of stress in their lives. In addition to practical concerns (managing spending habits, planning for retirement), they revealed a persistent sense of anxiety. Money pervades almost everything people value in life, and they don’t feel in control of it.

Therein lies the opportunity — and the challenge — for financial services providers, which so far have done little to ease consumers’ money worries. To fix that, financial institutions need to understand more about consumers’ relationship with money and, in particular, their differing attitudes between what we call “fast” and “slow” money. 

Financial Institutions Are Missing a Huge Opportunity — The Future of Money

Key Insights into Consumers and Money

Key findings from our study include: 

  • Differences abound across age groups, genders and lifestyles when it comes to money concerns. Millennials, for example, are much more stressed about money than older generations, and women worry more than men do. People with “fixed” lifestyles (more likely to stay in the same job and live in the same country for many years) are less money-stressed than people with “fluid” lifestyles, who report higher levels of stress and a greater likelihood to use digital tools but also tend to be the least loyal group of customers.

Figure 1

  • There’s a big difference between how people feel about “fast” vs. “slow” money. Fast money is daily and short-term spending, focused on exchanging goods and services. Slow money (pensions, insurance, investments, etc.) is assigned to some distant future purpose and is vastly more difficult for customers to manage and comprehend. Whereas fast money has greatly benefited from digitization, the industry is far from successfully estab­lishing what digital can do for slow money. It is around slow money, however, that people face by far their greatest financial needs and challenges.

  • Financial institutions are missing the “slow-money” boat. We believe getting slow money right will make consumers more loyal, less price sensitive and more inclined to do more business with your organization. However, customers told us they increasingly feel they have a distant, impersonal and at times antagonistic relationship with their financial services providers. The vast majority (90%) said their relationship with their bank was defined by simple transactions, such as depositing money. Less than one-quarter (23%) said a financial services professional had ever offered advice on getting more out of their money. Rather than being seen as a legitimate, reliable source of financial guidance and support, financial institutions are seen as utilities.

  • The digital focal point should be on slow money. By digitizing slow money, we estimate that banks can achieve a financial effect that corresponds to an increase of 14.2% of revenues. This is the result of:

    • An annual revenue increase of 8%, stemming primarily from a reduction in customer churn, as increased slow-money products will increase customer loyalty and lock-in.
    • An annual cost reduction corresponding to 6.2% of revenue, primarily from digitized customer interactions, as more customer-bank interactions move online.

Meeting the Slow-Money Challenge

So, what does it look like to get “slow money” right? It means using digital techniques to guide customers through financial decisions; regularly updating customers and giving them a feeling of control; translating financial data into is meaningful information; recognizing customers wanted peace of mind from their slow money.

We see five actions that financial institutions can take to meet the slow-money challenge: 

Activate data to recognize the customer:

Build a system of recognition that consolidates trans­actional, behavioral, financial and socio-demo­graphic data into one view of the customer that is shared, remembered and used at every touchpoint.

Build predictive models for financial key moments:

Understand when customers are about to experience life events with major financial ramifications. Identify ways to be relevant not only for life events them­selves but also to help consumers prepare for them.

Release the power of digital learning:

Motivate customers to develop skills and sensibilities in a way that fits their capabilities and situational needs. Integrate guidance and data interpretation into the front end of existing digital platforms and provide advice at the moment customers make a financial decision. 

Digitize financial advice:

Turn your expertise into offer­ings that guide customers to healthier financial behaviors and interpret what their financial data concretely means for their situation. Provide meaningful points of comparison to help customers understand whether they are finan­cially on track.

Organize around the customer:

Serve up a shared point of view on what matters most to customers, and surface data that resides across business units. Evaluate performance based on the financial well-being of the customer rather than product or compa­ny satisfaction.

Today, the biggest challenge for financial services organizations is determining how digital can support the marriage of people’s fast- and slow-money challenges: giving customers convenience when it comes to their fast money, and meaningful guidance and integration when it comes to their slow money. Doing so will determine leaders vs. laggards in the digital future.

For more on our study, see the full report "The Future of Money." To learn more, visit ReD AssociatesCognizant Digital Business and Cognizant Banking and Financial Services.

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