Financial struggles are not unique to the pandemic, but the economic fallout from COVID-19 has certainly exacerbated them. More people now know that uncomfortable feeling when a bill arrives and they're unsure how to pay. They've experienced the anxiety of a looming job loss. They've made the tough decision to defer a bill to pay rent.
New research from Fiserv shows financial concerns run deep. Seven out of 10 consumers are “somewhat concerned” or “very concerned” about the effect of the pandemic on their finances, according to Expectations & Experiences: Consumer Finances During COVID-19, a consumer trends survey conducted by The Harris Poll on behalf of Fiserv in May 2020.
Younger people, especially, are experiencing the pandemic's economic effects. The survey found 3 percent of people 56 or older reported they had missed a rent or mortgage payment, while 14 percent of people 55 and under said the same. The age differences play out in missed bill payments, too. For example, 23 percent of younger consumers (55 and under) said they had missed a bill payment because of the pandemic, while 7 percent of older consumers said the same.
As the pandemic becomes more protracted, most expect financial struggles to worsen. But even in crisis, those who understand how to spend, save, borrow and plan effectively are likely faring better than those who don't. While the groundwork for financial literacy begins at an early age, financial institutions can still show those without that background how to navigate difficult circumstances.
For some consumers, that may mean back-to-basics education and assistance that includes short-term relief, renegotiated loans and resources to help them avoid eviction. In today's self-service, always-on digital world, consumers rely on tools and capabilities that enable real-time access to account and loan information, easy credit score monitoring and more.
As trusted financial providers, banks and credit unions are uniquely positioned to help people weather this unprecedented storm. Here are seven steps your financial institution can take now to help consumers gain better control of their finances.
1. Know Your Audience
Consumers tell you everything your financial institution needs to know about them. Through aggregated data, banks and credit unions can gain a deep understanding of financial patterns and behaviors. For example, a good indication of job loss is when accounts with regular direct deposits suddenly stop receiving those deposits. Proactively reaching out to those accountholders with information about a financial counseling hotline and other resources could help mitigate some financial problems.
2. Educate Consumers About Security and Fraud Risks
People living on the edge financially are often more vulnerable to offers promising a quick fix to their troubles. So it's not surprising that fraud attempts – social engineering, compromised passwords, phishing emails – have increased during the pandemic. Use educational materials and messaging to help consumers understand the importance of protecting personal information, especially as they interact with your financial institution through digital and self-service channels.
3. Equip Your Front-Line Teams
Whether in the branch or the call center, your front-line staff is best positioned to help consumers manage their accounts and finances. Using empathy and expertise, staff can shape conversations about overdrafts, credit scores and missed payments through the lens of financial fitness. Ensure your teams have the necessary skills and training for those discussions and that your customers or members have multiple options to connect with your institution – virtually and physically.
4. Simplify Your Message
Think your customer or member knows what APR or NSF stands for or means? Think again. Using plain language and avoiding acronyms and jargon can go a long way toward making consumers feel comfortable and confident when talking about money and banking. In the same way, real-world examples in marketing materials help consumers see how the experiences of others are relevant. Employ self-service videos and tutorials for consumers who want to learn when and how they choose.
5. Empower Through Credit Score Monitoring
Knowing their credit score – and how it works – can help consumers shape their financial future. But many people assume it's difficult or expensive to check their score. Providing an easy way for your customers and members to monitor and manage their credit scores through online banking sets them up for success on multiple fronts. Information from credit scores provides an early indicator of fraudulent activity and helps people set targets for savings, lending or other financial goals.
6. Make It Fun
Thinking and talking about money can be difficult. Injecting a tone of lightness and support into financial health and literacy topics, while staying on brand, can help institutions engage with customers and members. Use games, puzzles and prizes to emphasize and reward savings, debt reduction or financial literacy goals. Send messages of encouragement to people who have turned around a previously challenging financial situation. Flip the switch on what can be scary, boring or difficult topics for many consumers.
7. Be Social
Many people receive information and communicate primarily through social media. Use your financial institution's social media channels to illustrate your expertise, competence and caring, especially now. Share helpful savings tips, consumer lending options or educational resources to advance financial health. Start conversations that let your customers and members know you're interested in them and their financial future.
Finding a Path Forward
Achieving financial health is challenging, especially now. But this is an unprecedented opportunity to leverage your expertise and reach your consumers where they are.
Most people are not financial experts and many are missing the safety nets and resources they relied on in better times. Your customers and members are looking to you – their trusted financial institution – for help navigating these choppy waters. Be a resource for your consumers and your community, leveraging connections and local ties to help them find the best path forward to financial health.