October 11, 2019

Financial Wellness

Wellness, both physical and mental, has become top of mind for Americans in recent years, and technology companies are catching on to this trend. These companies, including Apple, FitBit and Garmin, are making watches or wearable devices that help people proactively manage their health by tracking steps, monitoring heartrate, sleep patterns and caloric intake. Moreover, there are also countless apps that help people monitor and improve their health through correct diet and exercise.

While many people strive to keep physical wellness a priority, they also realize the importance of maintaining their financial wellness. Yet, According to CNN, 40 percent of Americans are not prepared to cover a $400 emergency expense, which is far from healthy. Credit unions have a unique opportunity to offer their members the services and tools to enable them to track their spending and saving habits and work to keep themselves financially healthy.

Learning Members’ Habits

One way that credit unions can do this is by using the recent developments in artificial intelligence (AI) and machine learning to leverage the data they already have about members. Just as fitness apps or smart watches are able to learn and track habits, such how active one is, diet habits, or what a daily schedule might be, credit unions  can, with permission, leverage  the data they have about members and use it to determine how they like to spend and save, if they pay their bills on time and when they get paid, just to name a few. Knowing this information is crucial to helping members manage their money and their bills more efficiently.

Managing Present Priorities

Just like a fitness watch might tell someone he or she needs to get up and be active, or maybe slow down and take a deep breath, credit unions should be able to offer something similar for its members. In order to do so, credit unions must be aware of what their members’ biggest priorities are in the present, just as a personal trainer might want to know about a client’s immediate goals for fitness.

Having daily priorities simplified all in one place makes the process of managing bills and finances much more doable for members. By being able to notify members of the next bill coming due or letting them know that they might not have enough money to pay that upcoming bill, the credit union takes any guesswork out of managing finances. Members do not have to worry about forgetting anything, because their credit union is keeping a careful watch on things and is positioned to take care of it for them.

Recommending Future Actions

While managing immediate priorities is important, the true benefit for members lies in the credit union’s ability to help its members prepare for the future. Members do not want to think that a financial emergency could happen to them, but unexpected expenses are all too common and a lack of preparation could do lasting damage to those members’ financial stability in the long-term. According to Bankrate, in the event of a financial emergency, a lack of liquid savings could throw of a household’s finances for a year or more.

The potential for long-term financial repercussions makes it crucial that credit unions take a proactive role in helping their members save, as well as avoid any potential financial emergencies. Overdraft fees or late fees on bills can pile up and exacerbate difficult financial situation if members are not managing their payments responsibly.

When it comes to payments, credit unions can adopt AI and machine learning technology, which can help by alerting members when bills are nearly due and if they do not have enough money to pay it, then recommend next steps. The credit union could recommend moving money over from another account, or even offer to negotiate with the biller to try to lower it. By offering this guidance, the credit union is helping to simplify members’ lives and helping them to better manage their finances.

In the same way, the credit union can leverage the available data to proactively notify the member that their bill is due in a few days and that they should proactively pay it while they have the available funds. It can also notify the member that they may have money left over after all their bill payments are made and can recommend moving that money to a savings account, to prepare for a financial emergency down the road or to save for a particular financial goal. Providing this smarter payments experience gives the credit union a real competitive advantage in the marketplace.

While no one thinks a financial disaster will ever happen to themselves, it is important to be prepared. Credit unions can deepen their relationships with members by helping them prepare for and defend against any financial mishaps or simply to prepare for the future, while making the process of managing their money and payments as easy as possible. Credit unions already occupy the role of trusted financial partners for their members; helping them manage their immediate and long-term financial wellness is just another aspect of this important relationship and the value they provide to members.

Mickey Goldwasser is vice president of Payrailz, a digital payments company offering secure, smarter more engaging and predictive payment solutions to credit unions.


Article appears online at: http://www.cunacouncils.org/news/16438/news-article/