Enabling ourselves to do what we know is best for us, while it may delay gratification of some sort is not a new problem for humans. The application of technology to provide reminders, prompts and automation of our better intentions for our financial wellness provides us tools to stay on plans and the access to information enables a wider swathe of us to formulate plans with a good chance of working. In many ways, mobile banking and smartphones can be leveraged to help facilitate financial wellness.
This is the case for savings products, too. Behavioral economists identify lack of discipline, rather than simple impatience, as a main reason people don’t save more — a characteristic that has led to the creation of a variety of savings products that provide discipline (by requiring deposits or restricting access until a goal is met). That discipline can be useful, but it can also be counterproductive. Workers experiencing a high degree of volatility often need cash in emergencies. For such individuals, savings products that provide simple cues to help savers maintain discipline while allowing them the flexibility to make their own financial decisions could work better.
Mercator Advisory Group continues to examine the changing role of financial institutions in society. The shift of FI staff from manually processing transactions to delivering more advisory type services is indeed underway. Those organizations embracing the new model looking into ways in how to partner with their customers. By assisting clients in ways to better negotiate their daily, monthly and yearly financial lives, FIs will be rewarded with loyal higher value clients that they helped to develop that wealth.
Overview by Joseph Walent, Associate Director, Customer Interactions Advisory Service at Mercator Advisory Group
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