One of the buzzworthy themes across the financial services sector is how to make banking better. With fintechs continuing to make inroads into banking’s customer base, what does making the experience better for the customer look like? In this episode, Sean and Gina share the latest information and insights on people’s top financial priorities in 2022 and explore ways that banks and credit unions are meeting customers where they are – from mobile to the branch, and even on TikTok. With trends set in motion during the pandemic, Sean and Gina discuss the pressing need for financial wellness across generations and how banks are stepping up to provide new tools to empower consumers no matter where they are in their financial journey.
Intro: This is Believe in Banking, a podcast series for decision-makers, influencers, and leaders, featuring experts taking on the financial industry’s most pressing issues with insight and empathy. The podcast features information and conversations designed to enlighten and empower. Here are your Believe in Banking hosts, Sean Keathley and Gina Bleedorn.
Sean Keathley: Welcome to our Believe in Banking podcast. I am Sean Keathley, president and CEO of Adrenaline.
Gina Bleedorn: And I’m Gina Bleedorn, chief experience officer at Adrenaline.
Sean Keathley: One of the big buzzworthy things I would say that we’re hearing that’s a real theme across the industry is this notion of how to make banking better. And I think you can get a lot of opinions on the topic depending on where you are in the industry. But I think if you just started with the idea of what are ways to make banking better? What are ways banks serve more? What is making the experience better for the customer even mean? And then even thinking about credit unions, is it different? Are they serving their community differently than banks? Are there any learnings there and then we know as well with the Canadian financial institutions, there are some things happening there as well like open banking. Gina, what are your thoughts as we think about this idea of making banking better?
Gina Bleedorn: Yeah. When we think about answering that question, I think the best way to think about it is zooming right to what people want banking to be for them, what do they need? And one of those things that we know is happening, I think COVID set it in motion and it has now exploded is financial education and wellness. And financial wellness has been around as a term for a long time, it’s not a new thing, but I think the resurgence in need is new. And there’s a whole other generation now that is clamoring for it. FNBO actually released a study recently about financial wellness. 40% of people saying they want to increase their overall financial wellness, 44% want to increase their savings. People are really thinking about money in the bank. And 35% of millennials want to start planning for the future.
Gina Bleedorn: It is something that is now top of mind, but they’re not turning to their banker credit union necessarily for that empowerment, they’re turning elsewhere. Nearly half, 47% are getting it from what they call personal financial websites. 34% are getting it from financial advisors and 25% are getting it from TikTok, which is shocking in a way, but also completely intuitive on the other hand. Only 29% are saying they’re getting it from their bank or their bankers or financial institutions. So all that said over half, 54% want their financial institution to give them the help and give them the information, they’re just not getting it so they’re going elsewhere.
Sean Keathley: Well, when I have a car full of 14-year-olds headed to a travel baseball tournament, listening to their conversations, and often I ask, where did you hear that? Or where did you learn that? TikTok is the most common answer, but seriously, you do think about this workforce is getting younger. And there is a generation that has grown up with a phone in their hand. Information is at their fingertips. We’re also in unprecedented times in terms of headwinds from an economy, because we have been through a hundred-year challenge with the pandemic and inflation is high and people are thinking about their dollar as not going as far as it did in 2019 before the pandemic. And so I think there is a real thirst for people to learn more and be savvy with their money and I think that’s an incredible opportunity for the financial institutions to fill that hole.
Gina Bleedorn: Recently, FNB Community Bank, they are a commercial bank in Oklahoma, went viral, super viral with a post on TikTok about Venmo financial education. Basically just saying, Venmo is making money off of your balance in Venmo so you should move it to your financial institution. It was designed to be education. It was that. It got nearly 4 million views and about 8,000 new followers. That is significant.
Gina Bleedorn: And whether people take it as, oh my gosh, I’m going to now never keep a balance in Venmo, or actually I don’t care, I’ll leave my balance in Venmo or that’s fascinating and I’m appalled Venmo would do that, but I’m not going to do anything. Whatever their reaction was, the point is that a bank gave them that information and empowered them to have the right to do something about it if they wanted to. So a great example of serving up information to people where they are in a way they actually want to consume it and are even slightly entertained by it because they did it in a TikTok way with a person with a funny face and music. That’s a brilliant example of using a channel in an effective way to get a message about financial education across.
Sean Keathley: I totally agree. And maybe more on the physical side, we know there is a credit union in the Dallas area, Credit Union of Texas, they opened a high school branch that was so successful, they’ve just opened their second. And the notion here is they’ve got a younger generation running the branches and they are running them on a theme of education. Learn about how to manage your money, learn about savings, the power of saving over time, learn about credit scores, open credit card accounts with the goal of paying them off monthly to build credit. And they’re seeing an incredible interest with the students. And one thing we’ve been watching, I don’t know the count, up to 27, 28 states now have signed legislation to try to incorporate a financial education class in high schools. So this tells you that there is a real thirst for this. And I think whether it is through social media strategies or whether it’s through use of the branch channel, I think there are some best practices out there for financial institutions to look at.
Gina Bleedorn: 27% of Gen Z and Gen Z are kind of, some are still in high school, some are in college and just coming out of college, want to start planning financially for the future. So thus financial planning is not just for the old and the wealthy, it’s for everyone. We’ve discussed and want to reiterate, there’s a huge financial advisory opportunity gap in even mid-market and upper mid-market millennials, elder millennials, and even young Gen Xers that will pay for financial planning services. And many financial institutions don’t really have an offering in place that could be even a revenue stream, a paid offering to financially plan that’s not all the way into wealth management or what typically was wealth management, but is a little more accessible for the masses and the masses are clamoring for it.
Sean Keathley: Well, and they’re not giving themselves a very good grade. There was a TIAA consumer survey earlier this year, 78% of U.S. adults, and many of them in the age group you mentioned, young adults give themselves a low financial wellness score. So they’re admitting it that this is a real problem. And I think it’s a great opportunity. It reminds me of thinking about some of the things Charles Schwab does. Most every one of their big prototypes has a conference room dedicated to teaching and they let people enroll for classes and they teach people on different topics that they post at local levels and that’s an incredible way for them to give back to their neighborhoods. And they often even find people that look to Charles Schwab to help them solve the problems they’re learning about, but it is a good example of an idea of attacking this problem head on and thinking of it almost as a mini university in each little neighborhood.
Gina Bleedorn: And a great way to leverage physical locations. Sean, what you spoke about with Schwab’s workshops has certainly been a tenant of their brand for a long time, but why can’t that be something many others adopt in different ways forms or fashions, even branch marketing. We are seeing at least with our clients, a big uptick at the branch marketing level, whether in digital marketing, digital signage or static even, or even education of bankers to support marketing at the branch level. There’s a big uptick in using that, not just to push product or maybe even not to push product at all, but to educate and certainly some of that education can lead to products. And this again is not a new idea, but there’s a new level of need from the market that is making this so timely to consider right now.
Sean Keathley: Well, and I think you’re right, it’s not a new idea or new need, the desire is probably growing. But the other thing that you mentioned is the use of the branch channel and we have seen that evolve since 2008 in the launch of mobile and the transactional nature changing. And this idea that visits are more craved and you welcome someone into the branch, you’re glad they’re there. There’s probably a bigger chance it’s for a premium reason, open an account, get a loan, do something more significant, but the other idea would be, what if you could get people in a branch to have them learn about how they can make smarter decisions or sign up for things that will make them plan better, or just be more fiscally safe and proficient. And I do think that’s a huge opportunity and it does apply to any size organization.
Sean Keathley: It’s not just for large national banks or regional banks, anyone can do this. Where we see these type of branch location decisions go wrong is they think the design of the space is the end of the story. And it is really a cultural commitment in any type of community room that’s never used or wellness center that’s not used correctly, that’s always because there’s no one dedicated to one, marketing in the idea this is something you do and two, having a program to run the programs. And so we always would warn people, not just to design spaces, but to think about the purpose, the why and how you’re going to execute.
Gina Bleedorn: Yeah. And let’s not forget about the concept of trust and building trust. We’ve talked certainly before about the relevance of community institutions being able to build trust and even just any traditional financial institution, having that let’s say over challenger banks and over fintechs that don’t have history presence, community involvement, and a reminder fintech penetration is up. There’s been a 275% increase in it and new data is now showing from Cornerstone Advisors that was featured in Forbes just last month, that 60% of Gen Z and millennials have a primary checking account with either Chime, PayPal or Cash App.
Gina Bleedorn: Now, certainly that doesn’t mean they’re not also using their primary financial institution, but even now millennials are up to about 31% are saying their primary checking account has become a digital bank. And so with that, it is time to double down on creating trust to do that. It’s really about creating relevance. And relevance isn’t just cool digital tools or fintechy things, it is about the programming, the physical channels, the education, and yes, also tools that are really helping people understand how finances play a role in their lives, in their real lives. And so if you can make finances relevant, you win. You win trust, you win loyalty, you win advocacy and you win market share
Sean Keathley: Well, and it’s the ultimate defense against fintech, right? Because there’s those things they are challenged to own at a branch level in a community. They don’t have infrastructure of physical facilities that show presence and they don’t have the human connection and the people. So it is a delicate balance and I think you’ve got to play on your strengths to combat it versus trying to emulate their strengths. And given all that, one of the things that, think about Bain & Company has this new survey out. 50% of customers are ready to switch banks in the next 12 months, that’s a big number. And we have seen that tick up, I think four years ago. The primary reason you would switch your bank is because you moved. Now when you think about it, there’s been a lot of people moving as a result of the pandemic and the ability to work remotely.
Sean Keathley: Certainly, we’ve experienced that at Adrenaline. So the number of people looking to switch is at an all-time high. And I think that makes this very important to consider what we just said, because when you’re moving your account is when there’s a choice made. And if people already to your point Gina have the Cash App, PayPal, they’re getting their financial advice from TikTok, I think they’re more likely to move away from a traditional banking relationship, whereas where they’re looking to a more typical bank or credit union to get these emotional high-value things that would be more likely to have them move to a bank or credit union that had a branch in the neighborhood where they’re moving and not go virtual when they move and make their decision.
Gina Bleedorn: So you teach them something, they will be loyal for life.
Outro: You’ve been listening to Believe in Banking, a podcast series created to empower decision-makers, influencers, and industry leaders in financial services. Be sure to also join us on our flagship site, believeinbanking.com.