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Intelligent, Personalized Goal-Based Savings: Help Your Customers Build Financial Resiliencein Turbulent Times

Goal-Based Savings: More Important Than Ever

Most of the retail banks I work with know that helping their customers meet their financial goals is a win-win proposition and a meaningful, essential mission. When banks foster and encourage healthy savings habits for goals, their customers are more financially resilient and more satisfied with the bank.

Some of you will remember that helping customers save for a short-term goal was once a commonplace program through a “Christmas Club” savings accounts. Banks can now deliver year-round personalized savings programs, so a customer can celebrate and feel like it is Christmas in July when they reach their hard-earned savings goals. However, Christmas in July may seem far-fetched with the ongoing COVID-19 and economic crises. Many individuals and families are struggling to establish the most basic of goal-based savings—desperately wishing they had more “emergency” funds for mounting unexpected expenses. Now more than ever, customers need help building financial wellness through good savings habits.

In these turbulent times, I see many leading banks valiantly increasing their efforts to help their customers. Today’s economic volatility is underscoring the need for a solid cushion of savings to get through radically unstable times. Banks that are committed to fostering financial wellness and good savings habits are providing customer – centric solutions that leverage analytics, decision management, and customer communication to deliver intelligent goal-based savings for their customers.

What Is (And Isn’t) Goal-Based Savings?

Let’s clarify what is and what is not part of an ideal goal-based savings program. When I say goal-based savings, I’m referring to liquid accounts and savings goals that are one or two years out—a wedding, a vacation (when we can travel freely again), or most likely needed right now, a rainy day emergency fund. Longer-term savings (such as retirement or education goals) are often more diversified and include risk-based investments (like stocks), so these are not considered part of an intelligent goal-based savings plan.

Additionally, while providing automatic transfers from a checking account or payroll is beneficial for savings, it is not considered an intelligent goal-based savings program. The act of setting up transfers and with a “set it and forget it” approach omits the personalization, partnership, and trust that is characterized within intelligent goal-based savings.

How Can You Deliver Intelligent, Personalized Goal-Based Savings?

Customers (rightly) have expectations that any firm that has access to their information should be able to deliver a personalized approach to their services. Banks are on a digital transformation journey, and frankly, many are still playing catch-up to the digital giants in commerce and social media to provide a relevant and personalized experience.

When banks help a customer reach an important personal goal (like first-time homeownership or improved financial stability through an emergency fund), they build something very powerful with their customers: loyalty and trust.

Customer savings goals are deeply personal, especially in times of economic stress or uncertainty. Banks that aspire to be trusted financial guides employ an intelligent, multi-pronged, approach that:

  • helps customers establish a savings goal and ensures the goal attributes lead to savings success,
  • delivers a relevant incentive to motivate a customer to meet their goal,
  • continually nudges and encourages savers toward their goals,
  • provides relevant, meaningful guidance through analytics along the savings journey,
  • gives proactive, personalized communication through a variety of communication channels, and
  • enables the bank to deliver these savings campaigns with agility and respond to customer needs through a business-driven platform.

Three Ways to Make the Savings Process Smarter

Here are three ways to make the savings process smarter:

  1. First, use predictive analytics to improve saving outcomes. Within the platform for goal-based savings, models are executed along every step of the savings journey. At inception, models contribute to guiding the goal parameters – “how much should I save per month to shore up my emergency savings or plan a celebratory trip?” Throughout the savings journey, models help score the customer’s behavior to ensure the best guidance is provided.
  2. Second, use decision management techniques to operationalize the analytic models. Often referred to as rules, the decision management components are the engine of your savings program. Rules conduct many critical tasks, including incentive selection, goal measurement, and guidance content.
  3. Third, use personalized omni-channel customer communication. This is used to deliver encouragement and guidance customers during their savings journey. Formats can include SMS, email, and print material sent via mail. Much like a fitness or wellness coach, these messages can really help a customer stay on track and reach their goals. (And, the bank gets credit for helping the customer get there.)

These three components are best delivered through a flexible, cloud-based platform that allows the banks to focus more on the savings campaigns and lesson the delivery mechanics. Banks that embrace a platform approach can focus on delivering a distinctive program that improves savers’ success.

How Can We Respond Quickly to the Crises at Hand?

Goal-based savings provides banks with a relevant and engaging capability that can be entirely offered via digital channels or through a blended approach that leverage front-line staff during those crucial (and these days, urgent) customer interactions at a branch or call center.

Banks can move quickly as there is no need to modify a core deposit system. An effective goal-based savings framework allows a bank to launch a goal-based savings program. Business users define the attributes such as incentives and related eligibility, allowing institutions to add capabilities and quickly respond to rapidly changing market trends without the burdening already stretched IT resources.

Fight Back & Build Financial Resilience

When a bank has intelligent goal-based savings, each customer gets a personalized, empowering experience. They feel valued, and each savings goal is akin to an individualized campaign.

By leveraging analytics, decision management, and customer communication, your customer savers will find engagement, guidance, and sense of connection to your bank. Your bank can proudly share how you have helped thousands of customers in your communities reach their savings goals and view your bank as the go-to partner for their finances.

Glenn Grossman is a principal consultant with FICO’s Deposits Practice team, where he helps financial institutions enable deposit pricing solutions.

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