The majority of consumers (80%) want their primary financial institution to help improve their financial health, but only a small percentage (14%) say their institution actually helps. And this demand is only growing: Approximately 176 million Americans, or 70% of the population, are not considered financially healthy, according to the Financial Health Network’s 2022 U.S. Trends Report. Current economic conditions are only adding fuel to the existing national financial health crisis.
Consumers are searching for financial services that meet their unique needs. It’s not uncommon for a Gen Z or millennial couple to do business with 30 to 40 financial providers. This can make it increasingly difficult to get a complete and accurate financial picture to make healthy financial decisions and manage their finances.
Banks and credit unions are well-positioned to strengthen their connections with customers through technology and services that help reduce the barriers to financial health. But it takes a clear growth, service, and product strategy, along with technology modernization.
Embrace an open infrastructure.
Financial institutions can embrace the digital transformation occurring in the industry to innovate faster and serve evolving needs of the people in their community. But they cannot be all things to all people. By narrowing their strategic focus to a particular vertical, affiliation, target demographic, etc., they can build personal trust and service within a niche to differentiate and best serve accountholders in their moments of need. This includes a solid financial health strategy that helps each accountholder make better financial decisions.
Financial institutions can look to innovative, forward-looking technology companies that provide modern banking capabilities and build future-proofing technology to support their financial health strategy – for example, a cloud-native core that allows the financial institution to choose which services meet their needs as well as their accountholders.
Build an inclusive fintech ecosystem.
Financial fragmentation continues to complicate accountholders’ financial lives. There has never been a better time for consumers and businesses to simplify their financial relationships and consolidate them in one place. By embracing open banking strategies, financial institutions can pull in data and enable access to third-party applications, offering accountholders greater visibility across all their financial relationships. This ultimately helps them make healthier financial decisions, while allowing the financial institution to achieve first-app status.
Providing choice, as well as safer access to data and finances, is the new standard that we must meet together. For example, Jack Henry gives community banks and credit unions access to the more than 850 fintechs that are already integrated into our digital banking platform. And we have a developer’s portal, jackhenry.dev, where anyone can leverage our APIs to build, customize, or create their own unique solutions. Giving fintechs and financial institutions access to our APIs is a necessary step to create a thriving open banking platform and a financial ecosystem that allows banks and credit unions to become the center of their members’ financial lives.
Develop to solve business challenges.
Financial institutions operate in a challenging environment; rapid technology advancements, regulatory shifts, increased competition from non-financial institution rivals, and evolving consumer expectations will continue to proliferate. The challenge is to build a strategy that meets specific needs rather than simply deploying in-demand technology.
Accountholders want access to budgeting, planning, lending and faster payments, all in thoughtful and customized ways. And they should be able to bank securely, right inside their digital banking provider. But it can be overwhelming for a financial institution to build every solution itself to match these growing digital demands. Narrowing the strategic focus to provide people-inspired innovation is the priority. Focus on what challenges you can solve for accountholders, and the rest can be supported through open integrations with fintechs.
Financial institutions have an opportunity to become the digital front door for all financial experiences with an effective financial health strategy that focuses on openness and optionality. The industry will be challenged to embrace competition and open standards and act with people’s best interest at heart. Together, we can help Americans find financial stability and foster resilience.
About Greg Adelson
Greg Adelson is Jack Henry’s President and Chief Operating Officer. He is responsible for all business lines and solutions. Adelson joined Jack Henry in 2011 as Group President of iPay Solutions™ and has more than 25 years of financial services experience.