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Proactive banking: How younger customers expect banks to tackle financial stress

Tales Sian Lopes
Tales Sian Lopes

By Tales Sian Lopes, Head of Financial Services, Australia & New Zealand, Publicis Sapient

Australians are acutely feeling the cost-of-living crisis, driving a re-evaluation of the role that banks play in mitigating financial stress. In the current economic landscape, a majority of customers believe that banks should bear some responsibility and help them during times of financial stress.

Our research makes it clear that the cost-of-living crisis is an urgent priority for all Australians, and even if the economic outlook improves, there will still be a need for personalised customer care.

An overwhelming majority of respondents (96 percent) believe that banks should proactively detect signs of financial stress early. Younger demographics are even more likely to expect support.

Understanding financial stress among young Australians

As well as detect signs of stress, most respondents (79 percent) also expect banks to proactively address the cost-of-living crisis. Younger generations, particularly those under 45 years and people in a precarious financial situation, hold the strongest views, with 85 percent "strongly believing" that banks need to have a role in addressing financial stress.

Older generations (66 percent of people aged 80+ years) and those in a "comfortable" financial situation (69 percent) are less likely to hold this sentiment as strongly.

Proactive measures for financial relief

Customers themselves identify possible warning signs of stress, such as missed payments on credit cards and loans, job loss or income reduction, and overdrafts and insufficient funds. They are also able to identify ways that banks could support them. This includes flexibility in loan repayment terms or temporary relief (49 percent), fee waivers and reductions, especially for essential daily living (45 percent), and interest rate adjustments (42 percent).

Considering these expectations, it's incumbent on banks to build a toolkit of financial wellbeing intervention techniques to use proactively. Implementing mechanisms to prevent worsening financial stress enabled by technology (AI and personalisation) will significantly improve customer retention and satisfaction, a clear competitive advantage for banks.

Innovating customer care through data

Banks hold a wealth of data on their customers. Technologies such as AI and Data Analytics can help banks offer personalised customer experiences at scale by analysing huge amounts of data and using it to provide customers with pertinent information at the right time. Those in "precarious" financial situations expect tailored services even more than those in a "comfortable" position.

Banks need to use data effectively to identify risk factors for financial stress, and build personalised plans for each customer, with the best tools for their individual situation. Data-driven insights can pre-emptively address signs of financial stress and ultimately enhance customer satisfaction and loyalty.

Overall, the research reveals three key takeaways for banks. First, the existing process of seeking assistance in times of financial stress has been characterised as suboptimal and disjointed. Banks should enhance their services in this area to better meet customer expectations.

Secondly, banks must leverage readily accessible data to proactively identify and support customers who are experiencing financial stress. Finally, creating a strategy that supports customers throughout their lifecycle is imperative to ensuring that the impact of financial stress is mitigated, as well as improving financial outcomes for both customers and banks.

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Tales Sian Lopes
Tales Sian Lopes
Managing Partner, Financial Services, Australia & New Zealand

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