The best thing about working in a members-first industry is that when we invest in our members, we invest in ourselves. Credit unions who prioritize the financial wellbeing of their members build on that success over time to create a healthier outlook themselves. So, what makes a healthy member, and how can your credit union aid in financial wellness for its membership?
Understanding Financial Wellness
The first step to creating healthier members at your credit union is understanding what a healthy member looks like. Healthy members:
- Have a nest egg of savings
- Spend within their means
- Don’t take on excess debt
- Make loan payments on-time
- Have an emergency fund
This may not sound like much, but in periods of high interest and inflation, contributing to a savings account each month can be difficult for some members. A recent Bankrate survey shows that roughly 36% of Americans have more in credit card debt than they do in emergency savings.
Financial wellness also means different things for different members depending on their life stage and individual goals, such as prioritizing debt reduction or retirement planning. Personalized goals mean different outcomes for each member, and perhaps even a different way of communicating with them.
How to Aid in Creating Financial Wellness
With a framework of what financial wellness looks like, and the flexibility to adapt it to each member, how can your credit union help members realize their version of financial wellness?
The first step is gathering data. Your credit union has access to loads of member data in the form of spending and saving habits. By tracking and categorizing that data, your credit union can start to understand member needs, and build individualized financial guidance.
Creating or partnering on a member survey will help with this process, as it gives members the opportunity to self-identify as needing financial guidance. The downside to a survey, however, is your credit union has to be prepared for low response rates. The information collected is valuable, however, and will enable the ability to craft population segment inferences.
Using Technology to Help
Technology has become a central augmentation in how credit unions engage with members and help them to achieve financial wellness. By incorporating multiple sources of data into a shared management system, we can formulate holistic behavioral profiles to correspond with self-identified member sentiment, and then leverage data modeling and machine learning to mine for similar patterns elsewhere. This exercise establishes benchmarks that can be used to show improvement over time to stakeholders, leading to gamification and including the members themselves!
The member financial health metric framework is also designed to be complementary and leverage successful processes already in use, such as next best product and loan risk assessment. Expanding beyond traditional products and services, it embraces ongoing financial education and spotlights member desire for additional guidance.
Helping your members achieve better financial health will help your credit union to achieve greater health in the long run. To learn more about the importance of member financial health, and to hear about one credit union’s vision and journey, be sure to attend my breakout session at the EDGE Tech Conference in May, “Accelerating Financial Well-Being with the Member Financial Health Metric.”
This article was written by Greg Leslie, Client Engagement Manager at Trellance.
