What if every financial product or service was designed with the goal of supporting the financial health of users? Making it easier for households to spend, save, borrow and plan for the future doesn’t necessarily require a big revamp, but rather a series of consumer-friendly tweaks that make it easier to bank by phone, budget, manage cash flow or customize payment due dates.
Today’s robust ecosystem of banks, fintechs, and technology platforms provides a seemingly limitless array of financial tools and services that can make the options for managing household finances feel more overwhelming than ever.
But the tools and technology that have created this vast menu of offerings can also be channeled to help demystify them. When designed with intention and aligned with what the research tells us about what works, financial products can help customers stay more in control of their finances and avoid unnecessary debt, fees, and instability.
Creating Certainty in a Time of Upheaval
People across the U.S. face significant financial strain due in part to rising costs of essentials, from housing and home insurance to childcare and prescription medicine. So it’s not surprising that more than half of Americans spent as much as or more than their income over the past year, and nearly a third of households reported falling behind on at least one bill payment.
Today, the trifecta of a precarious economy, decreasing regulation of consumer financial services, and eroding public trust in institutions makes now the moment for financial institutions, credit unions, and fintechs to double down on creating more certainty and stability in household finances. Even small changes in how products and services are designed can reduce uncertainty, creating outsize impact.
Most households’ day-to-day financial lives rely on two primary products: checking accounts and credit cards. Changes to their feature functionality could help create more financial certainty.
Small Changes, Big Impact
Imagine if it were standard practice for banks to make check deposits from reliable sources available in full on the same day it receives them. That would make it easier for households to pay bills on time and reduce the likelihood of overdrafts.
If it were standard practice for lenders to use an app or online tool to give borrowers the ability to choose when their monthly credit card payments – or car loan payments — were due, it would help households better manage cash flow and avoid late fees.
For example, most car loan payments are due on the date of purchase. Put yourself in the buyer’s shoes: You purchase the car on the 12th, but your paycheck doesn’t arrive until the 15th. Every month, that gap creates anxiety — will I have enough money in my account? Will I be hit with a late fee? Will the bank repossess my car?
Beneficial State Bank made the small change of texting borrowers a simple form to establish a payment date timed to their pay schedule and the results were notable. Borrowers who received the form had 27% fewer late payments and paid 10% more toward their debt, which translates into fewer late payment fees and a better credit score. For the bank, it meant fewer delinquencies and charge offs.
Small changes, big impact.
Practices like these create predictability, which can make a positive difference in people’s financial lives. They should become the standard. From building codes to nutrition and healthcare, standards have revolutionized countless industries and shifted systems by setting clear expectations that shape behavior, practices, and policies.
Predictable experiences are the foundation of consumer trust. As we move into a fast-changing world with AI, cryptocurrency, and relaxed regulations across the board, providing these stable customer experiences will be a brand differentiator. The key to building that trust is right in front of us.