5 Strategies for Making Financial Wellness Central to Your Growth Strategy

There is a new urgency for credit unions to deepen their bond with members in order to earn the primary financial relationship (PFR). In the throes of the pandemic, members need their credit unions more than ever. But it’s also a two way street. Helping members with their personal financial performance boosts stickiness, engagement and trust.

It’s a win-win. Indeed, Gallup research found that among consumers with the greatest sense of financial wellbeing, 91% are extremely satisfied with their financial institution. What’s more, 77% of them are heavily engaged, generating 37% higher revenue than lesser engaged counterparts.

Why the emphasis on the primary relationship now? Consumers have shown a fresh willingness to digitally engage across a spectrum of providers, including big banks, big tech and fintech. This has made credit union memberships a target-rich environment for competitors. The circumstance is more acute among lower income earners, who will be more directly impacted by the economic ripples of the pandemic for months and potentially years.

Nearly 60% of Americans said – before the pandemic – they were stressed about their finances. Undoubtedly that figure is much worse today. And, sadly, many economists believe there is more pain to come. All Americans, but especially those who are newly struggling, want desperately to move out of chaos and into control so they can have a clear picture of their finances. Part of what’s contributing to that sense of chaos is the often messy and disorganized quilt of financial providers they’ve stitched together to try and solve their financial problems.

Now is the time for credit unions and indeed, all financial institutions, to boldly pursue deeper member relationships – to build interaction, solution adoption and trust so that members and customers can easily embrace better money behaviors. Ultimately, those behaviors will stimulate a desire to synthesize their solutions and solidify a primary financial relationship with the credit union they trust.

By leveraging financial wellness and a holistic view of their financial lives, financial institutions will carve a path from a state of disaggregation to one of re-aggregation. In this way, they become the single, trusted source (or one of a couple trusted sources rather than many) which will lead to better financial outcomes. Getting there, however, will require a significant shift in mindset around the definition and practice of financial wellness.

Financial Wellness Encompasses So Much More Than Financial Literacy

Ask any credit union leader if their credit union offers financial wellness programs, and chances are they will answer with a hearty “Yes!” But, here’s the deal. Too often, a credit union’s financial wellness initiatives are categorized under community outreach. “One-off” events like budgeting workshops and retirement planning webinars that fail to account for a member’s unique and holistic behaviors and circumstances miss the opportunity in front of us at this moment. Attendees may walk away having learned a lesson or two, but they aren’t supported in the implementation of those lessons across their daily actions. Helping members achieve true financial wellness requires a much more all-inclusive and two-way approach.

We believe that credit unions that consider financial wellness as core to their mission and central to their strategy will not only see a shift in the daily behaviors of members, they will see marked growth in member engagement, usage, market share and, yes, revenue.

While most credit unions agree financial wellness is aligned with their mission, many aren’t sure how to execute it in a way that has the greatest impact. Based on the combined input of 70 CO-OP Financial Services’ Co-Creation Council credit unions, we have uncovered five strategies for making financial wellness central to your credit union’s growth strategy.

Make Financial Wellness Core to Culture: Credit unions and their employees are in the happiness business. If employees are invested in their own financial wellness, they pay it forward through first-person energy and excitement around living a financially healthy lifestyle. Credit unions with a culture of financial wellness ensure employees have access to the same resources as members. They encourage building member financial performance across all that they do. A culture based on strong member outcomes will ensure that financial wellness is not simply an education program, it’s one that’s built on empathy.

Dave Libby, president/CEO of Town & Country Federal Credit Union in Minot, N.D., shared in a recent CO-OP THINK Master Class that many of his cooperative’s financial wellness programs are developed from staff struggles, things like divorce or a cancer diagnosis. “Because the employees walking through these struggles are the most passionate, we often empower them to lead the development of programs designed for people going through exactly what they’re going through.” A total of 20% of Town & Country’s staff are participating in financial wellness programs today.

Reframe as Wealth Creation: It’s never a great experience to be the bearer of bad news or only hold members to account. Too often, financial wellness programs focus on telling members what they can’t or shouldn’t do. Rather than striking a parental tone that places all kinds of stipulations on a member’s behavior, credit unions that assume the role of friend or advisor are in a much better position to bring about positive changes.

Instead of focusing on money management, financial wellness programs should center on wealth creation, specifically making the process accessible, democratic and positive. By helping members see that they have power over their immediate and long-term finances, the credit union builds a member’s confidence while also creating that feeling of serenity so many people crave right now.

Mutual Metrics: To get the top-down support strategic financial wellness programs deserve, leaders will need to effectively link financial wellness to growth. One way to do that is through the development and tracking of specific key performance indicators around the improvement of members’ financial lives.  Focusing on engagement across channels, member behavior improvement and solution cross sales goes beyond financial literacy. That kind of measurement gets to the root of helping members achieve better lives and, in turn, a stronger relationship with your credit union. It helps you see how you’re impacting member choices as they work with you. Measuring the before- and after-wellness of those who go through your program can help remind leaders across the organization that the credit union’s success is based on members’ success.

Across Not Down: This strategy is about designing financial wellness across your solutions based on member needs and the financial actions they take day-to-day: spending (i.e., payments), saving, borrowing, investing and protecting. Ask yourself, are all of your solutions designed with financial wellness and better member behaviors at their core? A key piece of building your own financial wellness ecosystem is understanding your member segments and designing solutions based on their distinctive financial needs, challenges and engagement patterns across channels.

We know financial confidence increases as consumers move through different life stages and lifestyles. Therefore, their receptivity to and needs from a financial wellness program will change over time. As with any other financial services engagement, success depends on relevancy and personalization.

And that’s how financial wellness ultimately becomes a part of the growth strategy. Credit unions intentionally design a persona-specific program that shifts in content and focus as the members’ goals evolve.

FinTouch Relationship: Finally, you can do a lot with an app. However, generally speaking, many people need another person (sometimes multiple people) to keep them accountable and energized to stay after their financial creation goals for the long term. With the integration of financial counselors with self-service and digital engagement, financial wellness programs become much more effective, personal and evolutionary. Most importantly, they facilitate the kind of two-way relationships that earn credit unions PFR status with more members.

Even before COVID-19, many Americans struggled to meet their monthly financial obligations, and a shocking number of people did not have enough in savings to weather a $400 emergency. The pandemic exacerbated financially unwell circumstances for millions of people. Regardless of the shape our economic recovery ultimately takes, credit union members will need strong, compassionate and trustworthy advice for becoming and staying financially well. It’s a big ask.

Now, think of who you call when you need something big. You call the person you enjoy being with every day, a friend you can trust to show you the way out of trouble. Credit unions can be that friend for millions of Americans. The strategies outlined above have the capability to help credit union members achieve true financial peace, systematically enriching existing relationships while introducing even more people to the credit union movement.

Jean Chatzky is a personal finance journalist and the founder of HerMoney.com, and is based in New York City.

Samantha Paxson is Chief Experience Officer for CO-OP Financial Services based in Rancho Cucamonga, Calif.