Consumers are stressed when it comes to managing their money. Are we spending too much or too little? Which bills should we pay first? Are we saving enough to meet retirement goals or building enough of an emergency savings?
Sometimes it’s tough to find reputable answers to these questions. The need for reliable insights and answers is vital to help people navigate volatile and uncertain times. Financial planners have historically focused on investing rather than day-to-day budgeting for their clients. First-generation personal financial management (PFM) tools have been helpful in terms of tracking where the consumer is today, but these tools do not provide insights for the future. First-generation tools provide information that is static and is typically presented as pie charts without context for the consumer. These tools do not offer specific, actionable, and hyper-personalized insights or benchmarking capabilities regarding the decisions that consumers should make to improve their financial wellness.
Next Generation Insights
Disruptive financial wellness tools can introduce much-needed changes in how financial guidance is provided to consumers in digital banking. These “smart tools” leverage machine learning algorithms to analyze consumers’ past history and make projections and personalized recommendations about the future. These tools can help consumers with their day-to-day concerns as well as long-term budgeting and savings. Financial planners have the opportunity to move beyond a focus on investing and offer wellness guidance for the day-to-day, mid- and long-term concerns their clients are facing. Moreover, these financial wellness tools are available to consumers through omnichannel delivery (desktop computer, laptop, tablet, or smartphone). Meeting customers where, when and how they engage in digital banking and wellness also includes increasingly powerful chatbot assistance; which is constantly improving when machine learning is applied to deep and accurate data sets.
What Makes These New Tools Tick?
New financial wellness tools do the heavy lifting to give consumers the actionable insights they need. They do this by incorporating an Artificial Intelligence (AI) engine coupled with access to the right data. As a consequence, the tools have unique personalization capabilities to help consumers achieve financial wellness. However, financial service providers need to take several steps in order to achieve the full potential presented by these tools.
- Meaningful Data
It is vital that financial service providers have data that offers a holistic view of their customers’ financial lives. This includes the customers’ investments, borrowing (loans and mortgages), day-to-day expenditures, savings, and income. That is, if financial service providers want to offer a comprehensive solution, they need comprehensive financial data about their customers.
Secondly, this financial data needs to be cleansed. It also needs to be “enriched,” meaning that ambiguous or cryptic transaction information must be turned into contextualized data including merchant name, date, amount, and category of purchase. The resulting data set is now: “data with a purpose,” meaning it is now actionable.
To accomplish the new tasks demanded of data, financial service providers need to work with partners who have the ability to deliver clean data that can be incorporated into financial wellness apps and digital analytics.
- Results Consumers Can Understand and Act On
Artificial intelligence is the engine inside these financial wellness tools. AI is necessary to turn data into prescriptive and actionable guidance for the consumer. Unlike static PFM tools, which only present a picture of past and current account balances, an AI engine offers predictive intelligence and can identify patterns that help customers anticipate and manage financial cycles and events
These AI solutions can scan the consumers’ past history and current account balances to glean new information and help them make informed decisions on what actions to take with their next dollar. They can also leverage peer benchmarking capabilities to deliver insights on what consumers in similar geographic and socio-economic groups are doing to improve their financial wellness.
How Envestnet | Yodlee Can Help
Envestnet | Yodlee® Financial Wellness Solutions are equipped to help financial service providers empower consumers with the actionable advice and hyper-personalized financial insights they need during any economic climate.
Comprised of the Envestnet | Yodlee Financial Data Platform, AI-powered FinApp series, Intelligent APIs, and more – we enable financial service providers to deliver actionable financial wellness solutions to a whole range of consumers.
You can find out more about our financial wellness solutions here.
