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Financial Institutions


How Credit Unions Can Harness Data Analytics for Personalized Financial Wellness

Financial Institutions

Customization vs One-Size-Fits-All: Reshaping Financial Wellness for Credit Union Members

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Last Update: June 10, 2024

In 2022, there was a stark decline in the financial well-being of adults in the United States. The Fed reported a 5% drop in those who felt comfortable1, dropping to nearly pre-2016 levels. That trend has continued throughout 20232, with record lows reported at the end of the year. 

As troubles mount, credit unions have started to rethink how to best serve their members' financial wellness. The one-size-fits-all approach that has been commonly used in the past very clearly no longer works. 

The diverse needs and unique financial situations of the members necessitate a more personalized approach to financial services. 

How Standardization Limits Success

Research has shown that custom, active financial planning strategies are more successful than simple or standard solutions.3

A one-size-fits-all approach neglects to consider individual financial situations and the distinctive goals of each member. 

For example, a strategy suitable for a young member who is just starting their career and has a low income but also few responsibilities will not be effective for a middle-aged member with dependents, mortgages, and a higher income level. 

As such, standardized, broad-based solutions are less likely to produce positive outcomes for all members. They also can't provide the level of detail and specific advice that might be needed for unique financial situations. 

Another example would be someone with high levels of student loan debt needing a different plan of action compared to someone planning for retirement.

The Customization Challenge

The challenge, though, is how to provide a personalized financial wellness program that is also affordable and efficient. Customization can be time-consuming and costly, especially if poorly executed with outdated methods.

Additionally, credit union members’ needs aren’t just diverse, they’re often complex and specific, changing over time as they advance through different stages of their lives. They have different dreams, like buying a house, saving for college, or planning for retirement – each requiring different financial strategies.

Creating a unique financial plan for each member will be challenging, and to make things even harder, customer expectations are also evolving.

As they transition to digital meetups and remote banking, customers demand seamless digital experiences without high fees4). This price sensitivity pressures credit unions to decrease costs while improving customer experience.

Reshaping Financial Wellness 

The benefits of personalized financial wellness are clear, but how can credit unions practically achieve this?

A Holistic Approach

Holistic financial wellness goes beyond merely providing financial products and services – it's about looking at the member's entire economic situation. An important issue often overlooked in traditional planning models is the impact of non-financial factors. 

Aspects that play a part in financial health include things like:

  • Physical health
  • Mental wellbeing
  • Job security
  • Family situation
  • Education

In order to create truly personalized financial wellness plans, credit unions must consider these factors, as they contribute to the member's ability to earn income, save money, and make wise decisions. 

Credit unions don’t need to act as psychologists or health professionals, but they must understand how these elements are all intertwined.

By partnering with other service providers such as health insurance companies, educational institutions, and career counseling agencies, credit unions can help members address their financial issues in a more comprehensive manner. 

Education vs Coaching

While financial education has traditionally been deemed important for ensuring wellness, a shift towards financial coaching is increasingly seen as more beneficial. Why? 

Financial education, which is typically broad and standardized, aims at equipping members with basic knowledge about financial products, budgeting, investing, and other related concepts. 

While education is a crucial foundation, coaching takes it a step further by tailoring advice to the specific needs and situations of each member. It not only provides information but also continuous support, motivation, accountability, and a personal approach based on the member's unique circumstances. 

Coaching provides an empowerment-oriented rather than an advice-driven approach. Members are not just receiving information, but actively participating in the process, drawing their own conclusions, and making their own financial decisions.

As a result, members feel ownership of their financial goals and are more committed to pursuing them.

Stress Management

A significant aspect of personalized financial wellness involves helping members manage immediate financial stressors. This, in turn, paves the way for long-term financial planning.

Financial stress can come from unexpected medical bills to loss of employment. Nearly two-thirds of Americans are now living paycheck to paycheck.5  Such situations often lead to a cycle of debt that becomes hard to escape. 

By providing services that directly help members address these stressors, credit unions can dramatically improve their members' financial wellness. This could involve:

  • Debt counseling
  • Flexible loan payments
  • Emergency loans with low-interest rates

Ultimately, by helping members navigate and control their immediate financial stressors, credit unions equip them to break free from debt cycles and make proactive strides toward financial stability.

Financial Empowerment

Financial empowerment is about more than helping members manage their money. It's about helping them build confidence in their financial decision-making abilities while also creating economic stability and opportunities for growth.

Credit unions can boost financial empowerment by providing resources aimed at increasing member’s financial knowledge and skills. These might include budgeting tools, investment advice, and savings strategies catered specifically to the member’s financial situation.

Additionally, credit unions can offer programs or partnerships that foster economic opportunities. This could involve collaborations with local businesses for job placement services, providing entrepreneurial training, or offering low-interest loans for start-up businesses or education costs.

Empowered members are more likely to make bold, informed financial decisions and feel secure in their future – ultimately leading to better financial wellness.

Adding Visibility

In today's digital age, transparency is everything. Members want to know what's happening with their money, why it's happening, and how it benefits them.

Credit unions can leverage technology to enhance visibility and create a more customized experience for their members. Real-time alerts on transactions, clear breakdowns of fees, and easy-to-understand financial reports can be provided through mobile and online banking platforms. 

There can be a dashboard where members can easily track their financial goals, savings progress, and investment growth. These tools would also calculate and clearly display how specific services or plans contribute to their financial wellness. 

Advanced fintech, like artificial intelligence, can be used to model different scenarios, offering members personalized advice on how to respond based on their unique circumstances. 

By making financial journeys more visible and understandable, credit unions empower their members to take charge of their financial wellness, increasing trust and fostering stronger relationships. 

Final Thoughts

Members have diverse needs, and a one-size-fits-all approach isn’t going to work for much longer. To truly support financial wellness, credit unions need to prioritize a more personalized, well-rounded approach. 

Not only will this benefit the members’ overall financial health, but it also goes a long way in enhancing loyalty and establishing credit unions as true community partners.

Enrich has compiled a collection of best practices for institutions looking to expand their financial wellness programming. Together, let's create a future where financial wellness is the norm for every one of your members.



1 - https://www.federalreserve.gov/publications/2023-economic-well-being-of-us-households-in-2022-overall-financial-well-being.htm

2 - https://pro.morningconsult.com/trackers/tracking-financial-well-being

3 - https://pensionresearchcouncil.wharton.upenn.edu/wp-content/uploads/2017/02/WP2016-15-Kim-et-al.pdf

4 - https://www-ft-com.ezp-prod1.hul.harvard.edu/content/a10e5aa2-744f-4849-b186-aaec3256be49

5 - https://www.cnbc.com/2023/10/31/62percent-of-americans-still-live-paycheck-to-paycheck-amid-inflation.html

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