Why Financial Wellbeing Is Critical To Member Success

In a world of self-serving member experience metrics, supporting a member’s financial wellbeing is all about them, which is truly the pinnacle of member service.

What do members really want? Simply put, they want their credit union to support their financial wellbeing.

Members who agree that their credit union looks out for their financial wellbeing are three times more likely to be engaged. And, engaged members are 39% more likely to sign up for new services, 49% more likely to increase balances, and 32% more likely to seek out their credit union first for financial advice.

But, often, credit union leaders conflate financial health with financial wellbeing. These are not the same. Financial health is about money; financial wellbeing is about a person’s emotional relationship with that money. If you are making decisions for your credit union based on an inaccurate premise of financial health and trying instead to differentiate based on friendly service, you’re missing the opportunity to serve members as fully as you could be and will lose members to your banking brethren.

Gallup research has found that financial wellbeing does tend to get better with higher income. That might not be surprising; however, our research has also found that is not always the case. It is common that people have high financial health and low financial wellbeing and vice versa. For example, of those earning more than $120,000 per year, 43% are struggling or suffering in their financial wellbeing. As such, there are opportunities across all socioeconomic groups to improve financial wellbeing.

When the novel coronavirus hit in 2020, the U.S. population entered a stark reality within a matter of weeks as daily significant stress and worry spiked to an unprecedented magnitude. According to Gallup’s U.S. panel study, 50% of people were worried they would experience not only financial hardship but severe financial hardship. This concern spanned well past the initial onset of the virus.

Notably, for the eight credit unions participating in the Callahan-Gallup Collaborative Financial Wellbeing and Member Engagement Program, membership financial wellbeing improved.

Yes, improved.

During the onset of the pandemic from March through May 2020 35% of respondents reported they were thriving in their financial wellbeing. For the seven months following June through December 2020 40% reported such. In fact, members averaged higher levels of financial wellbeing during the seven-month period of June through December than they did in January and February of 2020 two months before the onset of the pandemic. Members’ emotional relationship to their money contained a greater sense of hope than what the financial health numbers on face value would portray.

So, what does this mean for the future of member service? Credit unions need to see members as people first the person behind the numbers. And to truly know your members, you must understand them through their emotions worry, confidence, and enjoyment. Believe it or not, this approach is a complete paradigm shift for most credit unions.

In a world of self-serving member experience metrics like will you recommend me or am I your primary financial institution, supporting a member’s financial wellbeing is refreshingly about them how are you doing and how can I better support you. To put it another way, supporting a member’s financial wellbeing is the pinnacle of service.

Unfortunately, fewer than half believe their credit union looks out for their financial wellbeing. In 2016, credit unions had a 16% market edge compared to banks on this metric. In 2020, their edge was down to only 8%. Service has become a ubiquitous benefit touted by credit unions and banks over time.

But credit unions can regain their edge. If you were to think about the member story you are most proud of, my bet is the story would be one of financial wellbeing. When members take control their financial wellbeing, they change their destiny. And when credit unions view their own processes, products, and services through the lens of member financial wellbeing, their mission and margin soars.

January 13, 2021

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