Howard Pull, Head of Digital Transformation Strategy at MullenLowe Profero
The impact of the COVID-19 crisis on the economy has been huge. Over the past six months, youth unemployment figures have dropped, wages have stagnated and GDP has fallen with a record 20.4%. The stop by GDP is worse compared to 2008 Financial Crisis, the Winter of Discontent and the Great Depression.
While the furlough scheme and other government measures have provided some much-needed financial support, the prevailing social and economic conditions make money worries increasingly common. According to a recent survey from MullenLowe Profero, during the pandemic 40% of 18-25-year-olds are afraid to check out their bank account, with a further 40% proclaiming that thinking about their money has a negative impact on their own personal wellbeing.
In response to these rising financial concerns from account holders, it is clear that banks have to help people – especially young adults – feel more confident in managing their cash. In particular, banks need to provide more educational support to their customers about how they can make a good financial decisions. This means designing tools and support services to enable more people to effectively manage their finances.
With 60% of consumers aged 18-25 believing that banks should enable them to have the capacity to absorb a financial shock, banking institutions also need to adapt their products and services to meet the needs of more uncertain customers.
Adapting services, however, is easier said than done. The pandemic has radically shaped consumer behaviours and therefore the old rules no longer apply. For example, while consumers in the past might have preferred to discuss financial matters personally at a bank branch, chance of infection and the widespread use of digital tools has meant that nearly all young people want banks to supply wellbeing services online.
Digital experiences will also be important to the future success of any bank. According to MullenLowe Profero's report, digital experience is now the number one reason why young people select a bank. Therefore, it is clear that banks during the pandemic and beyond need to reevaluate their operations and shape their personal wellbeing strategies around digital tools.
Community and Global Wellbeing
MullenLowe Profero's report into financial wellbeing found that young people weren't just concerned with their own personal wellbeing. They were also concerned about the importance of community and global wellbeing too. Actually, over half of 18-25-year-olds agree that the events of the last few months have made them seek out brands that do better for the world, with another 50% stating that the importance of a local community has increased during the pandemic.
Community wellbeing is concerned with the importance of local areas and the businesses and organisations which are based within them, whereas global wellbeing is worried about the entire world. For banks, showing support for areas close to their branches and customers as well as issues affecting the globe like the climate crisis is important to maintaining the trust and support of account holders.
Focussing banks on concerns around community and global wellbeing requires banks to evaluate their impact on the wider world. In other words, it forces banks to check who they support and where their money could be better placed. For example, young people want to be recognised for his or her positive behaviours. 56% of 18-25-year-olds want rewards and benefits for getting ethical and sustainable products and services.
The findings of the report found that young people across the board want financial institutions to reflect their values and to help them manage their finances. With COVID-19 continuing to wreak havoc on our day to day lives, banks can provide much-needed support by offering educational help in addition to creating products and services that actively manage an account holder's finances. They can also part of and provide support to the wider community and world by taking measures to reward ethical and sustainable behaviours.