Inflation reached a forty-one-year high in June, and according to the Consumer Price Index, prices have remained elevated. Many are struggling to make their dollars stretch and are looking to their financial institutions for guidance on how to better manage spending and stay afloat financially.
Financial firms cannot singlehandedly control inflation, of course, but they can position themselves as knowledgeable partners that customers can depend on to be in their corner.
Here are four ways financial institutions can better support struggling customers during periods of high inflation:
1. Harness customers’ financial transaction data to tailor personalized solutions.
Companies should invest in data governance, data analysis, and data visualization. More accessible and digestible data gives organizations the information required to build the kind of intuitive, tailored products that customers want and need. It also supplies firms with deeper insight into their customer base, enabling them to suggest and sell the right products at the right time.
For example, a customer struggling to pay off a credit card bill because of inflated prices may benefit from transferring their balance to a new credit card that is zero interest for the first twelve months. Access to data gives companies the understanding they need to match such a product to an appropriate consumer. They can use data to make decisions on the types of products they should build, as well as to figure out whom to market certain products towards.
2. Invest in marketing.
Many financial institutions offer budgeting tools and apps that can help customers better manage their spending when money is tight, but adoption lags because clients aren’t made aware of them. To get the most out of these investments, companies must prioritize publicizing their tools and products in an appealing and clear way. Investing in marketing does not only mean investing in the creation and sharing of content and collateral, however. To fully reap the benefits of marketing, employee outreach and training must also be prioritized, so employees are prepared and encouraged to teach all types of customers how to use these tools and products in a way that suits their unique needs.
3. Eliminate overdraft fees.
In a study of 5,000 banking customers worldwide conducted by Censuswide, 29% of banking customers suggested that eliminating overdraft fees would help them make it through this high inflation period. Many large banks have done away with overdraft fees (thanks to the Overdraft Protection Act of 2021) or have at least begun giving longer grace periods for payments before charging fees. Getting rid of overdraft fees and implementing more lenient overdraft policies not only helps save customers money but contributes to higher customer loyalty and improved brand reputation.
4. Implement rewards and loyalty programs.
Banks can implement cash-back programs through their products, partner with businesses and venues to provide special discounts, and offer rewards upon new account creation and card openings. They can also offer incentives to customers when they practice healthy financial behavior, like paying bills on time and in full when they are able. Rewards-based programs are a fantastic area to start for banks striving for a more personalized, customer-centric approach.
Interested in discussing how you can better support your customers during this period of high inflation? Contact one of our financial services experts today to learn how to make the most out of your data and offer personalized solutions to your customers.