Focusing on financial wellness will help banks understand the true risk of their businesses
The COVID-19 crisis has shown it is more important than ever for banks to be able to gauge and help improve the financial wellbeing of their customers, says GlobalData.
According to analysts, the first half of 2020 has created significant problems for UK banks and their customers to overcome. Subdued consumer confidence combined with millions facing a reduced income has left major banks facing losses this year, with billions of pounds now set aside for expected loan defaults.
In early April 2020 Virgin Money launched Money on your Mind, a financial wellness service for bank and non-bank customers alike. Customers send in questions online and receive an answer via phone or email from one of 300 members of Virgin’s Red team (who were previously branch staff). Virgin has also taken advantage of alternative digital channels such as YouTube, posting answers to common financial wellness questions.
The analyst says trying to understand as well as improve the financial habits and thinking of customers will not only enable banks to offer a more personalized experience, it will help banks learn the true risk of the loans they’re making and ultimately help them prepare for the unknown.