Financial Insights: Judgmental or Empowering?

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In an age where technology is seamlessly integrated with financial services, insights delivered by financial institutions have become commonplace. These calls to action are intended as helpful nudges to enhance users’ financial well-being and foster a sense of partnership with the institution.

Yet, as we navigate our financial journeys, we often encounter a pivotal fork in the road.  Insights can either feel judgmental and unhelpful or insights that are empowering, convenient, and applicable. While the intention of providing insights always comes from a good place, they frequently become a source of frustration and confusion for many users, as a result of poor execution or improper due diligence. 

Understanding the Divide

The divergence between "judgmental" and "empowering" insights is not merely confined to the language used. It signifies a fundamental difference in approach. Judgmental insights, which we will refer to as "reactionary insights," tend to adopt a reactive stance. 

Reactionary insights bring attention to financial challenges without providing a viable course of action. Unfortunately, they can evoke feelings of shame, leading users to experience a sense of guilt and stress without a clear solution. These insights were intended to provide helpful observations into users’ spending behavior, but the impact is far from that intention. 

Reactionary Insight Example: 

After a user has spent 25% more on fast food this month, their financial institution sends them a notification that says: "Your spending at restaurants is higher this month. Consider cutting back."

The Pitfall of Reactionary Insights

Although well-intentioned, reactionary insights fall short of delivering substantial value to users. Simply highlighting financial issues without presenting an actionable path forward can have unintended consequences. Instead of promoting positive change, these insights can lead to stagnation or even regressive financial behavior. Users may find themselves trapped in a cycle of guilt, lacking the direction needed to make meaningful improvements.

Additionally, reactionary insights are often too simplistic to account for the complicated nature of a user's lifestyle and circumstances. A reactionary insight might highlight the rising expenses of a certain spending category without delving into the underlying reasons. Perhaps the user is grappling with unforeseen personal or professional challenges. With their routine disrupted, they’ve intentionally increased reliance on convenient dining options. This lack of context not only disregards the user's unique situation but also misses the opportunity to offer empathetic guidance tailored to their specific needs, like pointing out special promotions or coupons they can use the next time they purchase food.

Furthermore, users frequently possess a keen awareness of their spending patterns, making the additional burden of their financial institution reiterating these changes in spending to be stressful and evoke feelings of shame and judgment. Rather than fostering a productive dialogue, reactionary insights risk alienating users and may make them less likely to engage with their financial institution.

Paving the Way for Empowerment

But there is a better option. Enter "actionable insights," a game-changing approach to insights that shifts the focus from judgment to empowerment. Unlike their reactionary counterparts, actionable insights don't just simply point out problems in a user’s spending. Instead, they offer clear, simple, and personalized steps users can take to improve their financial well-being. These insights guide users toward concrete solutions and provide the necessary tools to make informed decisions.

Actionable insights work to instill a sense of confidence and reassurance in users. They provide users with the tangible steps, eliminating the guesswork and reducing the friction. As users follow these actionable recommendations, they experience a proactive engagement with their finances. They become transformed from passive observers to proactive decision-makers. This shift creates a positive and productive relationship between users and their financial institution – fostering trust, loyalty, and a shared commitment to achieving financial goals. Ultimately, actionable insights leave users feeling supported, informed, and in control of their financial journey.

Reactionary Insight Example: 

After a user has spent 25% more on fast food this month, their financial institution sends them a notification that says: “Next time you’re at FlavorFusion Burgers, join their loyalty program to earn a free meal. Plus, get 10% off your order each time you order from the FlavorFusion mobile app!”

The Power of Actionable Insights

The implementation of actionable insights represents a significant shift in the user experience for the better. By providing users with actionable steps, financial institutions foster a culture of trust and camaraderie. Users no longer feel like their financial decisions are being judged, instead they feel supported by their financial institution. This approach nurtures a deeper sense of trust, as users perceive the institution as a source of guidance, enabling them to make informed financial decisions confidently.

Creating reactionary insights is easy. 

While creating reactionary insights is easy, they aren't hitting the intended mark. The oversimplification of monthly spending can't account for emergencies, intentional large spends like vacation, or a myriad of other life circumstances. But when financial institutions invest in actionable insights, they move from the seat of judgement and into the role of coach. By offering manageable and personalized actionable solutions a bank or credit union can come along side their users to elevate their financial journey.

Crafting a Positive Financial Future

In an ever-evolving landscape where financial technology continues to reshape the industry, the choice between reactionary and actionable insights can offer significant differences in outcome. By empowering users with practical recommendations, financial institutions not only assist them in overcoming financial hurdles, but also cultivate an enduring sense of progress and achievement.

The distinction becomes even more clear in the emotional response elicited from users. A reactionary insight notification can leave users sinking into stress and guilt, exacerbating their financial concerns. Conversely, the sight of a notification for an actionable insight creates a sense of excitement and curiosity, engaging users and motivating them to explore new ways to enhance their financial well-being. Understanding users' needs and providing appropriate tools not only enriches the user experience, but establishes a strong foundation of trust and partnership between users and their financial institution.