Four Ways Banks Can Help Customers in the Fourth Quarter

While the momentum in the banking industry is clearly favoring online transactions over in-person banking, regional banks still have a strong opportunity to strengthen relationships with local customers. As the stock market continues to rise and America still has low unemployment, banks can provide sound advice right now that will help customers heading into 2020.

Inform Clients of the Benefits of Automation

Banking customers can benefit in numerous ways by automation. Experts say that one of the key ways that consumers can increase their credit score is by automating payments. While certainly credit card debt and getting behind on mortgage payments due to finances is a key issue, consumers underestimate how much damage they can do to a credit score by simply missing payments by accident.

Secondly, automation can help save. A simple transfer from checking to an investible account increases savings just as a 401(k) is deducted each paycheck period. Behavioral science experts have proven that it is less likely for someone to opt out of a routine payment than to opt into one.

Improve Terms of Large Monthly Payments

With mortgage rates falling, bankers might think that customers would automatically look at what they could be saving by refinancing. Not true. Even the most budget conscious person may be budgeting his/her life well on a month to month basis without focusing on how to lower the actual payments. Mortgage rates are not the only place a bank can help a customer. According to CNBC, “Americans could be paying more than $369,000 in fees over their lifetime for their workplace retirement plans, individual retirement account plans and checking and savings accounts.” While a bank makes money in part on fees, helping customers to be shrewd in tracking where they could save will increase trust and lead to future business. Compounding fees will decrease savings over a long period of time. Investment firm Vanguard built a successful business around this fact. If you do not help your customers find ways to save on fees, competitors might.

Analyze Spending Habits

While it might be unrealistic for a community bank to speak on the topic of spending habits with a walk in customer, those banks that service the customer beyond banking and into savings and investments can have a meaningful conversation about spending.

Financial advisors linked to a bank, for instance, can have a candid conversation about the spending habits of their clients by going over monthly checking and savings account records. Restaurant and bar tabs, for instance for millennials can add up to several hundred dollars a month that could make a key difference in their lives. Bankers can challenge customers to audit their finances and find out where there are easy problems to fix.

A 2020 Budget Plan will Go Further than a New Year’s Resolution

The beginning of the fourth quarter allows time for your customers to analyze what they will make in income in 2019 and what they will spend. Plans tend to work better when they are considered over time rather than an impulse reaction at the end of the year. Did the client save as much in their IRA as she had hoped? There is still time to make contributions before the end of the year. How much did he spent on credit card debt? Perhaps the credit card debt is actually more important than saving if the debt outpaces the benefits of a retirement plan.

Banks are as qualified as anyone to help customers do a 360 evaluation on what they are doing right and doing wrong with their day to day finances. Banking customers’ spending habits, automation, and monthly fixed costs and fees are as important to their customers’ financial health as what they invest in over time.