Money and Emotions | July 2018

What’s the greatest source of stress in consumers’

lives?

Money.

When we joined our partner ReD Associates for a

comprehensive study on the future of money, we

heard a common theme: People feel as if they’re

not in control of their money. i

While digital has introduced unprecedented

convenience to everyday consumer money

management like bill payment, more complex

financial tasks are another matter. People report

feeling anxious and frustrated regarding long-

term financial matters such as investments and

pensions.

For financial institutions, the paradox is unsettling.

Little digital progress has been made for the types

of money that require the most assistance — and

represent the most lucrative untapped revenue.

That scenario is about to change.

Money and Emotions

By creating digital experiences that tap into consumers’ feelings about money, financial institutions can deepen brand engagement.

DIGITAL BUSINESS

Digital Business

2Money and Emotions |

Our research found that money falls into two

distinct categories for consumers – fast and slow –

and that consumers display striking differences

in their attitudes towards them. (See graphic,

“The Emotions of Money,” on page 4.)

Understanding those differences and consumers’

emotional connection with money can help

financial institutions chart a course toward

more meaningful digital experiences. Personal

finance and wealth management in the digital

era are no longer one-size-fits-all. Customers

expect the same level of personalization and

contextualization in banking and finance that

they find in retail and hospitality.

Here’s how financial institutions (FIs) can

capitalize on digital advances to meet consumers’

emotional needs regarding money:

1. KNOW YOUR CUSTOMERS AND THEIR RELATIONSHIPS WITH MONEY

The first step is also the most challenging to

execute. Getting to know your customers’ likes

and dislikes requires drawing data from multiple

sources. Yet FIs – and their data – typically remain

organized around products and services.

The right data enables FIs to establish detailed

customer personas, and then map each to

products and actions based on the types of

money the customer is interacting with.

Take the creation of a student persona: an

undergraduate or graduate, living on a modest

budget. After reviewing relevant data points

– outstanding loan balances and expected

graduation dates as well as supplemental income

sources – FIs can determine the relevant types

of money and where the organization could

focus to provide optimal value. When it comes

to sustenance money, for example, how much

weekly or monthly income is required to maintain

desired lifestyle? How can the FI leverage this

insight to maximize the student’s account

balances?

2. BUILD ANALYTICAL MODELS BASED ON MOMENTS THAT MATTER

Algorithms go a step further than the triggers

that most marketing campaigns home in: They

suggest curated products and services that

capitalize on the intersection of emotions and

money.

FIs can launch personalized campaigns tied

to key financial moments. For millennials, for

example, FIs might apply the construct of key

financial moments to productive money, such as

long-term investments including mutual funds

and stocks. If the predictive algorithm signals a

customer’s interest in long-term investing, the FI

can reach out with relevant financial planning,

annuities or IRA offerings, ultimately creating

additional revenue opportunities for the bank.

As artificial intelligence (AI) becomes more

prevalent, its ability to discern non-standard

patterns and behaviors will lead to even more

personalized recommendations, such as

behavioral changes that can reduce spending.

3. GO TO SCHOOL ON DIGITAL EDUCATION

By encouraging financial fluency, FIs not only

offer the continual guidance needed to link fast

and slow money, but they can also engage more

meaningfully with consumers. Equally important,

they can proactively serve customers at key

moments.

At the heart of financial fluency is digital content

that addresses customer needs and the emotions

that tie into them. FIs become brand publishers,

educating their audiences and also building

community. It’s a key step in humanizing banking.

Digital Business

3Money and Emotions |

Take the persona of an established couple

with secure financial standing and clear goals.

Content that addresses the couple’s fast-money

needs might include how-to articles on budgeting

when using auto-pay for recurring bills. Slow-

money concerns might focus on topics related to

growing their net worth, such as optimizing debt,

cash management solutions and proactive tax

optimization strategies.

With digital platforms, FIs can weave together

previously siloed data points to generate

personalized learning content, communication

preferences and progress-tracking dashboards.

4. MAKE IT RADICALLY SIMPLE AND FRICTIONLESS

In the tap-and-swipe world, simplicity rules, even

for customer experiences beyond the mobile

realm. FIs can lower the anxiety that customers

often associate with slow money by ensuring

digital tasks — from moving money to making

investment decisions — follow radically simple,

frictionless paths.

A scenario-planning tool, for example, might

enable individuals to see how decisions they

make today play out in the future, building their

decision-making confidence while increasing

loyalty and cross-sell potential.

AI is the next growth opportunity for continual

guidance. In addition to increasing financial

fluency, robo-advisors are learning customers’

needs and creating plans for wealth management

and experimental money. Keeping consumers

engaged, however, remains a challenge: As

conversational AI begins to take hold, chatbots

will advance the move to frictionless customer

experiences as they help consumers conduct

their financial affairs via platforms such as

Facebook Messenger and WhatsApp.

5. CREATE A DIGITAL-FIRST CULTURE

The change management required to support

digital initiatives is often more challenging for

financial institutions than implementing the

technologies. FIs remain segregated by channels,

products and geography. Many add digital tools

as an afterthought rather than folding them into

existing operations. The result is a jumble of

processes and functional lines of business that

seem decidedly out of step.

Ironically, while many FIs brim with efforts to

serve customers, much of it is uncoordinated.

Every department that competes for wallet

share likes to think it “owns” the customer. Few

organizations offer incentives for the functional

collaboration that’s needed for a digital-first

culture.

Digital success means dismantling barriers and

developing a culture of innovation in a one-bank

concept. It also means finding the right balance

between human touch and smart digitization.

For more information and detailed next steps on

each of our recommendations, read our white

paper, “How Financial Institutions Can Capitalize

on the Emotions of Money.” ii

ABOUT COGNIZANT

Cognizant (Nasdaq-100: CTSH) is one of the world’s leading professional services companies, transforming clients’ business, operating and technology models for the digital era. Our unique industry-based, consultative approach helps clients envision, build and run more innovative and efficient businesses. Headquartered in the U.S., Cognizant is ranked 195 on the Fortune 500 and is consistently listed among the most admired companies in the world. Learn how Cognizant helps clients lead with digital at www.cognizant.com or follow us @Cognizant.

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TL Codex 3711

EMOTIONAL CONNECTIONS WITH MONEY

Fast and slow money hold different meanings for individuals depending on where the money comes

from, as well as its form and intended use. Each has its own associated behaviors and purpose.

Footnotes

i ”The Future of Money” included an ethnographic study of 32 families in the U.S. and Europe, and a

survey of 3,000 people in the U.S. and the UK. We also conducted in-depth interviews with financial

advisors, academic researchers, fintech entrepreneurs and leaders of financial services institutions.

ii https://www.cognizant.com/whitepapers/how-financial-institutions-can-capitalize-on-the-emotions-

of-money-codex2691.pdf

Slow Money Fast Money

SUSTENANCEChecking accounts, cash and credit cards used for everyday expenses

ANXIETY

AUTO-PAYInsurance, rent and other bill payments deducted regularly

AMBIVALENCE, HOSTILITY

TANGIBLEReal estate, art, collectibles

SECURITY

PRODUCTIVEStocks and bonds

RESPONSIBLE

MONEY IN THE VAULTEmergency funds

PEACE OF MIND

EXPERIMENTALStock market, angel investing

EXCITEMENT

PURPOSEFULEarmarked for a positive goal (retirement, education, travel)

DISTANT, COMPLEX

BORROWEDLoans, credit card and student loan debt

GUILT

FAST MONEY is engaged with on a regular basis. Transactional in nature, its various types include bill payments and bank accounts.

SLOW MONEY consists of pensions and investments that consumers assign to a distant future purpose. Its primary value is to provide peace of mind.