Why banks should offer actionable debt guidance tools

In the world of finance, understanding debt and navigating the complex landscape of student loans, personal loans, credit cards, and mortgages is crucial. Many banks and financial institutions offer educational resources and general advice—what's often called "financial signposting." While these types of resources are beneficial for many, they might not go far enough to prompt actual, beneficial changes in behavior among your customers.

This is where actionable debt guidance tools come into play.

The Limitations of General Financial and Debt Education

Research by Michie, Stralen, and West in 2011* illustrates a significant issue with just offering general education: it's not sufficiently tied to specific actions that consumers can take.

Educational content often fails to bridge the gap between knowledge and action. Many customers understand what debt is and why it's essential to manage it, but they struggle with how to proceed. This can lead to procrastination—a common issue when faced with trying to manage debt which can often be daunting and confusing to your customers.

The power of implementation intentions

A psychological strategy known as 'implementation intentions’ is key to banks helping their customers make real changes. The concept involves not just setting a goal but also planning the specific, concrete actions required to achieve it- or giving your customers access to tools that facilitate them taking action.

By creating a clear connection between the outcome (debt reduction) and the steps required to achieve it (easy-to-use debt guidance tools), consumers are more likely to act. This approach helps overcome procrastination by transforming abstract goals into action.

Banks and financial institutions are in a unique position to leverage their influence to offer more than education and signposting. Payitoff partners with banks to provide tools that facilitate customers' implementation intentions.

The business case for actionable debt guidance tools

From a business perspective, partnering with Payitoff to provide your customers with actionable debt guidance tools can enhance customer loyalty and trust. Customers are likely to perceive their bank as a partner in their financial health journey, rather than just a service provider. This relationship can lead to increased customer retention and potentially attract new customers looking for practical financial management solutions. Payitoff solutions also provide banks with valuable consumer insights and further engagement opportunities.

While financial education and signposting are valuable to your customers, they need to be complemented by tools that promote action.

Banks and financial institutions that implement actionable debt guidance tools will not only help their customers manage their debt more effectively but will also stand out in a competitive market by showing a deep commitment to their customers' financial well-being.

If you are a bank or a financial institution that would like to bridge the crucial gap between knowledge and action to turn your customers’ financial goals into financial successes, then contact us, and we will show you how.

*Source: https://implementationscience.biomedcentral.com/articles/10.1186/1748-5908-6-42#Sec7