The Personalization Revelation

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How bespoke banking is changing the way we save.

Marie Thomasson loves to save money—and she loves it even more when technology helps her do it. Always on the lookout for the newest savings trend, the Los Angeles-based financial consultant spent the
last few years experimenting with mobile apps that encourage better financial habits by deducting small amounts from her checking account at regular intervals and putting the money into savings.

Over two years, she saved nearly $4,000 on top of the money she was already putting away.

“You don’t even realize the money is gone,” says Thomasson, “and all of a sudden you’ve got a few thousand in the bank.”

Although the first of these apps was created by independent software developers, banks have gotten in on the act, offering such products for free as part of a new trend toward personalization in consumer banking. Whether it’s free apps, improved alerts or increased transparency around rates and fees, bespoke banking is reshaping how Americans save and spend.

A recent survey by PurePoint® Financial showed that 30 percent of Americans say they manage savings with apps on their phone. It’s a sizable chunk, but PurePoint Financial president Pierre P. Habis would like to see that number rise to 100 percent. He believes that sound financial habits are the bedrock of the economy and sees apps similar to what Thomasson uses as a new expression of the oldest savings tactic in the world: dedicating a fixed portion of every paycheck to your savings account.

“My dad taught me that,” Habis says. “Whether it’s a percentage or fixed dollar amount, regardless if you use an app or direct deposit, just commit to doing it consistently. That’s an old school habit that will never go away. It’s a terrific habit to have.”

PurePoint, which launched earlier this year, was created to make it easy for people to save, whether online, over the phone or in person at their financial centers.

“Our mission is for all Americans to be saving at a double digit savings rate,” he says. “We want everyone to prioritize their savings, and there are lots of great apps available to help them do that.”

Greg McBride, chief financial analyst at Bankrate, sees this kind of personalization as “an arms race.” Because there is relatively little to distinguish one bank from another, personalization features can be a difference maker.

“In a commodity business, you have to figure out a way to differentiate yourself,” he says. “Personalization is a big part of that differentiation. The consumer wants to do their financial business on their terms: when they want, how they want.”

And personalization is particularly important when it comes to attracting Millennials.

“Their expectation is convenience,” McBride says of Millennial consumers, “and that mandates more of a personalized approach, particularly in the context of mobile banking.”

McBride has found that Gen Xers and Baby Boomers use the same digital tools that are attracting Millennials, but at a lower rate. For older consumers, particularly those nearing retirement, “personal contact and custom advice” is more important than online gadgets.

Digital convenience has also made it easier for consumers to shop around from bank to bank in search of the best products with the lowest fees. Increased transparency around fees, Habis believes, has led to fees being reduced across the industry or, in the case of institutions like PurePoint, eliminated entirely.

“Any time technology advances,” he says, “price goes down—and consumers benefit.”

By WSJ. Custom Studios.

Disclosure:
WSJ. Custom Studios is a unit of The Wall Street Journal advertising department. The Wall Street Journal news organization was not involved in the creation of this content.

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