A New Era of Purpose in Financial Services
A new era of purpose in financial services. A look behind the curtain at how financial service brands are differentiating through purpose.
We are in the midst of a financial revolution. Disguised under the chaos of 2020, rebel forces emerged to disrupt the financial industry’s deeply rooted standards and practices. Some attacks were abrupt like COVID-19 springboarding digital innovation changing the way we bank and Reddit users outsmarting Wall Street challenging the way we invest. Other attacks were executed more discreetly, like minority groups gaining market buying power by evolving the traditional financial services consumer. These changes mark the turn of a new chapter in the financial industry centered on innovation, diversity, and championing consumers. The problem is, the majority of financial institutional practices haven’t changed, even though their consumers have started to.
This may be because financial institutions don’t see a need to change. Historically, the majority of wealth in American has been managed by white households and that still holds true today. According to the Federal Reserve, “white households owned 90.7% of household wealth in the United States”. Since companies usually design services and products for their core consumer, it’s only natural that most companies out there cater to white households where men make the majority of decisions.
But the historically white male grip on America’s wealth is loosening as diverse consumers break into the market via opportunities like earning higher wages, opening bank accounts, buying property, starting businesses, and participating in the stock market.
“By 2030, American women are expected to control much of the $30 trillion in financial assets that baby boomers will possess—a potential wealth transfer of such magnitude that it approaches the annual GDP of the United States.” (McKinsey)
Minority groups have seen a huge increase in market buying power as well, from 2000 to 2018 “the African American market had a 114 percent increase, the Native Americans had a 185 percent increase, the Asian market had a 267 percent increase, making it the fastest-growing minority market in the country, and the Hispanic market had a 212 percent increase” (Multicultural Economy Report from the University of Georgia.)
The companies who are championing these new financial consumers have found themselves rocket-boosted above the competition. Their secret weapon: embodying a greater purpose that resonates with and encourages their customers. But what does it look like for financial services to successfully align with a greater purpose? Brand purpose is a term a lot of brands like to throw around like a badge signaling they stand for a cause but at best this comes off as inauthentic, and at worst, it can be harmful, even deadly for brands as cancel culture is on the prowl for anything disingenuous. Aligning a brand to a greater purpose can’t come from a place of trend-hopping or moment-seeking. It has to derive from within the brand, woven in its DNA. Most of the time a brand’s belief is hidden under the surface in founder stories, company culture, product design, and services. Once you discover a brand’s core belief, a greater purpose naturally can be harnessed. It’s one thing to say you stand for something, and another to put it into practice. Brands that are successfully living out a greater purpose by practicing empowerment, inclusivity, and accessibility.
As human rights and equality rose to the forefront of culture and current events, many financial services have made the standard-issue diversity and inclusion statement that says they aim to empower minority groups, including women. However, if you look at industry practices, you will see the majority of financial services are run by men and offer services designed for men.
According to a study done by the Harvard Business School, “among senior roles in venture capital and private equity, women held just 9% and 6% of the positions, respectively. Hedge funds bring that number to lower depths: women occupied only 11% of senior management roles.” (Investopedia). Even when you look outside senior roles, “Nearly 90% of traders are male, 86% of financial advisors are male, 90% of mutual fund managers are male, 95% of hedge fund managers are male, and 95% of venture capital partners are male.” (Sallie Krawcheck on NPR Money Planet).
The founder of Ellevest, Sallie Krawcheck, saw this as an opportunity to revolutionize financial opportunities for women by creating a company built around the purpose of closing the female wealth gap. On a mission to get more money in the hands of women, Ellevest champions this purpose through tangible actions of empowerment like hiring more women than the average financial company and offering products and services that are specifically designed to meet women’s financial needs.
For example, “the platform uses gender-specific salary curves and longevity data to power the forecasts for goal planning. When planning for retirement, you’ll see longer life spans for women, encouraging females to have enough money saved up for those lengthy post-paid-employment years” […] Her vision with Ellevest was to change the underlying investment product to suit the needs of women rather than changing women to make them invest more like men.” (Investopedia). Ellevest’s internal and external practices empower women to acquire, manage, and grow wealth, giving Ellevest a natural claim to their greater purpose.
While it may be easier for new companies to champion a greater purpose from scratch, it’s just as important for legacy brands to successfully evolve their brands to follow suit. Mastercard is a leading example of this as they dove in headfirst into the elevated brand promise “to “connect and power an inclusive digital economy that benefits everyone, everywhere by making transactions safe, simple, smart and accessible”. To make this promise come to life Mastercard put inclusivity at the heart of everything they do.
One tangible example of their efforts to be more inclusive includes the “True Name” initiative which allows trans and non-binary individuals to have their chosen name on their credit cards. While changing a name may seem like a small action, “nearly one third (32%) of individuals who have shown IDs with a name or gender that did not match their presentation reported negative experiences, including being harassed, denied services, and/or attacked, according to a report from the National Center for Transgender Equality.” Not only did this initiative set the tone for creating services that are more welcoming for the LBGTQ+ community, but it inspired CitiBank to be the first major bank to also adopt this product feature.
Along with making product and service innovations that are more inclusive, Mastercard has focused on internal efforts that promote inclusivity within the organization. They developed a Global Inclusion Council that “ helps guide our collective vision to ensure we use our actions to cultivate a culture of inclusion and belonging throughout Mastercard. [The] GIC brings a global perspective, with members representing all of our business regions – North America, Latin America/Caribbean, Europe, Asia/Pacific, and the Middle East and Africa.” (MasterCard). Additionally, Mastercard has aligned itself financially to champion other organizations that promote inclusivity like The Wounded Warrior Project, DiversityInc, Human Rights Campaign, Best Buddies, and African-American Museum, all of which sponsor a diverse range of communities.
Establishing a new north star to “connect and power an inclusive digital economy that benefits everyone”, Mastercard paved the way to center inclusive in their product innovation, financial support, and internal operations in a way that felt natural. These acts crafted genuine connections with their consumers and paved the way for an authentic claim to their purpose.
Fintech emerged as a huge driver in providing accessible digital resources and tools to people who are left unbanked or underbanked. “According to the findings from the FDIC’s 2019 survey of Household Use of Banking and Financial Services, which the commission published in October 2020, 66 million American adults–more than one in five–are unbanked or underbanked.” (Finextra). Most major banks have incorporated innovative fintech to improve banking functions but are motivated by consumer demand or industry trends. That means these features were designed with the traditional consumer in mind and therefore just skim the surface of making their banking services more accessible. True Link, a fintech company, is raising the bar on how to use design with accessibility in mind to create a world dedicated to improving the financial well-being of people with disabilities as well as vulnerable older adults through innovative products & services. On a mission “to provide greater independence and autonomy to people who are at financial risk when engaging with the world”. True Link lives out this greater purpose by designing products and services with elderly accessibility at the core. While this may seem like a niche market, “America’s aging population is vast and growing as ten to eleven thousand Boomers continue to retire every day. According to LIMRA, there are over 50 million retirees in the United States and, by 2035, there will be 72 million retirees.” (BVP)
Instead of thinking about how to adapt traditional banking to be more accessible to the elderly, they started designing products and services with them at the core. This mindset gave way to the True Link Card: A debit card that “can be configured to provide restricted access to funds [and] customized to protect cardholders”. Designing with accessibility for the consumer and their family in mind, “The True Link Card for Vulnerable Elders is based around the idea of giving an older person some autonomy with their money but with visibility for another person either to limit where and how that money is spent or simply to be able to monitor where it is going. It also makes it easier for elderly users to pass on their cards to caregivers to make a purchase on their behalf without needing to track whether that’s been used exactly as requested (as there is a limit). It was, in fact, Stinchcombe’s own experience with a grandparent losing money in a case of fraud and financial abuse that led him to start this company.” (TechCrunch).
Embracing a greater purpose can feel like a big ask, especially for brands that aren’t used to standing for something bigger than their product offerings. However, as seen with the success of the companies mentioned above, brand purpose isn’t something that you can whip up in a time of need. It’s a thoughtful and natural alignment within the company that can be amplified by practicing authentic examples of empowerment, inclusivity, and accessibility. The landscape of the financial industry is changing and as consumers gravitate towards brands that openly prioritize their diverse needs, you will have to evaluate if your brand is going to help pave the way or sit on the sidelines.
Regardless of if your brand is in the financial services industry or not, acts of empowerment, inclusivity, and accessibility can be harnessed to help your brand live out a greater purpose in an authentic way. Here are 5 actions to take now:
- Look inward and consider your brand’s greater purpose. Evaluate if your brand focuses on promises centered on features and functions or on a core belief that drives the brand’s actions. Ask yourself: Which resonates more with current and future customers?
- Listen to what your consumers are saying. Evaluate how your brand can help empower them through the products and services you offer. Ask yourself: what role does empowerment play in helping your brand live out a greater purpose?
- Review the makeup of your consumers. Evaluate how this group changed in the past few years. Ask yourself: Are the products and services designed to be inclusive of this whole group? What role does inclusivity play in helping your brand live out a greater purpose?
- Gage your level of accessibility. Evaluate how accessible your brand’s products and services are to people who may have trouble with traditional designs and practices. Ask yourself: What role does accountability play in helping your brand live out a greater purpose?
- Look to the future. Evaluating your current practices is important but it’s equally important to forecast how your brand will fare as culture, consumers, and the category evolve. Ask yourself: How is my brand helping pave the way in the industry?