Simplifying the Complexity of Money: A Path to a Better Future

Financial stress is a prevalent issue for the majority of Americans. Studies consistently show that around 60-85% of people feel some level of financial stress, which takes a toll on their overall well-being. This presents an opportunity for financial professionals to simplify the complexity of money and offer hope and help to those in need.

The top 3 insights from this article:

• Emotions in the Buying Journey: Understand the emotional journey of customers as they navigate the buying journey for financial products. The Six C's framework (confusion, clarity, courage, commitment, confidence, and confirmation) highlights the range of emotions people experience.
• The Power of Simplicity: Emphasize simplicity and clarity in your communication and user experience. Complexity and cognitive load can be overwhelming for customers, hindering their decision-making process. Draw inspiration from examples like Apple's simplified design and Five Guys' focused menu to demonstrate the value of simplicity. 
• Education and Empowerment: Go beyond financial literacy and educate customers about the complexities of money and financial behaviors. Help customers understand why they make certain financial decisions and provide them with the knowledge and tools to make better choices. By empowering customers with financial education, you can contribute to their long-term financial well-being.

The Consumer Buying Journey: Introducing the Six C's Framework

Traditionally, we think of the consumer buying journey as a process that moves from awareness to purchase, adoption, and advocacy. However, James Robert Lay, founder and CEO of the Digital Growth Institute and host of the Banking on Digital Growth Podcast, proposes a new perspective rooted in people's emotions and feelings. He calls it the Six C's of the Consumer Buying Journey Framework.

This framework recognizes that individuals shopping for financial products go through a range of emotions. It typically start off in some sort of confusion. And then there's clarity. And that clarity turns into courage, which turns into commitment. And ultimately, that commitment to click "Apply" turns to confidence. But the confidence is only there whenever the con complete the full application for the loan or for the deposit account. And then finally, there's some sort of confirmation that is needed that the decision you made was a very good decision. And so let's roll this back. I want to repeat this again, because this is a new mental model for some.

Understanding the emotional journey of buyers is crucial for leaders, lenders, and marketers. A CUNA Mutual study found that 65% of people entering a buying journey for a loan product experience fear and anxiety. Recognizing and addressing these emotions presents a tremendous opportunity to simplify the complexity of money.

The Power of Simplicity: Lessons from Apple and Five Guys

To illustrate the importance of simplicity, let's consider the example of an Apple TV remote. The design of this remote is remarkable in its simplicity. It has removed unnecessary buttons and features, making it easier for users to navigate. In contrast, an XFINITY remote offers more flexibility and features but also more complexity.

When it comes to financial brands, people are seeking simplicity and clarity. Money is inherently complex, and financial brands have an opportunity to remove as much complexity as possible.

Think of it this way: Do you want to be like the Cheesecake Factory with its overwhelming menu options, or more like Five Guys with a simple, focused menu?

Simplifying the options makes decision-making easier and reduces stress.

Furthermore, banks and credit unions often exacerbate the problem by adding extraneous cognitive load through their communication and marketing.

Financial brands need to recognize that their customers are not just buying a product or service. They are seeking solutions to their problems and pain points. By reducing cognitive load and simplifying their communication, financial brands can make their customers' lives better and increase their confidence in applying for loans or deposit accounts.

The Importance of Education and Breaking Taboos

Money is often considered taboo, making it difficult for people to talk openly about their financial problems. Banks and credit unions need to remove this taboo and educate their customers about the inherent complexity of money.

It's not just about financial literacy but about understanding our ingrained financial behaviors and habits.

After conducting extensive research through digital secret shopping studies, we've distilled that there are three emotional patterns when it comes to how money makes people feel.

1. Confusion: They know money is important, but they don't know what to do to save it or earn more.
2. Frustration: They feel like they are barely keeping their head above water and cannot seem to "catch up."
3. Overwhelm: They feel like no matter what they do, they are just getting into more and more debt.

Stash.com found that 34% of people are too embarrassed to talk about money because of financial stress. So what are financial brands doing to reduce that stress? Or are they doing anything at all?

Reducing Cognitive Load for a Better User Experience

To help reduce this stress, financial brands need to focus on reducing cognitive load. This can be done by simplifying websites and streamlining content. A quarterly digital secret shopping study revealed how one financial brand had over 300 product pages. So after looking at the website analytics and the traffic each of these pages were receiving, they simplified its website by either eliminating unnecessary pages altogether or unifying them with other product pages. As a result, their conversion rates increased by a remarkable 1500%.

When addressing cognitive load, it's important to consider three types: intrinsic, extraneous, and germane.

Intrinsic cognitive load refers to the inherent difficulty of the subject matter, which is high in the case of money and finances.

Extraneous cognitive load, on the other hand, is the additional load we add through our communication and presentation. Financial brands should aim to minimize this extraneous load by simplifying their messaging and avoiding unnecessary complexity.

Lastly, germane cognitive load involves providing frameworks and schemas that help users quickly interpret and organize information. Financial brands should focus on creating intuitive and user-friendly website experiences that guide customers through the decision-making process effectively.

Numerous studies and analyses have shown that simplifying communication and reducing cognitive load have a significant positive impact on conversion rates. Financial brands that prioritize simplicity and clarity experience exponential growth in their online presence and customer acquisition.

Take Action Today:

• Evaluate and Simplify Digital Channels: Review your digital channels, including your website and online platforms, with a focus on simplifying the user experience. Identify areas where you can reduce cognitive load by streamlining content, eliminating unnecessary complexity, and providing intuitive navigation. Prioritize clarity and simplicity in your communication to enhance the user experience and increase conversion rates.
• Educate Customers: Develop educational resources and initiatives that go beyond financial literacy. Help customers understand the complexities of money, financial behaviors, and habits. Offer tools, workshops, or online resources that empower them to make better financial decisions. By providing valuable education, you can build trust and establish your brand as a reliable source of guidance and support.
• Foster Open Conversations: Break the taboo surrounding money by fostering open conversations about financial challenges. Encourage customers to discuss their financial concerns and provide a safe space for them to seek advice and support. Consider hosting webinars, workshops, or community events that address common financial stressors and provide practical solutions. By facilitating these conversations, you can create a supportive environment and strengthen your relationship with customers.

Remember, these action items are aimed at simplifying the complexity of money and providing valuable support to customers. By taking steps to reduce cognitive load, educate customers, and foster open conversations, you can position your bank or credit union as a trusted partner in their financial journey.

For more about financial transformation, reach out to James Robert Lay at the Digital Growth Institute.