Today morning, I was watching a YouTube video on the transformation that the banking industry needs to make, whether it is through AI, data analytics or simply understanding the customer more.

There are 3 themes that were talked about, which financial institutions who are facing the customer, have to improve to stay relevant.

• Simplicity
• Speed
• Empathy

In personal finance, each of these themes have a distinct importance. While the banks and financial institutions will have to automate these to reach millions of customers and retain them, these parameters for customer engagement are equally applicable in our own dealing of personal finance.

Simplicity

As a Financial Coach, I come across situations where complexity has led to suboptimal performance or simply pain. Here are few examples:

• The convenience of credit cards or the lure of rewards points have spiraled in debt in our lives.
• People running after complex investments and strategies do not understand how much it is costing them.
• The financial industry has made the art of money management too complex and daunting.

Whereas the need of the hour is simplicity in personal finance. Being able to objectively look at our finances and taking the right decisions, which are aligned to our own values and not based on judgements of others, is the simplicity we should strive for.

The simplicity of seeking out financial strategies and products which will help us reach our life goals is much more effective than chasing a financial product for its promised high returns and glitzy marketing.

So how do we achieve simplicity in our personal finances?

• Always have extra cash at the end of the month after all expenses
• Have a good amount of emergency fund
• Invest a small amount regularly in no-fancy no-load index funds
• Spend on things that you value the most, not what is on sale or what others are buying
• Save money for each of your goals

So kiss your personal finance worries goodbye by Keeping It Simple, Stupid!

Speed

Speed does not mean we have to make speedy decisions in our personal finances. That would be pretty risky to do.

In fact, the opposite is usually true. Financial decisions should be taken slowly, with much thought and consideration.

However the other extreme which is called analysis paralysis should also be avoided in decision making.

We can incorporate speed in other ways in our personal finance journey.

• Use automation to build good financial habits of saving and investing
• Keep your emergency fund in a liquid, easily accessible savings account
• Fix the debt holes in your finances quickly, the more you delay the costlier they are
• Use banks and institutions which help move money faster and with low cost

There are several automations happening in the world of finance and banking.

Keeping up-to-date with those is also a form of speed at the individual level.

Align your financial life around these innovative and faster products.

Empathy

This is more than the official or regulatory “Know Your Customer”. Customer behavior and the data for that, is the key to success for most organizations facing B2C.

Customer preferences and understanding of her behavior is the topic of research in modern day marketing.

How can we as a customer ourselves bring in this empathy in our personal finance decisions?

We should stop looking at money as a status symbol or something to compare with others.

Money is a tool to achieve our own personalized goals and does not leave any scope of comparison.

When we understand ourselves better and what we want from life, money is a form of empathy towards ourselves.

• List down your life goals and allocate money towards those.
• Understand what purchases are going to make you happy.
• Make investments that will be meaningful and profitable in the long run, not a short term gain.
• Use money to be generous to the world by giving more.
• Forgive your money mistakes and move on to learn more and grow.

Empathy towards ourselves and our loved ones can make us use our money in a better way.

It removes all comparisons with others and help us focus on our own goals and priorities.

Conclusion

Simplicity, Speed and Empathy are the keywords in the financial world today.

As AI, cloud and blockchain technologies transform the world of personal finance, we have to adopt the 3 aspects ourselves when we look at our personal finance decisions.