Emotional intelligence can play a part in relieving financial pressure on vulnerable customers, and improve how your business innovates.
What role does emotional intelligence play in financial services? Finance is a cold, unemotional topic that only cold, unemotional people enjoy … right? Our experience is different. We’ve enjoyed working with so many organisations over the years, across so many projects, and have come to the conclusion that financial services is one of the most emotive sectors you can work in.
Its reputation of coldness, enhanced largely by stereotypes, is sometimes warranted but also undeserving. Are there cold, unemotional people working in financial services? Of course, as there are in schools, hospitals and doggy day care. Yet, taken as a whole, we believe the financial services sector wouldn’t successfully exist if it didn’t have people at the core of its interests.
Assessing the needs of vulnerable customers as they cope with debt takes a specific mindset. Do financial services firms always play fair with vulnerable customers? No, they don’t, but there’s so much evidence of fintech organisations striving to improve things. The chief tools they use to do this aren’t always based around cutting-edge software and phone apps. What’s at play is emotional intelligence.
How empathy will drive fintech innovation
Bill Murphy Jr’s summation of emotional intelligence is a good one, so let’s use it here. He says the concept of pity is “sorrow prompted by others’ misfortunes, but with no suggestion of a shared emotional understanding”. We may pity the lives of others as they struggle with debt problems, and may put in place simple mechanisms to help such as extended deadlines, or a fairer rate of interest. We see their plight but do little to help them escape debt.
Sympathy is showing some understanding of someone’s debt problems, but how it’s demonstrated is different from empathy. While sympathy may help a customer feel as if they are being listened to, empathy takes it to a whole new level. Empathy takes effort. It’s the ability to put yourself in someone else’s shoes and understand what they’re going through. You may not have experienced crippling debt yourself, but you can position its impact at an emotional level and compare it with your own experience of life.
For some, this is natural. For others, it’s an alien concept. How are we best going to help people in debt navigate their way out of critical financial situations? The answer is by practising empathy, even if it’s not something that comes natural to us. It’s the difference between extending a deadline before the bailiffs are sent in, or fully understanding the customer’s predicament and finding new ways to assist. It goes hand in hand with compassion. And being a compassionate financial services organisation may reveal how a business operates, and what decisions it makes, and what products and services it delivers.
Immersed in the Covid-19 recession as we are, more people need a compassionate response to their situations than ever before. There is massive debt. There are talent shortages as well as lost jobs. Firms large and small are permanently closing or being cheaply acquired. There are opportunities aplenty for an abundance of empathy and compassion! These are opportunities to do something different – to find new ways of helping people, to innovate and technologically progress.
Leadership and the decisions we make
At the heart of an empathetic organisation is good leadership. Let’s end this post with a quote by author and speaker Simon Sinek: “There are two things I think that great leaders need to have: empathy and perspective.”
Simon goes on to expand on what he believes a leader’s job actually is, which is to not necessarily be in charge but to take care of those in our charge. (You can see his empathy presentation online.) The idea is that if you relate to what others are going through, it will affect the decisions we make and how we see the world. In financial services, it’s making decisions that profoundly affect people’s financial lives, which is such a fundamental ingredient in how we perceive success, happiness, health and well-being.
Financial institutions are in positions of great power, and as we know from Spider-Man: “With great power comes great responsibility.” And that responsibility is immense. Yet, empathy and compassion have the ability to not only enable us to feel what people are going through and put things in place to help, they enable us to explore new paths in the process of doing so. The decisions we make with empathy at their core will be entirely different from those without, and that can only be a good thing for financial services.