Financial worry is the leading stress inducer for more than 70% of Americans, with younger population segments being affected the most. This stress gets carried forward at work and has a significant impact on employee productivity causing businesses to lose billions each week. Workers, especially millennials and Gen-Zs, are looking at employers to offer access to financial wellness tools. Financial wellbeing strengthens employee engagement and productivity at work resulting in low staff turnover, and allowing businesses to attract top-tier talent.
Financial wellness tools include a collection of platforms and applications designed to improve the financial health of the end-user. Financial health refers to the state of an individual’s financial position, defined largely by one's net worth, level of savings, financial preparedness, and debt. These tools can either be provided as an employee benefit to improve the financial wellbeing of staff or are available as apps to be downloaded and used directly by the consumer.
Technological developments such as open banking APIs have allowed third-party developers to build applications that integrate with users’ bank accounts, allowing them to analyze transactions, provide contextual advice, and automate actions such as payment of bills and debt.
Nine out of 10 Americans have reported significant stress on their personal finances due to the Covid-19 pandemic.
UBS Financial wellness service saw employer demand for financial wellness grow 700% since March 2020.
BrightPlan has seen customer numbers and its customer pipeline triple since the start of the pandemic.
Enrich, LearnLux, FinFit, and FutureFuel.io provided free financial wellness resources to companies to assist employees in navigating financial difficulties during the Covid-19 pandemic.
Companies offering platforms for employers to provide financial wellness as an employee benefit account for the majority of companies in the industry. Offerings range from financial coaching, tools to manage personal finances, financial support (such as low-cost emergency funds or earned wage access), to mechanisms to help employees manage their debt, particularly student loans.
As of August 2021, disruptors and watchlist companies identified across the employee benefits segments had attracted more than USD 1.4 billion in funding. Companies that provide business-to-consumer (B2C) applications for budgeting, saving money, and lowering expenses had raised in excess of USD 490 million as of the same date. Most startups in this space are in their early or growth stages and have been established over the last decade.
Incumbents that offer benefit platforms are largely financial services companies who also use these platforms to market their own financial or investment products to employees.
Most disruptors provide financial wellness platforms that focus on offering personalized financial coaching and education platforms to employers, who in turn offer them to its staff. Even the companies with a focus on other segments such as financial support or debt management usually come bundled with tailored educational content or access to professional coaches. Most disruptors across the industry hub are in their early or growth stages, with more than 70% of companies having been founded after 2015.
In terms of funding, DailyPay, Salary Finance, and Albert are among the largest disruptors in the employee benefits/B2B space which provide platforms for employers to provide financial support to their staff in the form of early access to earned wages. The greatest number of startups, however, were in the business of providing platforms for financial coaching for employees.
Albert, Truebill, and Cleo are among the key players in the business-to-consumer (B2C) segment, which includes companies offering apps to consumers to formulate budgets, and manage their savings and spending. Albert is the highest funded disruptor in this space, having raised USD 173 million as of August 2021.
Key disruptors such as Salary Finance, Wagestream, and Cleo originate from the UK, but have a notable presence in the US market.
Based in the UK, Salary Finance partners with employers to provide a platform for staff to access a range of financial wellbeing products such as early access to earned wages, low-cost borrowing backed by the user’s salaries, resources for customized financial education, and tools for employees to build and automate savings.
The company acquired Neyber, another UK-based financial wellness platform provider backed by Goldman Sachs in March 2020 for an undisclosed amount, helping Salary Finance expand its market share by absorbing Neyber’s customer base. As of December 2020, the platform was used by 500 employers across the UK and the US, available to more than four million employees. These include more than a fifth of the companies in the FTSE-100 index. Salary Finance partnered with the US financial technology company Chime in July 2021 to launch Save—a new product to incentivize US employees to set up salary-linked savings accounts that came with a USD 50 bonus and a variable Annual Percentage Yield (APY) of 0.50%. Eligible employees also receive access to SpotMe, an overdraft feature for early access to direct deposit funds, and a “save while you spend” feature to build their savings.
In December 2020, the company raised GBP 20 million (approximately USD 27 million) in Series D funding, jointly led by Experian and existing investor, Legal and Guardian. With this funding, the company’s total funding raised reached USD 138.8 million. The company expects to use the funding to accelerate product development.
In March 2021, Salary Finance secured a USD 150 million investment from Community Investment Management (CIM). The investment will be in the form of debt funding that will be disbursed to Salary Finance over a period of three years. The company will utilize this investment to fund low-cost loans for its users.
Financial coaching and tools:
Debt management support:
Incumbents in this space mostly include financial services companies, who are developing their own platforms that provide employers with resources for financial education and other personalized solutions to improve the financial health of its staff. The incumbents also use these platforms to market their own core products such as debt and investment products to potential users. In addition, the incumbents also include companies that provide HR related tech such as payroll management, and employee wellness solutions who have developed solutions for employee financial wellness.
Most incumbents have entered this space using internally developed products, with the exception of Morgan Stanley, Intuit, and KeyBank, who acquired companies already operating in this space. UBS partners with student loan management platform provider FutureFuel.io to bolster its own offerings.
Prudential Financial is a financial services company that specializes in insurance, investment management, and retirement related products, as well as mutual funds. As of December 2020, the company operated in 20 countries, collectively employing approximately 51,000 employees as of November 2020.
Prudential started analyzing financial stress among its own employees in 2008 at the beginning of the global financial crisis. Prudential began offering financial coaching, workshops from certified Prudential advisors, subsidized child care, and contributions to retirement plans. In February 2018, the company introduced a digital financial wellness platform that enabled employees to customize the offerings available to them. Prudential now offers this financial wellness suite to its institutional clients and in 2019 bolstered its offering to include a newer platform called LINK, that includes additional features that allow users to set their individual goals with timelines, and receive personalized guidance using artificial intelligence (AI) or a financial professional from Prudential.
In July 2020, Prudential released a collection of tools for employers, specifically designed to increase the financial wellness of staff during the pandemic. The package includes online tools and educational content that addresses the key challenges faced during the Covid-19 pandemic and provides insight on how to safeguard against financial disruptions. Prudential further expanded its product portfolio in February 2021 with the inclusion of digital caregiving services in partnership with Wellthy. Through this partnership, users of Prudential’s financial wellness tools will be able to access Wellthy’s digital caregiving tools such as educational content, digital care plan creation, caregiving document storage, appointment tracking, etc. along with other administrative and logistical support for employee caregivers, at no additional cost.
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