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Financial Wellness Tools
Overview
Financial worry is the leading stress inducer for more than three out of five Americans, with younger age groups being among the most impacted. 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-Zers, are increasingly looking to employers to offer access to financial wellness tools. Financial well-being has proven to enhance employee engagement and productivity at work, resulting in low staff turnover and allowing businesses to attract and retain 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 well-being 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.
Industry Updates
Market Sizing
The US Financial Wellness Tools market could reach USD 4.0 billion–5.0 billion by 2028
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Use cases
Financial wellness tools are implemented by employers across various industries to improve the financial health of their staff. These tools are designed to address various use cases, such as providing early access to earned wages, personalized financial coaching, student debt management support for different employee cohorts, debt consolidation, and payroll-deducted debt repayments.
We have identified such use cases below:
Market Mapping
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 March 2024, disruptors and watchlist companies identified across the employee benefits segments had attracted more than USD 3.4 billion in funding. Companies that provide B2C applications for budgeting, saving money, and lowering expenses had raised in excess of USD 780 million as of the same date. Most startups in this space are in their go-to-market or expansion 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.
Integrated solution providers
Financial education and coaching
Short-term advances
Emergency savings administration
Student loan management
Other debt management
B2C: Financial planning and budgeting
The Disruptors
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 go-to-market or expansion stages.
In terms of funding, Salary Finance, Wagesteam, and PayActiv 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, Cleo, and Truebill 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 176 million as of March 2024.
Funding History
Competitive Analysis
Incumbents
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 some notable acquisitions by companies such as Intuit, Morgan Stanley, and KeyBank.
Notable Investors
