Financial wellness has officially entered the chat. While the concept—which refers to the ongoing process of effectively managing your finances, with an awareness that an individual’s financial situation has an impact on their mental and physical well-being—has generated buzz for some time, fintech founders are now embracing it wholeheartedly. A slate of new and soon-to-launch apps have financial wellness at their core, offering features that leverage the best of both current tech and wellness-based strategies to give more people more control over their finances. As a result, these apps are poised to expand access to financial wellness at a time when pandemic-fueled uncertainty has made that all the more necessary.
“I see new fintech as handling the third point of the wellness trifecta: First, you have physical health, and that’s been in motion for a while with fitness apps; then, you have mental health, which has been having its app moment, too; and now, financial health is emerging in the tech space,” says Well+Good Trends Advisor Dani Pascarella, CFP, founder of the financial wellness platform OneEleven, which raised a new round of funding this fall. (It’ll be used to improve user experience on the platform via behavior-science research and to partner with more companies looking to offer its services to their employees in 2022.)
“In the wake of the pandemic, fintech has come to realize that most Americans are at risk of substantial financial challenges or cannot withstand a financial emergency." Rochelle Gorey, CEO and co-founder of SpringFour
This fintech-meets-health surge follows more talk about financial wellness, as the need for it has become so apparent. “In the wake of the pandemic, fintech has come to realize that most Americans are at risk of substantial financial challenges or cannot withstand a financial emergency,” says Rochelle Gorey, CEO and co-founder of digital financial-wellness firm SpringFour. It was the racial and socioeconomic disparities highlighted and worsened by the pandemic, in particular, that “both illuminated and accelerated the demand for financial support among gig workers, small-business owners, minorities, and others who were previously underserved by big banks, creating a race to innovate among fintechs like ours,” says Abhi Chaudhary, head of direct consumer banking at Green Dot, which launched its online banking alternative, GO2Bank, in January, with features like early access to paychecks and a secured credit card (that requires no credit check to open).
Other examples of new-gen fintech solve for one or more of the user’s specific financial needs: Finasana (launched in August) gamifies financial education into fun video-based quizzes; the Homeownership app from Landis (launched in July) coaches a user through each step of securing a mortgage; and Upwise from MetLife (launched in September) uses a tool called “Money Mood” to asses the user’s relationship with and understanding of money in order to create a unique financial plan for them. We’re also seeing launches that reduce stress for the user by streamlining the many moving pieces of a big financial picture: The Firstly app allows a user to sync the accounts and savings goals of various family members in one place, and the UK-based Curve app (coming to the U.S. in early 2022) links multiple debit and credit accounts with a single cashback card and lets a user switch any expense or purchase from one account to another up to a day after the fact.
The common denominator with this new class of fintech? A renewed focus on the people behind the bank accounts—notably, including those historically left out of the financial wellness conversation. Two platforms that are particularly geared toward making this space that has previously catered to people with economic privilege more inclusive are Perch Credit (launched in January), an app that allows folks without access to traditional credit lines to build credit by reporting recurring subscriptions and rent payments, and Tend (launched in August), an online banking collective designed to uplift the underbanked Latinx population by removing the red tape surrounding basic offerings like credit cards and providing a forum for community learning.
“We’re taking a very human angle on helping people improve their relationship with money by allowing them to connect and share real stories in an online space we’re calling The Green,” says Sofia Ramirez, Chief Experience Officer at Tend. “That’s also how we’re going to understand what people need and figure out if going forward, we should prioritize something like, say, easier access to cryptocurrency or fee-free international transfers.”
As more apps take this intentional approach to troubleshooting both longstanding money pain points and rising levels of financial stress, we expect them to soar in popularity, given folks are increasingly comfortable using them. According to a report released this fall by fintech company Plaid, 88 percent of Americans currently use finance apps, up 52 percent from just over half in 2020. And projections for the global fintech market track upward, too: It’s forecasted to become a $190 billion industry by 2026, growing about 14 percent annually from 2021.
Looking forward, it’s likely that fintechs aiming to expand their wellness offerings will begin to engage in direct partnerships with wellness experts and firms, too, says Christopher Courtney, PhD, vice president of science at debt-management company Happy Money. Case in point: Earlier this year, he and his team worked with a crew of psychologists to develop and launch a six-week online course aimed at financial-stress reduction called Peace.
“If your meditation app suddenly asked you to link your bank account, that might be off-putting; and at the same time, if your bank app asked you to meditate, that could feel odd,” Dr. Courtney says, “but as multidisciplinary approaches bring together the best of what’s possible, we can expect both financial- and wellness-tech companies to start realizing each other’s potential.”
THE EXPERTS TAKE
“People are realizing in a bigger way than ever before that your financial state impacts every single part of your hierarchy of needs. It’s 100-percent a component of wellness...Financial wellness is the result of healthy money habits. So, in order to achieve that state of mental wellness, you're basically in habit-building mode until those habits become automatic. And to build habits, you need to have frequent touchpoints, check-ins, accountability, and so on—which is why a mobile app just makes sense.”
Photo Credit: Stocksy/ Julia Volk