Beginning to solve the financial wellbeing crisis

Rana began with a sobering statistic – that today 63% of Americans could not withstand an emergency of $500, and the equivalent figure in the UK last year is £300. Indeed American workers are reporting unprecedented levels of mental stress specifically attributed to financial stress. These stats are sobering, but not entirely surprising. High inflation, rising debt from rising interest rates, and, frankly, the deliberate exit of some mainstream financial services providers at a time when they are most-needed, have put enormous financial, and mental, pressure on consumers across the US and UK.

But where traditional providers fail, it creates opportunities for fintechs to capture the attention of users, and put them on a different financial course that can be completely life-altering. The three entrepreneurs who joined us shared their perspectives on how to make a difference.

When Barney set out to build Cleo, his vision was to build a financial companion that would have a closer personal relationship to the user than any bank, with the primary goal of enabling financial wellbeing. He observed that pursuit of profit often meant traditional financial institutions pushing credit onto consumers to their financial detriment. Cleo, an ‘AI chatbot before it was cool’, learns users’ spending habits, gently nudges them towards better financial habits over time, and can recommend financial products that are most suitable for them. Pointedly humourous and sassy (the business has nine comedian conversational designers on staff), Cleo has had billions of conversations with over seven million young Americans about their financial health to date.

While Barney focused on economic misalignment, Emily from Wagestream called out the structural mismatch between common financial products and a segment that makes up a significant portion of workers in the UK - hourly-paid workers. Hourly-paid workers have traditionally been limited to financial products that conform to the needs of salaried workers, with hurtful consequences. Taking the simple example of credit cards, standard monthly repayments simply aren’t suitable for hourly-paid workers who tend to be paid every four weeks, not a fixed day each month, making it difficult or impossible to make the payment on time. Importantly, hourly worker salary pay varies greatly month to month, requiring greater flexibility of terms.

Today, the two million frontline workers who are users of Wagestream can access financial products that are purposefully designed for them, all built around pay. Emily shared the recent results of Wagestream’s savings scheme, where deposits are made on payday and users are opted in by default, removing the hurdle of needing the confidence to save and turning it into an act of inertia. As a result, Wagestream saw workplace savings participation skyrocket to 71%.