22 Sep 2020

The role fintech plays in engaging employees with their financial wellbeing

Throughout the past six months, many of us have been getting used to less face to face interaction and embracing an increasingly digital world. The fact is our ‘new normal’ means that many of us will continue to lead a more physically remote but digitally enabled existence.

Ben Hollingdale from Cushon will be facilitating a discussion group at REBA’s Employee Wellbeing Congress on how to deal with changing employee attitudes to money and what you can do to build employee financial resilience. Join him and industry colleagues at 14:40 tomorrow.

Technology has kept us close to those who matter and enabled us to keep our day to day lives on track, including our finances.

But how does this translate to improving employee wellbeing and engagement in the workplace?

Addressing the root cause of mental health issues

More than two-thirds (69%) of employees say that financial worries have a negative impact on their mental health, according to our Coronavirus (COVID-19) crisis and financial resilience research carried out during lockdown. Clearly this impact has a knock-on effect on how they then conduct themselves at work and their productivity.

Employers have already acknowledged that it’s vital to protect their employees’ mental health. The popularity of employee benefits that support employees’ mental health have surged since the beginning of lockdown. But what would be even better is for employers to help address and alleviate the root causes, and this is where fintech benefits can really support employees with their finances and the subsequent impact on their mental health.

Many of us are already familiar with online banking. Very few of us sort our finances out in person at the bank anymore, and the closing of branches (34% between 2015 and August 2019, according to a 2019 study by Which?) is testament to the fact that a lot more people are using technology to manage their finances.

A recent survey by Yobota of more than 2,000 adults found that 64% of UK adults have relied on technology to manage their finances since the beginning of the pandemic – an increase of 22% before lockdown.

Providing a fintech solution in the workplace that complements consumer attitudes and behaviours will help engage employees by making it easier for them to manage their money, thereby reducing their financial worries. And the reason why employees would choose to save into a fintech solution via the workplace versus a retail fintech solution is:

they can save and invest straight from their pay, meaning it’s saved before they can spend it
they’re likely to trust a fintech that has been through a vigorous compliance process by their employer (remember, you aren’t responsible for their money and what they do with it, but you can ensure the fintech provider is reputable and FCA accredited).

Fintech for all ages = engagement

If employers want a more engaged workforce, they need to be providing financial benefits for all employees. Our Realigning the workplace savings offering to meet the needs of millennials research highlighted that pensions just aren’t a priority for some people. Auto enrolment has worked because it has effectively harnessed young people’s apathy. But that’s not going to help drive cultural change to improve employee wellbeing and engagement.

Instead of concentrating on age, employers need to be providing accessible savings options in line with ‘life stages’.

At the REBA Employee Wellbeing Congress, we ran a poll that found 43% of attendees said engagement with pensions amongst their younger employees is low, but they’re looking for ways to improve this.

So how can they do this? By offering an easy way to build up accessible savings in addition to pensions. This can come in many forms, but an increasingly popular way to manage this is via pension redirect. Employees can save into their pension and redirect some of their contribution into an accessible savings account direct from pay. The right technology means people can easily change their contributions according to personal circumstance and keep an eye on their personal finances.

Fintech enables a seamless experience for the employee and the employer, integrating with existing benefits platforms, and making it easy for employers to administer and employees to manage their shorter term and long term savings all in one place. This gives them greater control and the ability to build financial resilience. Our latest research found that 92% of employers said they would consider setting up a workplace savings scheme in addition to a pension where employees can contribute direct from their pay.

This approach speaks to the varied needs of all employees. Even higher earners, where the tapered annual allowance or lifetime allowance means excess money into pensions can create a large tax charge, can benefit from fintech automatically offsetting the extra contributions into a tax-free ISA.

Financial resilience not debt management

Life is far more complex than traditional financial benefits packages can account for. People are staying at home longer and having families later. Even when they move out of home, many get stuck with their finances because of a lack of education on how to navigate to financial independence. Which leaves many 30+ year olds in debt simply trying to survive and get by day to day.

Putting in place a fintech solution to enable employees to build savings rather than firefight with debt management is a positive approach an employer can take to engage employees with their financial wellbeing. This is especially true when it is able to help employees make the most out of their money. With interest rates having been so low for so long, saving in cash often seems futile. But there are fintech solutions out there that can help guide people to get more from their money without the need for advice, which is often costly for either the employer or the employee. This includes dispelling the complexity and myths around investing and making it accessible to everyone.

Technology can help employees feel more confident when it comes to their finances, with automatic monitoring and alerts, so that they can make changes where relevant without having to be an expert or get advice which they may not feel they can afford.

The Yobota research also found that more than a fifth (21%) of people have signed up to new financial products during lockdown without having to speak to a single person. And 42% said they plan to continue using tech to manage their finances.

Fintech opens up opportunities that were previously deemed inaccessible for some.

Key takeaways

Fintech is something many of your employees are already familiar with. Using technology that aligns with consumer attitudes and behaviour will improve engagement with their financial wellbeing, particularly if you make it easy and offer the solution via payroll.
Traditional financial benefits tend to focus on a few select stages of life. Fintech increases the number of employees that benefit from employer support with their finances.
Lack of financial education makes it very difficult for people to navigate their way to financial resilience. Fintech helps guide people through the savings journey and takes the complexity out of things like investing, enabling employees to make the most of their money and improve their overall wellbeing.

This article is provided by Cushon.