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How the convergence of health, insurance and finance create growth for investment management

If you take a quick pulse from the average consumer on how they feel about money, you tend to get the same general responses: boring, stressful, confused and sometimes even inadequate. About 20% of the UK population belongs to two segments, the ‘spend it all’ cohort and the ‘spend without understanding’ cohort. Regardless of income, money is a really boring topic, and they would rather use their time and energy for other endeavours. A paltry 3% of Americans feel confident about their retirement plan, because figuring out how much you can spend and for how long is a really complicated thought process. Money becomes particularly stressful in the hardest life situations: millions of people can’t afford to see a doctor when they most need it and end up with unsustainable personal debt, which we know is the number one cause of personal bankruptcy. I believe that we in the financial services industry have a long way to go in helping people make sense of their money, make better financial decisions and prepare for their future.

Most of us won’t be able to live decorously in retirement, and the market opportunity to address this retirement savings gap is worth 70 trillion dollars The ‘niche’ market for debt rehabilitation is 123 billion dollars, in the United States alone. Addressing massive market gaps like this is not only a great business opportunity, but it’s also a social responsibility and an ethical posture that we need to hold ourselves accountable for.

We truly can do well by doing good. And the answers hinge on shifting our intent from knowing our customers to understanding our customers. This means appreciating at an emotional level customer needs, behaviours and motivations, and translating this insight into simple solutions built with scientific rigour. We need to design with empathy and build with technology.

As venture investors, we are seeing an unprecedented convergence of entrepreneurial, technological and scientific talent coupled with smart capital building customer-centric solutions at the intersection of finance, insurance, and healthcare. These solutions help people save, invest and manage their finances in a more holistic manner. They leverage broader data sets to nudge and coach customers towards improved behavioural journeys that improve their financial wellness.

One example is Happy Money, a growth-stage, venture-backed debt elimination platform.[*] Happy Money started their business with a really intriguing thesis: people with money problems develop PTSD-like behaviours, so understanding and improving their psychological wellbeing is essential to credit decision-making outcomes. Seven years on, Happy Money has not only scientifically proven their thesis, but also built a phenomenal business around it. Happy Money collects behavioural, attitudinal and transactional data from their customers, creating a rich data set that, when combined with machine learning and AI, enables significant credit scoring innovation. The proprietary algorithm has already outperformed the traditional FICO scoring and been successfully used to provide highly personalised solutions and behavioural recommendations.

The Happy Money team scientifically tracks a number of metrics that affect credit risk, including the Happiness Index – a composite measure of customer responses to things like gratitude, consciousness and emotional stability. These have been proven to be predictive of delinquency and charge-off above and beyond the credit model. From a customer-focused point of view, Happy Money provides a platform for consolidating and restructuring all their credit card debt. Through automated advice and coaching, customers can rehabilitate and eliminate their debt and even begin to save. From a social responsibility point of view, Happy Money has moved individuals along a behavioural continuum from being systematic borrowers to becoming a systematic savers. And that’s a really worthwhile journey!

Although important, financial wellness goes way beyond the traditional space of employer-sponsored benefits and education programmes. We see financial wellness as a growth opportunity space at the intersection of finance, insurance and healthcare providing customer-centric solutions to live healthier financial lives.

This is a space filled with emotional resonance, positive affiliation and strategic foresight for new and existing brands. From the United States to China and Europe, many global financial brands, such as MetLife, Ping An and Allianz, are vying for a voice in this holistic and newly defined financial wellness space.

Here is a chance for our industry to demonstrate that we can do well by doing good. We can bring original solutions to people’s grandest challenges in money matters: more inclusive and appropriate access to credit, savings and investment; supporting our children to become financially independent and resilient economic contributors; and helping our parents and ourselves age confidently and gracefully.

[*]Disclaimer we are investors in Happy Money, alongside Tencent, Mohamed el Ariani and others.

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