Financial wellness, the state of being in control of one’s finances and enjoying a degree of financial freedom, is a key component of mental health. Anybody who has felt a mortgage payment looming or feared the thud of a credit card bill hitting the doormat knows this. With some 77% of British residents reporting being stressed about money, financial wellness is a serious issue.
Michael Kent, Chairman and Cofounder of Azimo, a global money transfer provider, shares his thoughts on how fintech can help improve financial and mental health.
If you’re reading this while battling burnout, lockdown fatigue or elevated anxiety, you are not alone. England is “in the grip of a mental health crisis”, according to the Royal College of Psychiatrists. The Financial Times reports a similar picture in other parts of the world.
Financial services cannot solve the social, political and economic issues that cause financial insecurity, but they can and must do more to help. Fintech companies are uniquely placed to do this because they are, for the most part, challengers to the status quo. Free from the burden of legacy technology and layered bureaucracy, they can help consumers in three ways.
The first and most obvious way to help is through fair pricing. By using technology to cut costs, fintech companies can put money back into the pockets of ordinary people. The average cost of a remittance, for instance, is 7% of the amount sent. Digital companies can charge less than half that and still make a profit.
It is therefore immoral and increasingly impractical for banks and offline providers to charge so much for this essential service. Some of the world’s poorest people rely on remittances from relatives who work hard for low pay in richer countries. Fair pricing makes a material difference to people’s mental and financial health both at home and abroad.
Speed and reliability
The second way to help is through speed and reliability. Good financial technology reduces waiting times and frustrating experiences. Imagine if you sent £500 to a relative and it didn’t arrive on time. How would you feel? Probably pretty anxious. You’d feel even worse if you didn’t know the cause of the delay.
This kind of anxiety has a serious effect on someone’s mental health, especially when the transfer is for essential services or medical care. If you’re worrying about that missing money, how effectively can you do your job? Look after your children? Revise for your exams? Fast, reliable experiences and clear communication reduce anxiety and leave customers free to focus on what matters to them.
Convenience and Control
The third way to help is by giving customers convenience and control. We all know what it’s like to sit on hold, waiting for a robot to tell us why we need to speak to a human to complete a task that should be as simple as pressing a button. These experiences are frustrating, time-consuming and anxiety-inducing. They take control away from the customer and put it in the hands of a faceless corporation.
When fintech companies build better tools, customers can manage their own financial affairs. They can set limits on their spending, manage their household budget and send critical payments to loved ones while sitting in the comfort and privacy of their own home.
Independence and autonomy are important components of good mental health. We should do everything we can to give customers control over their financial affairs.
To make a real difference, however, fintech companies must underpin all these actions with trust and empathy. Trust in financial services plummeted after the financial crisis of 2007-2008. It has risen in the years since, but it is easily lost.
If we really care about the financial wellness and mental health of customers, we need to strengthen and retain that trust by listening to them, building the tools they need and charging a fair price for an excellent service.