Tech companies have taught consumers to expect a sleek, mobile and personalized user experience, as well as attentive customer service from the companies they interact with. Consumers have gotten so used to this, they want the same from their financial institutions. But financial institutions are among the most heavily regulated businesses in the U.S., so responding quickly to consumer trends can be challenging. 

Regional banks and credit unions have an especially hard time keeping up with new fintech startups that promise a better user experience at a lower price because providing one can often require a large investment in new technology. The good news is, there are fintech solutions out there that don’t require financial institutions to reinvent the wheel and risk customers’ personal data and regulatory arbitrage in the process. 

By partnering with a Health Savings Account provider like Lively, which has built its technology in-house to provide account holders and employers with a streamlined experience, financial institutions can offer their customers a modern, personalized user experience and responsive, top-rated customer service, all on a platform that’s secure and regulatorily sound.

What is fintech?

Fintech is the colloquial term for Financial Technology. The term originated in the 1990’s to refer to backend technology used by banks, but the current use (referring to technology that facilitates financial activity) began in 2008 with Wealthfront, an automated investment services platform. Now, when you hear the term “fintech” it’s probably referring to new technology aimed at improving and/or automating financial services, processes, operations and other finance needs for both commercial and personal use. 

Fintech uses specialized (and often proprietary) software to create platforms that are used exclusively on computers and/or smartphones. They include payment apps, robo advisors, accounting service apps, investment apps, crypto apps, etc.

How using fintech can help financial institutions

In an increasingly digital world, it’s imperative that financial institutions employ fintech solutions for their customers if they want to stay competitive. Customers don’t want to have to come into a branch to conduct their business. They don’t want to sign up for an entire suite of financial services or products when they only really need one part of it or be held up with a clunky paper application form. Fintech platforms enable online banking and other account management activities on-the-go while also making it possible for financial institutions to unbundle services and products so that consumers can personalize their interactions with the company. 

In addition to empowering their customers to build and manage their suite of financial services from wherever they are, fintech can reduce overhead costs and improve marketing efforts. Fintech automates many customer interactions and tasks so the financial institutions can provide faster service while also reducing the number of people they need to employ in order to fulfill their customers’ needs. In addition, employing fintech allows companies to collect useful data on their customers, which then allows them to send better, more targeted marketing (both in and outside the app) for products and services these customers are more likely to find useful. 

Using fintech solutions like AI-powered platforms and those that employ machine learning to use payment history data to spot fraudulent activity can help financial institutions cut down on misuse and said fraudulent activity. It can also result in better compliance and reduce asset leakage. 

Why HSAs make the perfect fintech solution for financial institutions

When financial institutions work with the right partner, Health Savings Accounts (HSAs), can be a fintech solution that benefits employers, employees, and the financial institutions that want to win and keep their business. They can also be an important source of business growth. At the end of 2023 Devenir reported that inside and branch sales for HSAs grew 60% from 2022.

Here’s why HSAs are the perfect fintech product for financial institutions to add to their portfolio:

• HSAs are extremely popular. In fact, 53% of employers now offer a High Deductible Health Plan (HDHP), the health insurance plan type that is compatible with offering and participating in an HSA. At the end of 2023, there were 37 million HSAs open in the U.S. holding over $123 billion in core deposits.  If you don’t offer an HSA, 55% of your commercial clients are likely sending deposits, interchange and fee revenue somewhere else to manage their HSA.

• Both commercial and consumer banking customers would prefer to have a singular banking relationship. That means, if you offer an HSA to current banking clients, and it’s a superior experience because you’ve partnered with a best-in-class solution like Lively, they are likely to move their HSA accounts to you. HSA customers expect mobile or computer-accessed online service, as opposed to in-branch service. This allows financial institutions the ability to offer a new product demonstrating market differentiation and innovation without putting additional strain on in-branch staff, or the astronomical investment of time and money to build it yourself

• HSA customers that are not current banking customers present a new audience for targeted marketing for other financial products. In fact, 79% of surveyed banking customers said they would move banks if they found one that would better fit their needs. Use the HSA to generate new commercial and retail customers, while simultaneously retaining the relationships you already have by preventing your customers from leaving for better HSA product platforms.

• By partnering with an HSA administrator like Lively, financial institutions are given a fintech platform that can be co-branded to personalize the customer experience. That means co-branded assets such as your customer interface and debit cards which keep your brand front and center.

• Lively’s solutions allow financial institutions to retain all core deposits on their books, earn all of the interchange revenue, and any fixed fees associated with the accounts. We believe that HSAs should be an asset for you, not a loss leader.

• Lively removes all of the pain associated with these highly-regulated accounts. Internal overhead spent on compliance, tax reporting, support, marketing, and maintenance create unnecessary risk and eat into profitability.  Lively does all the heavy lifting so you can reap the HSAs rewards without the headache.

What financial institutions should be aware of when implementing fintech

The U.S. Department of Treasury warns about new risks to consumer protection and market integrity, including data privacy and regulatory compliance issues, when engaging with fintech. It can be risky and costly for financial institutions to develop and employ their own, proprietary platforms. Maintaining privacy and security standards as well as improving existing features and developing new ones to keep up with fintech startups can require an entire team dedicated to such platform maintenance and innovation.

Fintech start-ups are more nimble than legacy financial institutions which can leave said financial institutions open to disruption if they try to do everything in-house. That’s why financial institutions should partner with trusted, innovative partners to stay agile and meet their customers’ evolving needs. 

Why Lively

Lively’s platform is expressly designed for ease of use, it empowers its users to completely manage their accounts on-the-go and our award-winning customer service ensures employers and employees continue to get the most they can out of their accounts. Here’s how Lively’s platform and service benefit financial partners:

1. Lively’s technology enables better enrollment, contribution capture, retention, and deposit growth. This makes the HSA more successful which increases employer satisfaction and revenue streams for the financial institution.

2. Lively’s platform is built on modern technology and is accessible on desktop and mobile devices that provides HSA account holders and employers with easy access to their accounts.

3. Lively’s platform is built on proprietary technology that makes it easy for Lively to fit into current systems at employers and partner financial institutions. It also enables Lively to offer a co-branded solution to financial institutions and improve product delivery. 

4. Lively offers best-in-class, responsive, knowledgeable customer service and we hire our team in-house - see our reviews to see why our customers love us.

5. Lively helps you drive sales and serve your customers better by providing services such as account holder onboarding, ongoing employee education and communication, staff training at financial institutions, marketing support, customer service, sales enablement and distribution assistance, a dedicated partner success team, and more. 

6. Lively offers a whole suite of benefits including: Flexible Spending Accounts (FSAs), Health Reimbursement Arrangements (HRAs), and Lifestyle Spending Accounts (LSAs) to ensure you have the ability to offer every benefit product solution your commercial relationships are seeking.

7. Lively offers low, transparent pricing so employers and employees alike keep more of their money invested, and you earn additional revenue.

8. Lively takes on the regulatory and security risk on behalf of the financial institution.

Get started today

Lively is the perfect alternative to the expensive capital and time investment that’s required for a financial institution to develop its own fintech solution, not to mention the added layer of risk associated with developing proprietary fintech. If you’re ready to modernize the products and services your financial institution offers by including an industry-leading HSA, reach out today.