The effects of COVID-19 have reminded us all that nothing is more important than our health and safety. But the disproportionate impacts across socioeconomic lines have laid bare yet again that financial well-being has a significant impact on physical and mental health.
Various news outlets have reported that COVID-19 brought a sharp rise in poverty levels and inequality. At Google, we’ve seen tangible evidence of consumer distress: searches for “financial help” tripled at the beginning of the pandemic and have remained high ever since. Adding insult to injury, the FBI reported a 69 percent increase in cyber crime impacting millions of Americans as nefarious actors exploited consumers in a moment of need. Taken together, many consumers — particularly those in the poorest and hardest hit communities — are hurting. And they’re less trusting than ever in governments and other large institutions traditionally viewed as benevolent sources of assistance.
Fortunately, in the face of these challenges, financial institutions are recognizing their opportunity to do more to help all consumers achieve financial wellness.
How financial services institutions can deliver help and earn trust
The current environment, shaped by the COVID-19 crisis, doesn’t mean that it’s no longer possible to earn consumer trust. Nor does it mean that legacy institutions are out of the game, although we would argue that many legacy institutions have a larger trust gap to overcome vs. the “clean-slate” disruptors quickly gaining traction.
What it does mean, as our research shows, is that consumers’ trust can and must be earned in new ways. Financial consumers are now less impressed by the history and heritage of large, long-standing brands boasting skyscrapers and branded stadiums. Financial services institutions that attract and retain consumers today are those providing real help to their customers, particularly through fast, frictionless and secure mobile experiences that improve and simplify their financial lives. These are the companies that consumers will trust, choose, and recommend to family and friends.
What used to be expressed by consumers as confusion and annoyance around the challenges of understanding (let alone optimizing) their finances is now voiced as a sense of feeling overwhelmed by too many choices, and frightened of making the wrong moves, missing out on upsides, and worst of all — losing everything that they’ve worked so hard to save.
One person from Google’s latest research described it best: “It boils down to fear of my financial situation. [I give] a company control over it, [I don’t] understand the industry completely, yet [I’m then also] expected to be ‘responsible’ and navigate it.” Consumers today want accurate, clear information that helps them make sound financial decisions and intuitive interfaces to help them act on those decisions, all while being safe from fraud.
At CapitalG, we’re inspired by companies that empower financial services institutions to deliver on those needs. Here’s how three of our portfolio companies are helping shape the future of financial services and supporting the economic recovery:
1. Helping customers better manage their finances
MX works with financial institutions to reimagine financial well-being, with AI-based solutions that help customers make better financial decisions by organizing, simplifying, and making personal financial recommendations. Its Pulse feature allows FSIs (financial service institutions) to offer customers personal and predictive financial advice to avoid overdraft fees and build trust.
2. Enabling better digital access to financial products
Companies like MANTL are equipping FSIs with tools that enable simple and safe account creation, regardless of geographic considerations. MANTL’s account opening product enables FSIs to be more digitally competitive with best in class know-your-customer (KYC) and onboarding tools that let users set up new accounts in minutes, from anywhere.
3. Support SMBs’ recovery from the pandemic
Many FSIs are getting new products to market faster with Unqork, whose no-code platform helps banks like Goldman Sachs and Manulife develop new applications in weeks instead of months while reducing development and maintenance costs by up to 40%. Since many small businesses have been hit hard by the pandemic, Unqork’s Loan Origination platform has helped many FSIs increase their lending capability by automating and speeding up the small business loan process.
For those of us working in the financial services space today, we have both the opportunity and the responsibility to deliver the help that people need right now. If we do this well, we’ll help more people save, invest, and protect their assets and achieve financial wellness. And since financial wellness contributes to overall health and safety, we might even help save lives.