Financial wellness has gone digital — Are your benefits keeping up?

The past decade has seen dramatic changes in the banking marketplace as consumers look for digital tools to help them easily access and manage their funds.  As a result of this shift, as well as a greater focus on the evolving needs of the worker amid an inflection point in the labor market, employers are increasingly interested in helping employees with financial wellness. A financially stable worker is often more productive and providing financial wellness programs can also help employers attract and retain good talent.

The rise of mobile finance
The digitalization of financial services is moving rapidly. According to the FDIC, mobile banking as the primary way of accessing bank accounts has increased steadily from 9.5% in 2015 to 15.6% in 2017, then doubled to 34% in 2019. Consumers have become used to transacting via mobile phone apps for shopping, transportation and food, and have come to expect the same experience from financial institutions. Some — especially millennials and Gen Z — often don't have a bank account at all. These unbanked or underbanked individuals are comfortable using modern tools that enable payments outside of the traditional banking system. 

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And consumers are very interested in financial tools that help them save money, budget and pay off debts. Many people are more conscious of their credit rating and want to stay on top of credit problems. Both traditional and digital banks are weaving this functionality into their solutions. The next step is to integrate these tools with workers' pay, making it easier for them to manage their paychecks wisely.

More employees want a path to financial wellness
According to ADP Research Institute's "People at Work 2022: A Global Workforce View" study, 67% of workers are experiencing stress at least once a week. As a result of stress, 60% of Gen Z and millennials say their work is suffering. Another study by the ADP Research Institute shows 89% of employers and 85% of employees agree financial wellness is important to overall well-being. There is a greater need to help employees achieve financial stability or, in other words, build enough savings to cover emergencies and life changes. Financial wellness is the path that leads to financial stability. Financial well-being programs can provide education and tools to assist employees in budgeting, managing debt and taxes, and saving for retirement or college.

Additionally, according to the research, 79% of employees say they want to work for an employer who cares about their financial well-being. While many employees say they want help with their personal finances, they often wait until they experience a crisis (e.g., income loss, unexpected expenses) before they seek guidance. 

Read more: BofA executive shares the financial benefits employees want in 2023 

Employers can make a difference here. The digitalization of financial products makes integrating financial wellness solutions into benefits and payroll functions easier than ever. Additionally, 84% of employers say offering financial wellness tools and solutions would help attract top talent 

What's in it for an employer? Retention, employee engagement, productivity and the ability to attract talent. In fact, 98% of employers say employee financial wellness impacts their organization most often through productivity, engagement and turnover, but also on the organization's bottom line. 

Where employers can help
What if you could personalize financial wellness guidance for your employees? Your payroll and HCM data already contain information that could trigger suggestions based on an employee's goals and life circumstances. For instance, after a new baby arrives, an employee could receive information about increasing savings to cover both present expenses and future goals. A worker just turning 40 might be offered personal retirement guidance. For employees who don't have traditional bank accounts, an employer could offer reloadable debit cards that also allow them to create savings "envelopes" for their financial goals. Budgeting tools enable workers to set aside a few dollars each paycheck for emergencies. An integrated bill payment solution can also help employees pay their bills on time before the money gets spent elsewhere. For those times when a day can make a difference, early access to earned wages can help employees pay bills before a penalty is incurred. 

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These kinds of financial wellness tools could make all the difference for your employees. But to work, the process must be simple and user-friendly, offering personalized and real-time recommendations. By offering such support, you can help build your employees' financial stability, increase employee satisfaction, and improve employee retention.