If you ask your average middle-age, middle-class, middle-income person what their top three fears are, 99 per cent will tell you: money, health and safety. 2020 put these fears on steroids.
But as we see possibility of vaccines hove into view, and the prospect of (health) life returning to normal, the primary concern will revert to money. (There is not much you can really do about safety.)
Commentators will tell you that middle-class standards of living have fallen dramatically over the previous two decades all over the world. Professional salaries have not kept pace with the cost of aspirant, middle-class products, and services. For example, health insurance and university education costs have trebled since the turn of the millennium, salaries certainly have not.
This is true everywhere if you are already a member of the middle-class. But it also misses a critical point. The world’s middle-class is expanding, and by 2025, more of the middle-class will live within Asia than outside of it.
People sometimes forget that a financially healthy middle-class is the engine of prosperity. It provides the skilled labour, the capital, the consumer demand and the tax pool for any country. A country’s prosperity relies on a prosperous middle-class.
Yet today, middle class consumers are more than ever bombarded by companies tempting them to deplete their wealth for short term pleasures and to take on more debt, to the detriment of long-term financial health.
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This is where “financial wellness” steps in and it’s why we started the company Hugo in Singapore.
Fintech doesn’t have to be only about expanding consumerism and extending more credit. It can instead be about helping people become financially more healthy and wealthier in the long-term.
In a world where we are all increasingly micro-targeted by tech getting us to spend and borrow more, I was compelled to create fintech with a much different purpose.
At Hugo, we call it Wealthcare where we use technology to help people spend less money and grow their long-term wealth, all without feeling like they are sacrificing anything.
In fact, we’ve found that the vast majority people can cut their spending by five per cent without any noticeable change to lifestyle or happiness just through better oversight of their finances and smarter financial management usually only afforded by the rich.
Our tech helps you manage expenditure, set and track budgets and create habit-forming investment journeys, effortlessly. Personal savings always require some discipline and perseverance on the part of the saver, but technology today can make middle-class saving easier, automatic. And dare I say… fun?
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We’re not alone. Companies such as Stashaway and Syfe in Singapore, Acorns and Chime in the US, or Moneybox and Emma in the UK, are all examples of upstart companies aligning fintech business models with the long-term financial health of their users. We welcome more companies to join with this similar mission.
This is because we believe Wealthcare cannot only help repair the damage to savings caused by COVID-19, but also introduce Asia’s rising middle-class to healthy financial habits that are either free or at least substantially cheaper than what has been traditionally charged by the finance industry.
It is not just consumers waking up. Companies are getting on board as well. They realise they owe a duty-of-care for their employees’ mental wellness, where money fears play an undeniable role. They realise that financial wellness programmes can lead to happier, more focused and productive staff.
Greater dynamism and new business models do threaten to leave some banks and financial services groups behind, hence many will launch savings-related pro-wellness brands (in name only). But as with Anheuser-Busch’s efforts to slither into the micro-brewery market, it threatens to go badly wrong for them.
The challenge is that much of banks’ business has been built on lending and high fees, hence some of their most profitable units are in direct conflict with a truly pro-consumer business model. If you ask a typical bank customer “who does this bank serve?”, very few will say “middle-class savers”.
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This matters more than ever because middle-class savers are increasingly discerning and demanding. Just as you expect that your hospital is focused on your long-term health rather than selling you painkillers for short-term pleasure, consumers want financial services companies to have their long-term financial health at heart. People want “better, faster, cheaper … and more trustworthy.” Tempting you with quick loans and charging high bank fees has become deeply unappealing.
Asia has the opportunity to lead the world when it comes to financially healthy consumers. The ASEAN economy may only be a quarter of the Eurozone, but its growth is incomparably higher, and savings rates are three times higher. This means the ASEAN savings industry alone will outstrip the Eurozone within five years.
Mighty China, Japan, India and South Korea already have combined savings double that of the US. Given Asia’s middle-class will soon become the world’s new economic powerhouse, fintech has a social responsibility to care for them well.
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