For most people, 2020 was the year that health became more of a priority than ever before. In 2021, some banks and fintechs are hoping to capitalize on this new mindset by rewarding customers for getting more physically active.
There is evidence of a correlation between physical and financial health, according to the 2019 U.S. Financial Health Pulse trends report from the Financial Health Network, a research organization formerly known as the Center for Financial Services Innovation.
The network has developed a FinHealth Score, a composite of eight metrics including savings and credit scores that gauges personal financial health on a scale of 1 to 100. Individuals whose health improved over the previous year had an average increase of 1.8 points in their FinHealth scores, according to the study. Those who reported a decrease in health, or had a major medical expense, saw their scores fall 3.3 points on average.
“Healthy people spend more money, stick around longer, buy more products and then claim or default less over the life of their engagement with you,” said Joel Lieginger, founder of the San Francisco-based wellness fintech Paceline.
Banks outside the United States already offer customers incentives to live more active lives.
Paceline and other U.S. players want to follow their lead.
“This year especially, we will see more fintech companies partnering across sectors to bring these types of products to life,” said Alaina Sparks, the U.S. fintech practice leader at Deloitte. “The focus on [environmental, social and corporate governance issues] and social purpose will also accelerate this trend.”
Adrienne White-Faines, market lead of health care at the Financial Health Network, agrees that the time is ripe to consider financial and physical health as linked.
“With the added visibility on health inequity arising from the COVID-19 pandemic, this is an essential time for a collaborative approach by health care and financial industry players to improve the financial health of vulnerable communities in tandem with improving population health,” she said in an email.
Paceline plans to launch a credit card where users earn points based on physical activity in the first half of the year.
But companies that want to encourage healthy behaviors — and profit from active, long-living, high-spending customers — must also accommodate customers with physical constraints.
“Any company offering this type of program should make it incumbent upon themselves to develop programs that are applicable for all sorts of consumers and a full range of abilities,” Sparks said. For example, companies can explore ways to emphasize the importance of mental health, perhaps by inviting customers to log meditation sessions.
Discovery, which provides insurance and banking services, is an example of one way forward. It operates on a shared-value model, with the idea that healthier customers who exercise regularly, eat well and get regular checkups file fewer insurance claims and make for a more profitable business. For those reasons, the company sweetens the rewards that encourage them to keep up their healthy lifestyles.
Discovery’s wellness program, Vitality, is offered by insurers around the world. But in South Africa specifically, customers of Discovery Bank — an all-digital bank that debuted in 2019 — receive a number of benefits for exhibiting healthy behaviors.
More specifically, the Vitality Active Rewards program encourages members to increase their activity levels by assigning weekly fitness and other goals in the Discovery app. Customers earn points for completing goals. For example, walking more than 10,000 steps a day, as measured by data from a wearable activity tracker, could earn 100 points; those who use a heart-rate monitor and achieve more than 80% of their maximum heart rate for more than 30 minutes get 300 points.
If customers meet their goals (which also include driving-related objectives, where telematics technology measures acceleration, braking and other driving behaviors), they qualify for rewards such as gym subsidies, flight discounts or even a free Apple Watch or iPhone 12.
Discovery Bank customers specifically will be assigned one of five “Vitality Money” statuses that denote how financially healthy they are (for instance, they don’t spend more than they earn) and will earn better rewards as they ascend the tiers, including higher interest rates and up to 75% cashback on designated healthy food items at select supermarkets.
“The status is agnostic of income,” said Akash Dowra, head of technical marketing and client insights at Discovery Bank. “You can be [the top] Diamond status at a low income as well as at a high-income level, and we manage the points on how you behave rather than what you earn.”
Customers with physical mobility issues can earn points in other ways, for instance getting annual checkups or visiting the dentist.
Paceline is currently a fitness rewards app that connects to a user’s Apple Watch, Fitbit or Garmin device and tracks whether they meet one simple goal: 150 minutes of moderate-intensity aerobic activity each week, the minimal amount recommended for adults between the ages 18 and 64 by the World Health Organization. If they consistently meet this goal, they can earn rewards such as gift cards to retailers that reflect their shopping habits, by linking their credit or debit cards to the app.
“If you’re walking your dog, going for a run or playing with your grandkids, any of that elevated heart-rate activity counts towards our definition of living an active lifestyle,” said Lieginger.
The next step is to debut a health-and-wellness credit card that will reward users based on their physical activity rather than their spending amounts. Later, Lieginger plans to add insurance where pricing is based on how physically active one is. Lieginger says that Paceline does not sell users’ data; instead, the data ensures that rewards are relevant to each customer.
Lieginger previously worked for the multinational insurance and finance corporation AIA Group in Asia, where one project taught him that healthy credit card customers spent three times more on their cards than unhealthy customers.
Like Discovery, he has a plan for customers with physical limitations.
“Anyone who is immobile to some degree or challenged in some way can still get some type of exercise that gets their heart rate moving," Lieginger said. “It’s constantly calibrated to your own level of effort.”
