Among the things you'll learn:
- Embedded Innovation & Revenue Growth: Learn how integrating embedded insurance protection can simultaneously reduce portfolio risk and create new revenue streams for businesses while serving middle-market consumers
- Strategic Framework for Partnerships between Fintechs and insurance providers that enables scalable risk management while expanding access to traditionally underserved segments
- Real-world implementation insights: Technical integration approaches, regulatory considerations, and metrics for measuring success in protecting both consumers and business interests
Transcription:
Jenn Burkmier (00:09):
Ready Jenn Burkmier, Partner Strategist at TruStage. If you're not familiar with what TruStage is, we are an investment insurance and technology company. This year marks our 90th year in the industry and we typically have traditional products, but my area specifically works on building insurance products meant for digital transactions
Akshay Krishnaiah (00:35):
Hi, Akshay Krishnaiah, Founder and CEO of Beem. Think of Beem as Amazon Prime for Money. We've been around since 2021 and 3 million customers.
Jenn Burkmier (00:47):
Yeah, fantastic. So this is a unique partnership between an old insurance company and a FinTech Super app. So we're going to review some of the case study information that we have put together based on our partnership over the last 12 months. We've been seeing some really cool things that are impacting consumers across the board. Get this going here. So it's all about embedded. So this conference has been a lot about embedded payments. I heard a session on embedded finance, why not embedded insurance? And you may be asking why insurance has anything to do with payment forum, which from our perspective, we're helping continue to make payments when a consumer has a peril that is protected like a job loss or disability. So we're helping facilitate payments back to our partners to ensure the consumer remains on track and the delinquencies don't happen. Now one of the bad things about insurance is not only has the regulations not changed since the fifties, but insurance, there's a misconception that it's only for the wealthy.
(02:00):
And the sad part is insurance occasionally is expensive, but the middle market America that really needs the insurance needs better access to insurance. So my area is focusing on that middle American segment and partnering with our customers to help bring in embedded frictionless insurance to consumers that need it the most. And when we do this, we're very focused on making sure it's as frictionless as possible so it's not distracting from the original transaction. So when we do this, we look for partners that we can help impact their customer financial security and our partners business model as well. Actually, do you want to talk a little bit about what Beem does and what your focus is?
Akshay Krishnaiah (02:48):
Sure. So I talked about Amazon Prime. It started with a simple premise that the biggest pain consumers were facing was faster shipping. So they started with that and then they built an ecosystem of daily utilities around it and delivered through a single trusted relationship. Similarly, a hundred million American families, they tend to do good with money, but the sequence in which money comes and goes out of their accounts is usually off because not everybody is in traditional income. So biggest pain point they faced was to solve for the cashflow. And so we created something called early access to verify deposits, any deposit, not just your paycheck that you can get early access to. We started with that and then we have built an ecosystem of daily utilities around it delivered through a trusted relationship, which is the Beem app available on iOS and Android. And the partnership with TruStage allows us to extend that ecosystem while continuing to deliver value to our customers.
Jenn Burkmier (03:53):
Yeah, so from TruStages' standpoint, when we built a payment guard is the product we partner with. When we did the research, we looked at the most common reasons that consumers go delinquent on their payments beyond the first payment default. Most common reasons are because of a job loss or a disability and for us, disability is illness or injury that prevents someone one from earning wages. So when we did further research to kind of support what we were looking at, we know that one in four consumers, 20 years or old 20 years old, will have some type of disability throughout their career that will prevent them from earning wages. So knowing that consumers live paycheck to paycheck and honestly I like to say paycheck, we wanted to make sure we had access for those consumers to continue to make those payments. I'm not sure if anybody in this room is familiar with short-term disability coverage, but generally speaking, when an employer does offer disability coverage to their employees, if the employee's lucky enough to have that type of employer, it really only provides 66% of the employees paycheck.
(05:13):
In addition, when you're out because of a disability, you're racking up medical bills, prescription costs, and day-to-day expenses that consumers just can't afford. So what typically happens is the consumer is facing a difficult choice during a time when they're already strapped. So it's very likely that they could go delinquent and have that downward spiral that could potentially cause an issue for future transactions. Another component to the research that we had was trying to figure out how long it takes someone to recover from an unemployment action. Even right before we came in here, I saw the Wall Street Journal talked about Disney had a reduction in force by 6% on their newscast. So job loss happens to anybody. And so with the economy the way it is, it takes an almost seven months for someone to recover from that type of activity. So we're trying to help prevent the downward spiral of those financial things that happen unexpectedly to the consumer that impacts the future financial security.
(06:29):
So when we thought about partnering with Beem, one of the things we did really well in my opinion, and I'd love your opinion too, is we collaborated extremely well and planned it methodically on how we could impact your consumers with the products that we knew we could put in place. So the Beems' team was phenomenal in looking at their user experience. They know their customers the best, so we let them build the creative and we just helped make sure we were disclosing the proper stuff that insurance requires. As you can all imagine all the disclosures. So when we did that, there was a lot of testing that happened to deploy the UX and the data flow. So from an insurance standpoint, we are very interested in making sure the consumer knows they have this coverage and when we have the data flow coming in that's needed, we can adjudicate the claim about 47% of the time same day. So that needed to be as efficient as possible given the subset of data that we were getting. And then as far as rollout Beems', team was phenomenal in making sure that the right education was in the right place for their users at the right time. What is the coverage that's being offered, why it's important, how to file a claim, what it means, what's happening next? And then iteration. I think we've been really good at partnering on the iteration because it's impactful for the consumer and for Beems' business model. Anything you'd add on the integration?
Akshay Krishnaiah (08:09):
Yeah, I mean we are the only provider probably on the planet today that serves anyone with any type of income. We're not an earned wage access, we're not a cash advance, we're not a payday loan. You could be an Uber driver. You can get visibility through our partnership with TruStage.
(08:28):
So it gives us that versatility that we have, it amplifies it further. And to really get here successfully, we had to take a very measured approach. So the way we did it was we have 3 million customers on our platform. We have them brokered down into 1300 micro segments and then we break them down into cams and then cohorts and then we experimented with each of these cohorts till we got it right. And that was fundamental to the success. So like Jen rightfully said, it was great partnership and we had to do it iteratively, but once you've gone through that process, then it works on its own.
Jenn Burkmier (09:12):
And that was the whole point is we wanted to build something that was frictionless and not requiring health questions or health screening or anything that traditional insurance usually puts in place. So the things that we're hearing, and this is kind of why we continue to do what we do, we hear that the product from the voice of customer that we get at the time of a claim, we hear that this is a lifesaver. It helped us pay our bills while we couldn't make our regular employment or our regular wages, excuse me, and it was here when I needed it the most and it was a safety net for us that I feel more secure taking out this transaction because I know it's got a backstop to it. So that is the customer aspect of the payment guard product that we partnered on. But what I'd love to do is have Akshay share a little bit about the results that he's seeing from a business standpoint.
Akshay Krishnaiah (10:09):
I mean we have grown from zero to 3 million customers over the last couple of years organically. And this partnership with TruStage has taken that further for us. We organically add 60 to a hundred thousand customers every month and clearly you can see from the numbers our churn numbers have gone down, our revenues have gone up and people are pleasantly surprised and they're happy to share that. And through word of mouth we've been continuing to grow and it's a testimony to the kind of safety nets that we had in place and which TruStage further helped us take it further for our customers, especially because a majority of the population is non-traditional income and they usually don't have these kinds of safety net and it allows us to bring it back to them.
Jenn Burkmier (11:04):
So today through this study, we just released this about two months ago, but through that timeframe we're protecting about 575 million in outstanding loan balances and from a payment structure we're giving a 3.75 backstop to against job loss and disability for his users. So it's been phenomenal to see something that you've helped build and partner uniquely have some really great impact on the consumer's financial status. So when we talk about potential partners and kind of customizing insurance to specific business models, the people that I talk to generally are asking specific questions on how it can work for what you do internally. Risk mitigation is one of the topics. So looking to reduce delinquency, build that portfolio resilience. When we did the research for the product, once again we were anticipating about a 20% reduction in delinquencies. So literally can see our customers 30, 60, 91 20, 180 delinquency if you're familiar with the delinquent loan accounts.
(12:21):
But when we apply a paid claim to those consumers, we're literally seeing 29%. So we're overachieving what we did on our projections, which is phenomenal. So it's just building that resilience against the uncertainty of job loss and disability that a lot of consumers or a lot of our partners want to look at different credit tiers and trying to help their communities through CRA efforts, those kinds of things. This is a great way to help build that resilience around those transactions that you may not be comfortable with. And then customer loyalty, my gosh, you were able to start seeing reduction in churn and there's always been studies done that shows the more you can help someone in it through a tough time, the more loyal they are to you to use you for a second and third and fourth transaction. So kind of getting back to that primary financial institution concept that I think we all eventually would love to get back to. And then finally market differentiation from the front side. He's offering the payment guard on a few of his subscription types, offering it in the UX on the front side, but also wrapping the portfolio so that if you securitize your loans it is also protected from an investment standpoint for your portfolio. So it's been fun, just fun. I can't say that enough on building something new that's impactful for both the consumer and our business partners.
(13:55):
We have copies of our case study available to you QR codes and there's some table drops here and then our contact information if you'd like to reach out to us. But Akshay, I want to give you a few minutes and talk about what's next because I know you have some cool stuff coming.
Akshay Krishnaiah (14:11):
Thank you. Yeah, very excited. Like I mentioned, we started our journey in 2021, we launched the app in 21 and we've been able to organically grow it to 3 million customers through the time. We have had to reinvent a lot of things as far as technology and the entire stack is concerned because we are doing early access to verify deposits, any deposit, it works without any income restrictions and it's unsecured and there is no interest. There's no credit check. So we had to reinvent and we had to manage risk not just on those deposits early access that we are providing, but also on the payment processing side. So we've done about 15 billion decisions across 5 million US customers, majority of them being Gen Z and all of the data and a hundred million in originations and 300 million in payment process at historically low charge off and risk rates.
(15:07):
We are taking all of that and we are rolling that into what we call a risk reasoning model. So think of ChatGPT, but for managing risk and more importantly, it's a reasoning model. The big challenge with using AI for these kinds of things is how did you arrive at that decision and was it arrived without biases? And so we've been able to do that and we are proud to get, we are internally testing it right now. We're proud to get it into the hands of everyone we can, the risk reasoning model and its successor what we call mixture of risk experts. Think of the world's best LLMs, fine tuned purely for financial risk that can help both your consumers customers while also helping you manage your portfolio risk.
Jenn Burkmier (15:59):
Fantastic. We have plenty of time if anyone has any questions, if you want to take a few questions.
Akshay Krishnaiah (16:05):
Sure.
Jenn Burkmier (16:05):
Does anybody have questions? Our case study was so embedded and frictionless. It went fast. Yeah, well I don't see any questions. I appreciate everybody. Oh, yep.
Audience Member Glenn Hall (16:25):
Hi everybody, I'm Glenn Hall, I'm with the Arizent parent company of American Banker. I'm just curious, beyond this example, this case study, where do you see opportunity for insurers in the FinTech space to be more engaged? Do you think there'll be others following your lead here or there are other opportunities you see? Just curious of where you see the market going for embedded insurance.
Jenn Burkmier (16:49):
Yeah, so if you think about how the transactions have really sped up into more of a digital approach rather than a face-to-face branch operations, someone actually physically talking to you. A lot of financial institutions have made a lot of income over the last 20, 30 years on the upsell cross-sell of insurance products. So when you take the loan officer out of the mix in cross-selling those products, the income levels go down for those financial institutions. So at TruStage we're thinking creatively on how we can embed the insurance to make it frictionless. And then another iteration we have in concept right now is offering the coverage as a part of a lender benefit and then having the consumer opt into it to keep the coverage. So we have to be very creative in being able to reach the consumer that needs the coverage the most without distracting. So good question. There are others in market, but a lot of times they have things that are difficult to get the consumer to say yes. So like health questions and things like that, that distract
Akshay Krishnaiah (18:07):
Exchange of value is becoming more risky and one sided. So because on one side the business is delivering value right upfront, but it's getting value back in installments as you can see with the proliferation of BNPL and other such things. And that's going to happen across all services. When that happens there is the risk goes up and whenever that is there, insurance products can fill in that gap to backstop that risk. So I think there will be more of it in more newer and innovative ways clearly.
Jenn Burkmier (18:39):
Absolutely. Good question. Anybody else? Fantastic. Well thank you so much. I appreciate you guys.