In November this column looked at compelling evidence as to why improving employee understanding of their personal finances can be a great way for employers to boost staff productivity and provides an opportunity for advisers to build new income streams. This month I look at a small UK based start up which is providing just such a service.
Nudge Global has been set up by Jeremy Beament and Tim Perkins, who previously worked at a well known flexible benefits consultancy. They intend to integrate financial wellness to reward and benefits in a way that learns from what people do and identifies what will be the services they are most likely to need next, in the way Amazon uses machine learning to target what people might want to buy next based on their buying and browsing habits.
For example if a user records the birth of a child the service will supply information on childcare vouchers, death in service information and enhanced maternity/paternity leave arrangements. Through doing so they want to help people set goals and achieve them.
In its current iteration the service provides no product transaction capability, although Nudge recognise that this might be a requirement for corporate advisers and benefit consultants if they are to provide white label arrangements. Nudge says its “Software as a Service” platform requires very little configuration by the client although I have not had the chance to validate this.
The current iteration is responsive – it changes the way information is rendered depending on the device used although it is not currently a native mobile app. It seems to respond very well on mobile devices and I think only the true geeks would recognise it is not a real app. In my view the current experience is fine for mobile purposes. The software is powered by their own proprietary engine, called Quantum. This drives notifications such as changes to legislation together with information and article to inform users. In turn users are asked to rate articles which then adds to the machine learning.
Unlike the most successful services of this type in the US, Nudge does not currently use third party data aggregation, that is, a process to access consumers other online accounts and import their detailed information to create their users budget rather users input their own spending. and compare it with detailed data from the Office of National Statistics to show how they compare to other people in similar demographics.
Nudge do not believe there is consumer appetite to use aggregation via an employer based system and in the interim have gamified their system to encourage users to enter this information themselves.
Our research internationally suggests otherwise and that in practice the vast majority of users will simply not maintain the data on a regular basis.
Employees are able to use the service to compare the cost of other financial products such as mortgages and ISAs to help them ensure they are getting competitive prices. The service does include its own risk profiling tool although it does not however in the current iteration address any inconsistencies identified in the results.
Although they are keen to develop partner arrangements working with advice firms, they also have a direct to employer model offering three levels of service. Bronze includes just personal finance information at a cost of £1 per employee per month, with a typical set up cost of £2,500. The silver option includes an annual refresh of the individual’s employee benefits for £1.50 per employee per month and a set up fee of £5,000. The £2 per employee gold option keeps benefits on an on-going basis up to date with a £7,500 set up fee. All figures are subject to VAT.
Overall this is a neat and cost effective solution for an important need, although I can’t help thinking it needs aggregation to achieve its full potential. The service has a lot to offer and also an ambitious development roadmap. This is just as well as I am aware of several competitor offerings rapidly approaching launch. I fully expect financial fitness services to become one of the most intense areas of competition in 2015. By the year end expect any benefits proposition without such content to struggle to remain competitive.
