For financial institutions, offering digital services that help consumers build their financial wellness is crucial for strengthening loyalty in an increasingly competitive market. And fintech partnerships provide a sure path for banks and credit unions to add capabilities that address today's most critical financial challenges.
Student debt is rising to the top of that list. In 2021, student debt in America hit $1.7 trillion and overtook all other forms of debt, except mortgages.
Fiserv continues to curate fintech partnerships that help financial institutions appeal to the next generation. And addressing the problem of student debt – a top concern of that younger demographic – is at the heart of a recent partnership between Fiserv and FutureFuel.io, a fintech that helps borrowers crush their student debt. The partnership will enable banks and credit unions to bring the FutureFuel.io student debt savings platform to millions of borrowers nationwide.
Adding urgency to the student debt problem is the approaching end to federal student debt payment relief at the end of January 2022. Laurel Taylor, founder and CEO of FutureFuel.io, said that 50 percent of federal student loanholders are not prepared to find the average monthly payment of $353 in their wallets when 43 million Americans are thrust back into repayment on February 1, 2022. The FutureFuel.io tools, though, can help those with debt save between $286 and $491 per month for cash flow.
Taylor and Sunil Sachdev, head of fintech for Fiserv, discussed what this partnership brings to financial institutions and their communities.
The following has been edited for length and clarity.
How is Fiserv helping financial institutions connect with fintechs such as FutureFuel.io so they can deliver innovative digital services?
Sunil Sachdev: The current landscape is quite different than just a few years ago. Financial institutions are facing more competitive pressures from neobanks and nontraditional competitors.
One of the things we're working on at Fiserv is opening our tech stack to support lighter, faster integration for fintechs into the back-end core banking systems.
Opening our tech stack enables financial institutions to work with multiple fintechs at a lower cost and bring innovation to market more quickly. Those two aspects really help financial institutions compete, given the pace of innovation today.
Access to FutureFuel.io will be quite simple for financial institutions because it's an extension of their existing digital banking platform. Consumers will access the experience from a link on their digital banking platform.
Opening our tech stack enables financial institutions to work with multiple fintechs at a lower cost and bring innovation to market more quickly.
– Sunil Sachdev, Head of Fintech, Fiserv
Why are debt-management services important for financial institutions to offer?
Laurel Taylor: It's so important for financial institutions, specifically, to address this need because they're a core part of consumer financial health and wellness. Consumers naturally look to their existing banking providers to help them build resilient financial futures.
In addition, the amount of data that Fiserv has in partnership with the financial institutions it serves can further personalize the user experience. Consumers have high expectations today. They want elegant and informed digital experiences, and they are willing to share their data with digital partners that provide real value and convenience, improving the customer experience and financial outcomes as a result.
This partnership brings outsized value to consumers by presenting their next best actions based on insights from their data. As we liberate $286 to $491 a month in cash flow, that also gives the financial institution an opportunity to help that consumer save for the future, invest and prepare for future goals such as homeownership.
This partnership is a significant example of making the connection between financial institutions and fintechs. What do you see on the horizon?
Sunil Sachdev: Partnering with fintechs such as FutureFuel.io that have an engaging user experience is a great way to expand the scope of financial services provided by banks and credit unions.
Working with fintechs brings two benefits. First, it allows financial institutions access to innovation to help them compete. Second, it allows them to learn from fintechs what they can do differently to increase their brand relevance and wallet share with consumers.
Laurel Taylor: We're starting on student debt, but the goal is to enable financial institutions to nurture users across multiple next best actions.
Building financial wellness is about helping the user throughout their entire journey and across multiple life events. If we're doing our job correctly, we are driving growth for the financial institution through deeper engagement across their full spectrum of services and solutions.
The amount of data that Fiserv has in partnership with the financial institutions it serves can further personalize the user experience.
– Laurel Taylor, Founder and CEO, FutureFuel.io
What are some of the debt-management capabilities that make the FutureFuel.io platform particularly effective?
Laurel Taylor: I founded FutureFuel.io because my mom and I have $200,000 of student debt between the two of us. I built what I wish we would have had access to as a family. It's a digital experience that applies best-in-class, out-of-category concepts to the problem of student debt.
The entire platform is based on personalization and data visualization. As users add their student debt to the platform, they can see tactics and strategies to better manage and pay down that debt.
When we onboard users, they share what their goals are. If they want to lower monthly payments, for example, we present personalized options based on income, state of residence, tax filings, and the status and composition of the loans.
For federal student loans, we've digitized the experience to help people discover the right income-driven repayment program or loan-forgiveness program. We map people to the federal programs they are uniquely qualified for and help them enroll in those programs. That's where we're creating that cash flow of $286 to $491 per month.
For consumers who want to be debt-free faster, we help them create extra payments from their own wallet by rounding up their spare change to the nearest dollar and harnessing their purchasing power through cashback options from merchants, similar to Honey. Our payments capabilities have grown in utilization by more than 800 percent since COVID-19 hit, as consumers who are able to make their payments have leaned into payments going to principal.
We believe in micro-actions and transactions that ultimately transform outcomes. We're creating not just financial literacy, but also actions that change behavior and outcomes just by making it easy to engage.