Fintech and Retirement Savings

Financial technology, or fintech, refers to using technology to improve the financial services industry. In the retirement plan industry, what is learned via fintech is being leveraged to improve participant experiences and financial wellness initiatives. From Mint, which, in 2006, before being purchased by Intuit, introduced website- and app-based budgeting, to more recent entrants, the popularity and influence of fintech providers continues to grow.

Fintech has broad acceptance among younger people. As digital natives, younger generations are more open to digital-first ways of managing their finances. Results from the 2021 PLANSPONSOR Participant Survey indicate that 87% of respondents ages 23 through 29 reported using some sort of fintech, and that percentage also holds for the 30 through 39 age demographic. The number drops to 75% for the 40 through 49 age group and to 58% for 50- through 59-year-olds.

“The PLANSPONSOR survey also suggests that the use of fintech has a correlation to participants’ engagement with their [defined contribution (DC)] plans,” says Brian O’Keefe, director of research and surveys for PLANADVISER and PLANSPONSOR and the survey’s co-author. “Findings indicate participants under 50 were twice as likely to have taken action with regard to their retirement savings in the past year.”

They were also much more likely to take negative actions such as decreasing deferrals or stopping contributions. And, though the survey sample covers only 1,197 individuals, ages 23 through 59, O’Keefe says it seems to support the idea that those who embrace fintech are more active savers. The success of fintech products, particularly among younger Millennial or Gen Z investors, offers several lessons the retirement plan industry can use to boost engagement.