How technology is tackling debt and financial anxiety
Anxiety can cause financial problems. Financial problems can cause anxiety. Technology can help solve both.
September 17, 2019
Few would dispute that just thinking about money can cause some stress at best, or even severe anxiety at worst. The majority (85%) of adults in the U.S. feel at least some financial anxiety. A recent Tally study even found that 50% of Americans experience the same levels of anxiety around their credit cards as people awaiting medical test results.
Dealing with anxiety or symptoms of anxiety can lead to:
Overspending: It’s harder to control urges.
Inaction: You avoid things that are triggering, so you become paralyzed with indecision.
Risk avoidance: You interpret ambiguous situations negatively.
Doubt: You second-guess your decisions.
This is where technology can help. There are several strategies that companies are employing to attempt to reduce our financial anxiety.
Making the basics easy and accessible
Over the course of the past decade, it’s become easier to access our financial data, manage our money and pay friends or businesses. Before 2010, few consumers had access to their credit scores. And the access they did have came with strings attached — a “free” trial that started charging you if you didn’t cancel. Companies like Credit Karma, Credit Sesame and now even the credit bureaus themselves have changed that.
With services like Paypal and Venmo, sending money to friends and family members is a snap. Apple Pay and Google Pay have made it possible to pay at the point of sale without pulling a credit card out of your wallet.
And now, the Apple Card hopes to bring more transparency to spending and the impact of interest charges, perhaps reducing the anxiety felt when you end up paying double for that pair of jeans you bought on credit and forgot to make a credit card payment for.
Financial automation may be the next big wave in fintech. A lot of apps are pushing the boundaries of what that could look like. Simple Bank’s Safe-to-Spend feature takes into account all of your expenses. When you make a purchase, it tells you how much of that balance is left.
Acorns and other investment apps have made entry-level investing approachable. Acorns’ Round-Ups feature takes the spare change from your everyday spending and automatically adds it to your investments.
In the debt space, Tally aims to relieve financial anxiety by helping you tackle your credit card debt and make payments a cinch through automation. To drive the point home, Tally’s home screen is an illustration of the user — you — with your feet up on a desk and a warm cup of coffee.
Relying on approachable characters
Technology is also hypothesizing that we need less real human interaction. Or perhaps, companies are convinced they can replace the comforting feeling of talking to another human with bots and characters.
Lemonade’s Maya walks you through the insurance policy shopping experience in an interactive chat session. She’s also the “person” who emails you your policy at the end, making you feel as if you have your own personal insurance assistant at your beck and call.
In another creative approach, Dave uses a cartoon bear — named “Dave” — to make the idea of what’s essentially short-term lending feel less anxiety-inducing. Throughout the app and website, you’ll find Dave in lots of adorable scenarios. Seriously, he’s cute. Can he help you feel less stressed about taking out a small loan to get to from paycheck to paycheck?
The Joy app from Happy Money walks you through a chat-friendly money personality quiz. At the end, you get an assessment of your personality: I’m the Oasis. You also get a money coach: Mine is a robot named “Atom.”
Creating comforting environments
Though not a financial app, Headspace is tackling stress and anxiety through meditation much more broadly. When you’re in the Headspace app or a meditation, you’re in the Headspace world, with colorful characters built with mostly rounded shapes and a soft, inviting color palette.
Acorns — yes, I’m mentioning them again — does a great job of creating an inviting environment based on growth, greenery and the mighty oak tree. Acorns’ primary color is green, which elicits feelings of health, wellness, tranquility and rebirth; all things I want to think about when faced with the intimidating prospect of investment strategy.
Robo-investing app Wealthfront recognized the need for more human branding and changed their website a couple of years ago to reflect that. The new illustration style is more human and relatable, or perhaps even aspirational.
What’s the impact of technology on financial anxiety?
Truth is, we don’t yet know the full impact. Here’s what we do know:
More people are accessing their financial data using technology. Credit Karma has surpassed 85 million members, and now credit scores are available for free through many other services, like your credit card.
Chatbot adoption is up, especially among millennial and Gen Z consumers. Bank of America reports that 7 million clients have used its digital banking chatbot, Erica.
New financial technology apps and old financial services companies alike are launching new initiatives all the time. And funding is readily available, especially mega-rounds of $100 million or more.
It’s not all positive, though. Technology can feel creepy due to all of the information you may be asked to fork over. And time and time again, technology has let us down with wide-reaching data breaches.
We once may have had all of our financial lives with one bank (savings, mortgage, credit). But now, our financial identity is spread across many companies and sometimes even shared with third-party technology working in the background. All of that could lead to more anxiety. While we of course should be vigilant about where and how our information is shared, technology companies and financial institutions must take better care with our data.
So, how can we determine whether technology is actually reducing financial anxiety?
First of all, the numbers aren’t enough. Just paying down debt or qualifying for the Apple Card doesn’t tell us anything. We need to push feedback to companies so they know how their technology is impacting our stress — for better or worse. We need to challenge them to find creative ways to measure the impact of tech on our overall well-being.