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How to bring Pension Plans to the digital era?

Pension Plan journeys are ripe for disruption – here is how you can achieve it.

After a first wave of day-to-day banking, banks and insurers are now focusing on new layers of digital banking, especially investment. Pension plans were traditionally out of the radar, seen as a low digital product, but the recent economic context is bringing pressure to become fully digital. In addition, pension plans are long term commitments to the providers and are therefore key on the loyalty of clients.

For that reason, Fintech Solutions believes pension plans subscription journeys will be a key topic in 2024 and developed a proposed landing page for Pension Plan subscription. The goal is to provide a benchmark for product managers, showing them also the methodology behind the proposed CX.

Explore our prototype here to get a feel for the future. Keep reading to learn how Fintech Solutions approached the process.

Starting Point

A whopping 73.8% of Portuguese families choose to keep their savings in regular current accounts, a substantial deviation from the Euro area average of 45.2%, according to a BCE study. This situation is aggravated by a drop in the savings capacity of families due to the current economic context. According to ASF, the production of unit linked insurance dropped 51% in March 2023 considering the comparable period, from 957 million euro to 470 million.

The savings habit of the population alongside with one of the lowest financial literacy indexes of Europe, raise several challenges for the distribution of pension plans in Portugal (results from 2020 survey by the European Central Bank).

Based on these foundations, the objective was then to conduct a direct, assertive, and quick user research study, focusing on pension plans distributors, current subscribers and non-subscribers and fintech experts.

Main Learnings from Client and Non-client Interviews

With a clear focus on efficiency and avoiding repetitive insights, the team conducted a set of in-depth interviews with individuals from the pre-defined target segment - individuals from 25 to 35 years old, starting to plan their financial future. Even though the traditional segment for pension plans falls on the older segment, it was critical to anticipate the needs of new generations.

There were insightful takeaways from these client and non-client conversations:

  1. Clients crave clear, jargon-free communication about retirement options. They want to understand how these financial products work without feeling like they need a finance degree.

  2. Mobile is gaining the trust of clients. Clients, as expected, showed preference for digital journeys with a growing confidence on mobile formats.

  3. Autonomy with the options to get human and specialized support – clients want the option to connect with human advisors when they need personalized guidance or support.

  4. Continue where I left – clients showed that their decision process is not continuous and tend to compare options. Features such as save a simulation or download a final proposal are highly valued.

  5. Clients appreciate tools that help them visualize their financial future. They desire straight forward calculators and forms that provide clear and customizable scenarios of how their retirement plans will evolve over time.

After hearing the client side, it was important to understand what the leading Portuguese financial institutions were thinking and doing regarding it. Fintech Solutions engaged with them to understand their current agendas on this type of products resulting in:

  1. Simplification is the name of the game. From the diversity of products to the selecting tools ending at the subscription process, players struggle to simplify a complex journey

  2. Trust in the digital channels requires human touch. Mature players recognize that clients need to feel secure and confident when making financial decisions online, and seek to provide further customer support.

  3. Transparency as a differentiator – according to the interviews, clients see pension plans as black boxes, and shared that transparency convinces clients, especially showing where investments are made, how they will report performance and how the client is empowered to make decisions.

Throughout the process, the team explored how current tech solutions posed as benchmarks for new approaches to pension plan distribution. In the benchmark dimension, it is relevant to highlight MySavings, a goal-based savings APP that enables the subscription of investment products, Doutor Finanças, that departures from the financial literacy enabler to a savings product provider and Coverflex, a compensation tool that provides collaborators self-servicing tools for pension plans subscription.

Across these solutions the common factor is the focus on financial literacy and the simplification of a digital journey.

In addition to these significant contributions, other fintech players in the industry offer innovative solutions that can complement Pension Plans and enhance companies' offerings. Taking the example of Coinscrap which specializes in recurring savings, simplifying the establishment of a steady stream of savings towards their retirement goals. Furthermore, Inveert, with its data-driven insights, empowers clients to make informed investment decisions. Flanks might also be a game-changer by enabling aggregation of financial products beyond PSD2 and offering a centralized view of a client's financial position, simplifying asset allocation and streamlining retirement planning management.

After having understood the problem and the market, had spoken to individuals and leading financial institutions, it was time to craft a Pension Plan journey that is user friendly, accessible, and manageable for all. All financial leaders and innovators are invited to experience the prototype here, and to start thinking about how you can integrate these insights into your services.

Building on learnings and taking action

This process had emphasized that clarity is a must. Pension planning should be easy to understand. Clients want to see their financial future, comprehend tax benefits, and navigate the process without getting lost in jargon. What Fintech Solutions built is an initial attempt on a journey founded in these principles.

Reach out with any questions or discuss potential collaborations to drive positive change in the industry or fill the contact form here, and the team will get in touch with you.

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