Fintech Can Help Caregivers if Barriers to Adoption are Addressed

Financial technology apps, or fintech, are poised to help financial family caregivers, the unpaid managers of someone else’s finances. A growing number of financial technology resources offer solutions for caregivers to improve financial access, make it easier to conduct transactions, save money, and ease some of the strain involved in managing another’s finances. The availability of these products is driven largely by nonbank entities, often startups, although traditional financial firms may also offer fintech solutions. Meanwhile, opportunity remains for widespread adoption.

A recent AARP study sheds light on barriers that stand in the way of adopting these potentially helpful technologies. These barriers include one, consumers need to be aware of these technologies, and two, they need to feel that their privacy is protected when using them. Regarding the latter, fintech is not without risks as regulation and consumer protections have not kept pace with the rapid development of new products and services. Increased adoption, therefore, requires work on multiple fronts.

A large and growing addressable market for fintech

Fintech developers likely see an untapped market in the 48 million caregivers assisting family members or friends in the United States. And more caregivers are taking on financial caregiving responsibilities. In 2020, 58 percent of US caregivers managed the finances of their care recipients, up from 54 percent in 2015 according to the AARP and National Alliance for Caregiving survey, Caregiving in the US. Caregivers have shown some interest in using tech solutions to assist in caregiving generally, an interest that could spill over into the financial aspects of their responsibilities. Just over half of caregivers (53%) have used at least one technology or software solution to assist in some area of caregiving. And among that group with at least some experience using tech for caregiving, 35% are using technology to track finances for their care recipient.

New fintech solutions for caregivers hit the market

Recently fintech companies have begun designing apps specifically for financial caregiving tasks, offering innovative solutions for caregivers. One example is caregiver reimbursement platforms, which link caregivers to tax credits, state-level tax breaks, and health insurance benefits meant to provide caregiver compensation. Other platforms offer solutions for more than one unpaid caregiver to respond to a care recipient’s needs by facilitating care coordination, managing and tracking shared expenses, and aligning communications and tasks among multiple caregivers serving one recipient across geography and households.

Gauging financial caregiver’s awareness of fintech

Most financial caregivers (90%) have used/currently use at least one of the types of fintech apps they were asked about. The financial caregivers who are adopters of fintech generally use it for online shopping (66 percent), making electronic payments (45 percent), and filing or paying taxes (39%) — activities that could also be used to assist a care recipient, according to the AARP study.

However, while most financial caregivers have explored fintech apps for personal use, many are unaware of the fintech tools that could make managing their care recipient’s finances easier; half of those surveyed in the AARP study, for example, didn’t know about fintech tools to manage debt. Financial caregivers were also unaware of tools for managing health care expenses (48 percent) and wealth (45 percent). Half of financial caregivers said they were unaware of fintech apps that can be used to co-manage someone’s finances, and only 5% currently use this type of app.

For broader adoption of fintech to occur, building awareness among financial caregivers is a need. But awareness is not the only necessary piece to move the needle.

Consumer concerns must be addressed

Still, other barriers demand attention—among them, concerns about data privacy and security. Discerning a legitimate fintech platform over a scam is a concern for 83 percent of financial caregivers. Hacking, malware, misuse of personal information, and lack of adequate security are all prime security concerns for financial caregivers.

These barriers will continue to impede fintech adoption among caregivers if not adequately addressed in a way that breeds consumer confidence. The promise of fintech is the potential to save time and money while expanding access to financial services. For caregivers tasked with financial care, fintech platforms may address some financial care pain points. Even so, consumers want assurance that the ease of a transaction, for example, will be safe and secure, not rife with security pitfalls.

Resources to assist financial caregivers

Financial caregivers have a challenging but critical job managing a care recipient’s finances. AARP offers numerous guides to help consumers navigate financial caregiving concerns, such as the Financial Workbook for Family Caregivers. The Consumer Financial Protection Bureau offers a guide to Managing Someone Else’s Money, which includes information about selecting financial caregivers and legally authorizing them to act.

Caregivers involved in financial tasks in support of their care recipients can benefit from planning ahead to manage a family member or friend’s finances. Being proactive enhances caregivers’ ability to meet future challenges head-on. There are a number of resources that can assist with financial caregiving tasks, including fintech apps. Fintech companies should consider intentional inclusion of and outreach to family caregivers and the organizations who support them in an effort to build awareness of fintech resources.