During the 2023 edition of the Finovate Fall conference in New York, the American startup Wysh introduced an innovative twist to its otherwise standard life insurance offering, targeting financial institutions seeking customer acquisition and retention... and their deposits.
Despite a similar solution soon to be available directly to consumers, developed with a partner, a key motivation for what seems like a strategic pivot for the startup is likely, as often in FinTech, the realization of the challenge in gaining consumer trust, crucial before selling a sensitive product. As a result, they're opting for a “B2B” distribution approach.
This strategy, while common, is more challenging in Wysh's market segment. Their idea is to make life's uncertainties a promotional advantage for checking and, notably, savings accounts. This is in a context where enhanced, often temporary, interest rates no longer offer competitive differentiation amidst fierce competition for citizens' savings.
Practically, a (micro-)insurance against death is automatically included, without any administrative formalities (like a medical exam), for each holder of an eligible account (at the bank's discretion). The coverage amount is proportional to the instant account balance, ranging from 1 to 10% (also contractually selected). In the event of the account owner's passing, the account is immediately credited with the predetermined fraction of the available balance.
The benefits for banks adopting this solution are significant. Beyond the appeal of a novel advantage, potentially interesting over 100 million uninsured Americans, it should positively impact fund collection on otherwise ordinary accounts. Additionally, it aids in educating the population, especially the more vulnerable groups, about the importance of coverage that's hard to consider, now activated freely and transparently.
This initiative also serves as an excellent educational approach to financial well-being, not just enhancing brand image and encouraging a more comprehensive approach to life insurance, but also benefiting other business areas, like investments. Concurrently, Wysh promotes the ease of integrating its offering, likely requiring just a simple connection to existing accounts in today's era of open banking.
Despite very favorable survey results, it's uncertain if Americans will be receptive to such a unique proposition. However, the principle of attaching an unfamiliar, potentially daunting product, challenging to market, to a standard, unremarkable service is noteworthy.