Digital financial health: What finance can learn from medicine

How much are we aware of or do we keep track of our personal health record? Since birth, how many times have we visited a doctor or a hospital for an immunization, a nagging cold, perhaps a broken arm, or a bad allergic reaction? Each visit involves doctors taking note of our height and weight, body temperature, blood pressure, symptoms, and potential diagnoses. The summation of these medical records forms our personal health history and contains the needed information to assist any keen doctor in developing a nuanced perspective of our well-being. Though in a distinctly different industry, financial service providers also collect and record a great deal of disparate information that could provide an accurate story about and help build our financial health over the course of our lifetimes. With an existing model from the medical profession, the natural question that arises is what insights and learnings can we derive from the medical field to tactfully apply to financial services to better improve its product offerings?

The vast majority of our medical history is diffused between all the different urgent cares, primary health practices, and specialists we ever cared to visit in the United States. Though numerous projects since the 1960s have attempted to standardize the collection and dissemination of this medical information, a lack of technology and policy incentives led most, if not all, of those initiatives to fail. In 2009, however, the U.S. government implemented the Health Information Technology for Economic and Clinical Health (HITECH) Act to incentivize healthcare providers to digitize records and create a robust national network of electronic health records.

While not a silver bullet and still far from realizing its full potential, the HITECH Act has encouraged the healthcare industry to take a big step in the right direction. It also provides the financial services industry with some food for thought as there exist interesting parallels between the two distinct industries.

Digitization as a first step to unlocking a myriad of analytics-led innovations

The HITECH Act’s nudge for medical record digitization established a trove of aggregated information that new analytical techniques could surveil to identify patterns and improve overall public health.  Imagine how granular, and arguably more accurate, we could get in assessing our physical condition if, say, people could input and analyze the combination of their heart rates, daily caloric intake, steps walked, hours slept, or really any relevant information that the thousands of health and wellness apps and digital trackers record nowadays.

While the financial services industry has yet to encounter a HITECH Act-like incentive, the quest for cheaper, more efficient and transparent ways of doing finance has led to intense competition and widespread innovation. This has led, for example, to a gradual reduction of the dependence on physical cash and checks in certain markets, and complemented the paper trail with digital footprints of transactions that were previously uncaptured.  Existing credit bureaus have made notable attempts to pull together certain pieces of our credit information, but many individuals are still barred from accessing capital because the way creditworthiness is assessed and reported today does not accurately reflect their true financial capacity and, in some cases, is even erroneous to the point of being harmful.

There is so much more to our financial capacity and behavior than just our credit repayment history. What if there were viable predictions to be made from our track record in paying our rent, utilities bill, cell phone subscription, insurance plans, or other such expenses patterns?  On top of that, beyond sifting through past records, what if we could demonstrate our creditworthiness through predictive behavioral assessment akin to an IQ test or a psychometric test for a job screening?

Individuals’ access to, ownership and portability of data

While the HITECH Act has successfully incentivized health providers to move from paper to digital records, it has yet to fully achieve its mission of seamless data-sharing between systems. Moving a patient’s record from one health system to another is often an expensive and time-consuming feat. Hospitals and clinics themselves frequently struggle to locate a complete, accurate, and up-to-date copy of patients’ medical records. The technology systems they use are often proprietary and lack the requisite interoperability infrastructure. Then there is also the question around whether it’s in the best interests of patients to access these records – what if they misinterpret the medical jargon or a doctor’s note (not uncommon given the stereotypical doctor’s handwriting)?

In financial services, the unequivocally key question is around data ownership. When a customer uses a credit card, who owns the information on what they purchased, where, and for how much? What rights do consumers have to access that data, to restrict its access, or even to remove it? Designing a system that answers these questions and strikes a balance between the customers’ and providers’ needs is vitally important. While it remains to be seen what this system will look like, we envision that it could involve distributed digital data repositories that put customers in charge of their own personal information. We imagine it as a combination of secure personal accounts with digital keychains that allow us to populate verified data, establish a financial identity online, and provide financial service providers the ability to remotely and securely access that data with the individual’s permission.

Who’s at the frontier of innovation?

While the vision of a data repository with embedded predictive analytics where individuals are empowered to access and manage their information still seems somewhat distant, we’re optimistic that a proper mixture of policy, regulation, market incentives, and tech advances will foster the creation of the next generation of credit bureaus and inclusive financial service providers. Already, from our front row seat at Venture Lab, we are excited to see new players upping the data game on the financial services field. Fintech startups such as DemystData, Destacame, and First Access are helping individuals and financial institutions sift through non-traditional sources of data for underwriting purposes, while Aire and RevolutionCredit are advancing the development of behavioral data analytics to complement historical financial data.

We are excited to see more innovations coming out of both medical and financial services sectors that could further advance individuals’ physical and financial health by leveraging the use of data and technology while empowering individuals to understand and take control of their data for their well-being.

Nikhil Garg co-authored this post.

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