Florida Banking September 2023

the small businesses they surveyed at the end of 2022 expected to change their financial services relationship in the next two years. • HSAs give financial institutions a new revenue stream that can increase the overall lifetime value of each customer. Banks and other financial institutions can earn revenue through net interest margin, interchange and employer administrative fees. Why your commercial customers already want an HSA Selling an HSA to your current customers won’t be a difficult task because more than half of Americans are already enrolled in an HDHP and are looking for ways to cut down on healthcare costs. These types of plans are growing in popularity because they offer the lowest monthly premiums and the greatest flexibility in terms of where employees spend their healthcare dollars. Offering an HSA alongside an HDHP is essential to both securing employees’ adoption of the health insurance plan, but also in financially supporting their physical and financial health. That’s why, according to Devenir, 70% of HSAs are sourced through an employer. In fact, over 55% of US employers offer an HDHP, so many of your customers are looking for an HSA for

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• HSAs help businesses recruit and retain talent. Many small and medium-sized businesses have a difficult time competing with larger organizations for talent. In addition, employers of all sizes are working hard to retain talent, as losing employees means a loss of productivity, intellectual capital, and can cost more than half an employee’s salary to replace them. But by offering an engaging, tech forward HSA that offers features like investment options and account holder education, businesses can differentiate themselves in the labor market. Offering an HSA also provides many advantages to financial institutions, especially for commercial customers. These include: • They provide financial institutions with a pathway for cross-selling. If you offer an HSA to employees that are not current customers, and you perform well, you establish a positive relationship and have the opportunity to woo them from their current banking relationship. If you’re unsure how large of a demographic these customers represent, according to a recent study by McKinsey, people are currently 2x more likely to open a new account than they were in the past, 15% are open to a new banking relationship and 20% are considering switching their banking relationships. In addition, BAI found that half of

the first time, or they’re looking for a better one. Offering your customers a competitive HSA not only strengthens your relationship and opens the door to cross selling new products, but keeps the deposits, net interest margin, and fee revenue gained from HSAs from going to a competitor. Why commercial customers need an alternative to traditional HSAs Most HSAs offered by banks are focused on the individual account holder and aren’t equipped with an employer platform that enables administration of, and insight into, the plan. Without an employer dashboard that can run custom reports, APIs for benefits administration integration and payroll integration, census management, contribution management, education, and transparency, you won't be set up to serve and grow with your commercial customers. Because the majority of HSAs are sourced through employers, you want to make sure you are set up to serve their needs to offer the most competitive HSA and ensure it is easy for employers to administer and manage, as well as simple for employees to use. Most traditional HSAs, including those offered by many financial institutions, are

18 — FLORIDA BANKING THE VOICE OF FLORIDA BANKING