Marion Mathes: Economic uncertainty, job loss, equality and financial inclusion discussions reached the forefront of national conversations this year. With Covid-19 impacting nearly every business worldwide, many lost jobs and financial insecurities were severely amplified as a result of the pandemic's effects. With 47% of Americans finding it either somewhat or very difficult to pay for an unexpected expense of $250 — up from 41% in May, it's safe to say that the need for financial wellness programs is more important than ever for 2021.

This past year we saw financial wellness gain momentum as an important employer benefit. Prudential released a new employee benefits package aimed at easing pandemic-related financial stress in the workplace, salary advance programs were introduced by large employers in the U.S. like Walmart, and short-term savings programs were added to employer-sponsored benefits like UPS.

These moves indicate that not only were employees seeking out these resources, but employers were recognizing their importance in helping their workforce through these extremely challenging times. We can expect this to continue in 2021.

Given the importance of financial wellness to both physical and mental health, employers will want to provide benefits that enable their employees to stay productive and work towards better financial stability.

We can anticipate increased interest in programs offering personal loans as well  tips for improving and building credit to continue becoming widespread, as they're stronger solutions for helping employees who are struggling financially than a salary advance program or payday loan.

How will the design of employee benefits change from 2020? What trends do you see?

Financial wellness is emerging as an important benefit offered by many companies today, and having access to financial education programs as well as fair and affordable loans are important tools to build credit and improve one's focus at work, absenteeism, and company loyalty.

The direct connection of financial health with mental and physical health is becoming widely accepted at a rapid pace, and according to a 2020 PwC survey, 40% of financially stressed employees feel that financial issues have affected their health. The pandemic has unfortunately only exacerbated financial concerns for employees, and as a result, we will see many employers expand benefit offerings to include financial wellness in the coming year.

Being mindful of not mentioning vendors or products, what innovations are you hoping to see in your particular segment of business?

Based on Just Capital, PayPal and The Financial Health Network's Worker Financial Wellness Initiative, we expect to see more attention from employers to measure the financial security of their workforce and implement targeted programs to address the needs of their employees.  We hope that salary advance programs will be recognized as merely a better band-aid than a payday loan since they do not actually contribute to a participant's financial wellness but simply allow continued paycheck-to-paycheck living, albeit at a lower cost.

We are hopeful that a focus on credit-building and long term solutions to short term liquidity needs are the types of programs that are selected and implemented, as these can provide transformational tools and resources to improve financial security. Finally, we anticipate that programs that approve all eligible employees will be implemented as they will address the systematic racism that is inherent in old standards.

How about employees' financial health — lack of emergency savings, living paycheck to paycheck — will it improve or worsen?

With so much economic uncertainty today and the current increase in the spread of Covid-19, it's likely that financial health for employees will continue to be pressured based on a variety of factors. We are seeing a return to economic shutdowns, which may lead to more business closures, pay cuts, and rising unemployment numbers.

The financial health for employees living paycheck to paycheck without a financial benefit lifeline will likely get worse before it gets better. This is especially true should they turn to payday loans, which have extremely high-interest rates and are filled with hidden fees. While salary advance programs are a better alternative, they don't go to the root of the problem, which is a lack of savings to cover unexpected expenses.

Without another stimulus package, it is likely that employees' financial health will worsen, which is why it's more important than ever to offer additional financing options. By offering programs through the workplace, employees can access emergency funds and simultaneously build credit at no cost to the employer.

How might employees' consumer credit and ability to borrow funds improve or worsen?

Consumer credit will be even more difficult to access in 2021 for those with poor or little credit history, and the number of families with poor credit will increase due to their inability to continue paying bills on time as a result of the job losses created by Covid-19.

With banks uncertain about the probability of consumer repayment capacity, they will likely raise the requirements for their lending activities. With the second wave of Covid-19 upon us, we can anticipate that it will become more challenging for employees to borrow funds and their credit scores will suffer if they miss payments and cannot pay bills on time.

Why is financial insecurity so prevalent among working Americans (one would expect this to be the case for the unemployed or temporary/gig economy worker, but not for salaried employees)?

While stable income is a driver of financial security, lack of cushion or savings for unexpected expenses is the primary cause of financial insecurity. With 78% of the population living paycheck-to-paycheck, it makes sense that financial insecurity is so prevalent. JPMorgan Chase has research that shows that a family that experiences a $2,000 unexpected expense does not recover for at least two years–two years after the event, the family has lower credit scores and more household debt.

The pandemic has put many families in a similar position, as household income has declined for so many, and without another stimulus package, it is likely that more families will be financially stressed over the next two years. Financial wellness programs offered at the employer level need to include both education and access to affordable funds to allow families to recover from the income shocks spurred by Covid-19.

Consumer protection — what will happen with this area, governmentally speaking?

With Biden in the Oval Office come 2021, the role of the government in protecting consumers from predatory lending can change now that he has the power to appoint a new head of the Consumer Financial Protection Bureau. Whoever is controlling the Senate will also have a say, as the Senate will need to approve Biden's selection.

Experts are reporting [as of the time this Q&A was written] that he is likely to replace current CFPB Director Kathy Kraninger once he begins his term next year. He is also expected to impose stricter guidelines and regulations for banks and financial institutions, making it easier for Americans to access credit.