Fiserv, located in Brookfield, Wisconsin, first unveiled its comprehensive program of services in the rapidly growing field of healthcare banking in 2005. With 22 years of experience, Fiserv is the world’s largest service provider to banks, credit unions, lending institutions, and investment advisors. And it is becoming a significant presence in health plan administration, including health savings accounts (HSAs).
The potential of HSAs, authorized by the U.S. Congress in 2004, is motivating financial institutions to target healthcare banking as a major growth area. Fiserv's goal is to be the leading technology enabler of this effort.
To learn more about Fiserv’s HSA program, BankNews.com interviewed Sherry Lawton, Fiserv health banking sales executive.
BankNews: When Fiserv first announced its HSA program in June 2005, the company said it was targeting the 8,000 community banks and credit unions in which Fiserv has a core processing relationship. What has been the result of this effort?
Lawton: We have had success providing our clients with a solution that gives them the capabilities to offer HSAs, as well as providing them with the opportunity to roll out a more robust overall healthcare banking solution to exceed the expectations of their current and potential customers.
BankNews: According to the American Banking Association, more than 80 percent of banks currently offering health savings accounts report that HSAs have not been a good source of deposits. What do you attribute this to? For example, is some of the problem related to the bank’s ability (or inability) to manage these accounts efficiently?
Lawton: There have not been as many HSAs opened to date as originally predicted. Thereby, the low deposit dollars could be due to volume of accounts versus the dollars in the account. We are seeing the average account balances ranging between $1,400 and $1,800 as of the end of last year.
The key to lack of deposit size and growth mostly is due to the lack of knowledge in regard to an HSA. A large number of individuals that have a qualified high-deductible health plan (HDHP) have not opted to open an HSA, mainly because they do not understand the relevance of opening one.
Many factors should improve the deposits in both volume and amount: passage of legislature last year that allows the individuals to deposit the maximum contribution; maximum contribution not limited to when in the year the account is opened; and the ability to rollover funds from an IRA. Another factor is education and helping the bank understand what an HSA is and how a HDHP can help customers — whether an individual or a business. Then it is disseminating this information to their customers and helping these customers understand how they can better manage their healthcare costs. The employers will also evaluate their opt-in ratios and make a determination whether it is feasible to make a larger contribution to the HSA to improve the opt-in ratios for the HDHP.
BankNews: Please describe some of the other solutions that Fiserv currently offers to help banks improve the management of HSAs.
Lawton: The Fiserv solution provides individual applications that integrate into an overall solution without having to upgrade to another level or to a different solution. Our philosophy is to provide a solution that helps the customer better manage their healthcare costs and information. The customer could be an employer, employee, plan, provider, self-employed, self-insured, uninsured, etc.
A few of the additional offerings are:
BankNews: Although the number of HSAs is still relatively small today, they are estimated to reach 15 to 20 million within the next three years, with $75 billion in assets. Do you agree with these figures? If yes, what do you say to banks still waiting to enter the HSA market?
Lawton: A large number of individuals qualified to have an HSA have chosen not to open one, for the most likely reason that they do not understand the benefits or characteristics of the HSA. I do believe there will be an upswing in the number of HSAs opened in the upcoming years as information continues to disseminate to the retail market, but $75 billion in assets is a bit of a stretch. I think it may be closer to $40 billion in three years.
Others factors that will increase the number will be more employers offering a HDHP in their benefit offerings, employers moving to only HDHPs, and employers funding a larger amount to the HSAs.
Banks need to get into the market immediately to avoid losing customers that are opening HSAs at other financial institutions because they are not offering them. Individuals want fewer sites to log in; and if they are logging in at another financial institution’s website, what will keep them from looking at their checking account options or CD rates? The other is that we are seeing that the average HSA holder has four or more services. It is not too late to get into the market. It is actually a great time because the retail customer will be starting to do a lot more inquiring in the upcoming year and this gives them time to get ready.
BankNews: If I am a community banker currently exploring the HSA market, what specific steps should I take to ensure my success in offering health savings accounts to small businesses or individuals?
Lawton: The first step would be to make sure you have the technology that will enable you to set up the HSA as a DDA with debit card and check capabilities and provides the appropriate tax reporting. Online enrollment capabilities will be necessary for providing access to employees that are not familiar with the bank or are not near a branch.
The second step is to make sure you have someone that is knowledgeable about HSAs or has a resource to go to get the answers. Front-line employees not only need to know that the bank offers HSAs; they also need to ask customers if they have an HAS, if the bank wants to go after the individual market. The last thing a bank wants to happen is to have an individual come in and ask if the bank offers HSAs and have the teller not know the answer.
The final step is to talk to your small businesses about HSAs and not assume they will come to you asking about them.
BankNews: What lies ahead in financial technology solutions that will help smaller banks compete in the offering of such products as health savings accounts?
Lawton: Smaller banks can compete as long at their core processor allows them to establish an HSA as a DDA and will do the tax reporting for them automatically. The main thing that will help smaller banks compete along with technology is time and education.