Fintech, financial technology, developed by start-ups, payment firms and banks, has not only been revolutionising financial industries, but also transforming non-financial industries including healthcare, improving operational efficiency and customer experience.
Fintech has contributed to innovation in healthcare, benefiting from advances in secure on-premises processing and anonymised data exchange between providers and financial service providers. Fintechs will catalyse healthcare transformation to resolve issues, such as cart abandonment in pharmacy, complex payment process in hospitals and payment integration with teleconsultation. Early fintech adopters can capture opportunities in the global healthcare market, projected to reach USD7 trillion measured by consumer expenditure on health goods and medical services.
BNPL solutions to boost pharmacy sales by lending to underserved
Integrating buy now, pay later (BNPL) solutions into pharmacies can boost sales by offering customers flexible, interest-free payment options, especially for essential healthcare products.
With the global pharmacy retail market size reaching USD1,046 billion globally in 2023 and forecast to grow at a 3.5% CAGR until 2028, the potential for BNPL adoption in this sector is vast
Source: Euromonitor Passport
Pharmacies can leverage BNPL to increase sales, as demonstrated by the partnership between Pharmacity (a pharmacy chain in Vietnam) and Fundiin (a Vietnamese BNPL start-up) in Vietnam in November 2023, offering interest-free instalments to its customers. By reducing financial pressure on patients and allowing them to access necessary treatments immediately, BNPL not only enhances customer satisfaction but also increases transaction sizes and access to underserved consumers.
Fintech streamlines patient experiences by revolutionising healthcare payments
The global market value of consumer expenditure on hospital and outpatient services reached USD4 trillion in 2024, with only a 3% CAGR predicted for 2024-2029
Source: Euromonitor Passport
A primary issue patients face during medical visits is the complex and time-consuming payment process. Embedded finance solutions streamline this, enabling more convenient transactions. For example, banks are expanding their healthcare payment solutions. In August 2024, US Bank acquired Salucro Healthcare Solutions, a market leader in online billing and payments offerings for healthcare providers across the US. In 2019, JP Morgan Chase acquired InstaMed, a US fintech, which automated the payment systems of Fresno Surgical Hospital.
In China, Alipay has transformed healthcare payments since 2019 by enabling credit payment for the national health insurance in collaboration with local medical bureaus and hospitals. Traditionally, patients had to prepay before receiving a diagnosis or treatment, leading to long queues and waiting times. By integrating Alipay’s Huabei credit system (an unsecured lending product), patients with medical insurance can now see a doctor first and settle their medical bills later through the Alipay app. This innovation eliminates the need for upfront payment or waiting at the hospital physically, as the charges are consolidated into a Huabei monthly bill.
18% of respondents in China reported that seeking medical care is too much of a hassle, down from 29% in 2020
Source: Euromonitor’s Voice of the Consumer: Health and Nutrition Survey, fielded in February 2024
This decline highlights the positive impact that streamlined payment systems have had on improving healthcare experiences.
Optimise payment integration and payroll in teleconsultation
Teleconsultation has gained traction with consumers wanting convenience, especially those residing in rural areas lacking healthcare branches. However, telehealth’s key challenge is to diversify online payment options and optimise online checkout experience. In the US, Zocdoc works with Stripe for payment aggregation and processing. In Southeast Asia, Good Doctor partners with Grab, integrating with GrabPay.
For international telehealth firms, it has proven difficult to manage foreign currency exchange (FX) fluctuation risks to control expenses and fast payment to the doctors across the markets for staff retention. PayAlly, a UK fintech, serves a teleconsultation client to provide FX contracts to secure a fixed exchange ratio yearly, to prevent FX fluctuation shocks. Meanwhile, PayAlly provides a single platform consolidating all payrolls, replacing multiple vendors for remittances.
Opportunities and challenges
With strict regulations on data security and high requirements on safety, healthcare used to be a laggard in experimenting and adopting fintechs. Given the rapid development of fintech across industries, regulators may encourage innovations in a controlled sandbox environment to address such challenges.
To summarise, fintechs can support healthcare providers to turn the following complex issues into growth opportunities: outdated payment systems with limited options for both consumer and commercial payments, expensive insurance, and complicated and manual external and internal processes. Fintech-powered healthcare providers are expected to optimise customer experience and enhance operational efficiency, gaining competitive advantage in the market.
Read our report, Embedded Finance Ecosystem: Mapping the Path to Services Industries’ Transformation, for further details.