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Financial Wellbeing at Work in 2021
‘Money and mental health are connected', according to the England and Wales mental health charity Mind, and this couldn’t ring more true in today’s climate. Along with many other saddening outcomes, the pandemic has caused an economic crisis - namely a COVID-19 recession, with thousands of people across the globe facing the brunt of job losses and, consequently, debt or general financial difficulties. Worrying about money alone is known to have a significant impact on mental health. Add the burden of unemployment and other financial hardships such as problem debt, and your ‘stress bucket’ is twice as likely to overflow; people who struggle with problem debt are more than twice as likely to suffer from depression.
Having a sense of financial wellbeing, particularly in the event of a financial shock, is, therefore, key for all, and digital platforms such as Hastee are working to push this narrative in the place where it matters the most: the workplace. The London-based fintech company believes that employers play a pivotal role in instilling financial health and resilience in people. Thus, to investigate further, we spoke to the CEO and Founder, James Herbert.
Hi James, thank you so much for joining us for this week’s Q&A! As the CEO and Founder of Hastee, it’s only right that we begin by asking you how the platform came about and what inspired you to start it in the first place?
It’s a pleasure, thank you for having me! At university, I created a company called Brightsparks to connect students with work opportunities so they could earn money. As students started to use my company to find work, I noticed a common problem; many were often having to wait for the monthly pay cycle to get paid. As a result, many were needing to turn down work simply because they couldn’t afford the travel day-by-day. It became very apparent that not having £20 today could stop them earning £150 tomorrow.
I thought: why does payday itself have to be a rigid construct that people have to wait for? If you think about the hunter-gatherer mindset, we are wired to expend effort and expect an immediate reward.
Looking at the opportunity, it was not just specific to students. Liquidity is a widespread issue faced by individuals across all types of industries and of all ages, and many turn to high-cost credit options to tie them over when needed. I wanted to find a solution to give individuals access to a portion of their earned wages whenever they need it, in advance of the monthly pay cycle - whether to help during challenging times or in day-to-day life. And thus Hastee, the financial health platform was born.
How do you define financial wellbeing at work and why do you think it’s important that organisations have open discussions about it with their employees - especially in this day and age with the pandemic causing a lot of money worries and, in turn, stress/anxiety?
We define financial wellbeing as the status of an employee’s overall financial situation in the context of their lifestyle and background. An employee’s level of financial wellbeing can be determined by a range of different factors, including savings, amount of spare money, and levels of debt.
Our recent research has found many workers in the UK are currently struggling with managing their financial health. Nearly half (41%) of UK workers are now relying on at least one new loan, credit card or overdraft, and two-thirds (66%) are regularly suffering from personal finance-related stress. Even when the economy was functioning normally before Covid-19, 82% of workers were still relying on high-cost credit to get them through the period between paydays.
While this problem is not new, the pandemic has now brutally exposed the flaws of a financial support system that hasn’t been fit for purpose for workers for a long time. Data shows financial stress can have a detrimental effect on a worker’s performance and wellbeing. Such stress not only affects workers’ sleep, social lives, and relationships - it also affects their health and productivity too. It is now widely recognised that financial wellbeing is one of the key indicators of mental wellbeing, and yet few companies are currently considering how much financial stress plays into their employee’s performance at work.
That’s why we think employers, now more than ever, need to be doing more to support their staff’s financial health. The pandemic has had a seismic impact on the liquidity of many workers, so they now have the opportunity to provide better support to their employees, when it comes to helping them manage their finances..
Hastee allows employees to take charge of their finances by enabling access to a portion of their earned pay on-demand when they need it. Is breaking the status quo of archaic payroll systems and employing Earnings on Demand (EoD) solutions the key to improving global (employee) financial health as well as business agility/continuity?
As mentioned previously, personal finances have truly been shaken up like never before due to Covid-19. Much of the population has seen their shift patterns change, their savings diminish, and their main sources of income change or vanish. Despite furlough schemes and extensions to credit card, loan, and overdraft repayments, many are struggling to make ends meet. This means that the traditional payroll cycle no longer meets the changing demands on today’s workforce. They need their earnings on-demand to meet unexpected challenges.
In fact, demand for better financial flexibility and support from employees themselves is growing. Over half (59%) of workers in the UK alone think having greater flexibility with how they access their monthly salary (either earlier or in more regular installments), would decrease their reliance on high-cost credit during the pandemic.
And it has benefits for employers too. Those who are actively empowering staff with earnings on-demand report lower presenteeism, higher retention, and increased productivity. The momentum is only going one way. It’s imperative that businesses are agile enough to onboard these solutions and futureproof pivotal business processes such as employment and retention. We believe it will be crucial to retaining staff and preserving worker morale in the future, especially as we hopefully start to move out of the pandemic.
What are the main benefits of digital money management tools such as Hastee for both businesses and their employees?
Having control of your finances is empowering, regardless of whether you are an employer or an employee. For employers, at no extra cost to the business, you can onboard a solution that gives your employees flexibility, reassurance and responsibility around their finances. In fact, data now suggests that employees are 74% more likely to stay with a company that offers flexible pay options and similar benefits.
The potential positives for employers are endless. By providing workers with these useful financial management tools, such as savings, cashback, rewards and budgeting guides, it can help them better understand their finances and empower them to make decisions that ultimately make their money go further.
Hastee’s 2020 ‘Workplace Wellbeing Study’ reports that fewer than 1 in 5 (18%) of UK workplaces offer financial wellbeing advice. How should companies go about implementing and nurturing this support in 2021 and beyond?
There is smart technology sitting within the UK fintech scene that can help companies implement this support. Whether it’s changing the way employees access their pay, or providing better access to financial education and management tools, companies can equip their staff with the options they need to better take charge of their finances. To help support their workforce more effectively, one way employers can start to offer more flexibility is by introducing an ‘earnings on demand’ (EoD) payment model.
Not only does this give employees the chance to access a portion of their monthly pay in real-time, it also provides them with greater flexibility and liquidity to navigate financially challenging times of the year. Earnings on Demand solutions are ethical alternatives to high-cost credit options such as payday loans, credit cards, and overdrafts. This increased liquidity can help avoid the use of these other options and means they can more flexibly access their own money on demand without accruing debt.
Finally, the Consumer Financial Protection Bureau (CFPB) recently approved the EoD business model in the US. What do you think this could mean for the growth of the sector?
The CFPB approval over in the US further validates the Earned Wage Access (EWA) business model and the ‘debt-free' liquidity benefit this can bring to employees, by providing access to their pay as it is earned. EWA, or Earnings on Demand (EoD) as it is often known in the UK, is rapidly gaining awareness as the most powerful employee benefit organisations can offer their workforce.
However, organisations need to be careful – not all EoD solutions are equal and the devil is in the detail. We would encourage employers to check the small print and invest in a model where workers are only ever able to receive a portion of their earned pay, meaning they won’t accrue debt. Not all providers operate this system, but if an employer can find the right technology partner, this service can have a huge impact on the morale and productivity of their workforce and won’t affect any part of their existing pay cycle. There is also the option to place a cap on the amount that employees are able to access in any one go.
This approval is undoubtedly a big positive for the industry and for those of us operating fair, ethical business models, but it also highlights to organisations the importance of selecting the right EoD provider to offer their staff.
Interested in taking action in improving financial wellbeing at work?