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Level: How Fintechs Can Win Back Public Sector Trust

The world is constantly looking for new innovative ways to do things, but there is often a misconception that if a company fails, its idea was bad. This is not always the case, however, it leaves a sour taste in the mouths of investors and makes them lose confidence in startups in the field. 

Stephen Holliday is the CEO of Level, the paytech providing salary-linked services that enable workers to instantly access, save and budget from their earned wages. Looking closely at the events of the past year, namely the pandemic, Holliday looks at what innovations took place to help NHS workers, using Greensill Capital owned, Earnd as a case study:

Stephen Holliday, CEO of Level
Stephen Holliday, CEO of Level

While it’s not uncommon for startups to fail, in the world of technology, a failed startup often comes with a presumption that the innovative new solution offered by the bankrupt business was not up to par. This lack of trust in tech has a rippling effect and can hinder the growth of tech startups in an already challenging and competitive market.

One very public example is the earned wage access app Earnd, which was handed over to administrators to wind down in the Spring after its owners, Greensill Capital, went bust.

The Greensill scandal and the collapse of the earned wage access app created a lot of press. At the time, Earnd’s platform was being used by a significant number of NHS workers to access their wages before payday, including doctors and nurses who had already spent more than a year battling the covid-19 pandemic on the frontline. Earnd going out of business left staff without an important financial wellbeing solution that they had come to benefit from.

It’s worth stressing, however, that the Greensill issue is exactly that: a Greensill issue. Earnd, and the brilliantly innovative technology behind it, was not the problem. As the lack of access to the service in the NHS is being felt across the workforce, it’s clear that the technology was making a real change, providing staff with positive behavioural changes and improving their financial wellbeing.

It’s a case of ‘right technology, wrong people behind it.’ Fortunately for the NHS and other organisations prioritising financial wellbeing, there are tech companies offering earned wage access and other behavioural solutions to financial health via an innovative app platform.

On-demand access for earned wages

Published at the start of the year, The Woolard Review from the Financial Conduct Authority was set up to look at the unsecured credit market, but also how changes in regulation would improve consumer confidence. This included what the Woolard Review called Employer Salary Advance Schemes (or ESAS), a payment innovation sometimes known as on-demand access for earned wages. This helps income smoothing by empowering people to afford unforeseen expenditure prior to pay day, without the need for other forms of high-cost credit. This might include unexpected vet or car bills that could occur at any time in the month.

The Woolard Review looked favourable upon on-demand access for earned wages, stating that ‘a sustainable market needs more alternatives to high-cost credit.’ In short, done properly, on-demand pay would be a significant benefit.

As is evidenced by hundreds of thousands of employees in a wide variety of sectors across the UK, such financial wellbeing platforms do work when they’re run by the right people with the right expertise and approach. Deployed properly, they can and must be a resource for the NHS to support their employees. Public sector staff faced with nominal salary increases must be given access to financial health and wellbeing solutions that help them save money, afford unexpected expenditure and become better at managing their personal finances.

Financial wellbeing is a relatively new way of supporting employees, with physical and then mental health being the key focus for many. But new research is highlighting just how much of an impact poor financial management has on employees, and as a result, their employers. For employers looking to support their staff with their mental and physical health, taking the necessary steps to support their financial health needs to be a top priority.

Why is this important for employers?

Employers in the public sector have the chance to set the tone in the private sector as well – playing a unique role in the financial health of their workforce. One in four UK workers reported to the Chartered Institute of Personnel and Development (CIPD) that money worries have affected their ability to do their job. Losing sleep, stress, depression and other mental health conditions take their toll, and result in lost performance and more days of absence. The covid-19 pandemic has had a huge impact on financial wellbeing which has added to the urgency for employers to take action. If those employers are the NHS, whose employees are on the front line, that’s even more essential.

Good financial wellbeing platforms enable customers to access wages after they have earned them, plan and budget accordingly, and avoid unnecessary debt caused by short-term cash-flow issues. Many NHS workers have fluctuating incomes due to working overtime as on variable contracts, so this helps them keep control of their finances. Even those on higher salaries may face financial challenges, as debt in the UK has increased as a result of the pandemic

The NHS needs to care about financial wellbeing, because at their core they are about health. And financial wellbeing plays a huge role in this.

Good suppliers do not offer just tech, but compassion and knowledge of the unique position that the NHS is in. They work in partnership. In fact, NHS Employers have a financial wellbeing guide they produced to enable HR leaders responsible for rewards to develop a strategic approach. Financial wellbeing platforms that gain the trust of the NHS will be aligned to this way of working.

They can also help save the NHS money. Regular payments are one of the reasons people join agencies or become ‘bank’ staff. By allowing access to wages as and when needed, the NHS can attract and retain more people, saving an average of 20% on agency staff.

On-demand pay cannot work alone

To aid and encourage a savings culture, on-demand pay must be offered as a holistic package. This means to benefit from access to short-term credit without the need for a credit card or further debt. However, in isolation, there is a risk of trapping people in bad cycles of behaviour. The key in a financial wellbeing solution is to empower employees to adopt a savings mindset, building a pay buffer too to avoid debt and meet future life goals.

As we said, employers like the NHS have a privileged position and can use it to deploy ‘salary linked’ services such as saving products not available on the open market. Further, educational resources empower users and establish new financial habits. By incorporating behavioural economics, nudge theory and product design they help create sustainable behaviour change that has long term benefits. They offer a holistic suite of services including comprehensive budgeting tools, financial education and savings techniques that address the symptoms of financial ill health. It is a financial toolkit, that people are not reliant on, but empowered by.

When data powers the platform everyone benefits – the organisation and the financial health of its users. Negative correlations, or signals of financial vulnerability, include days in overdraft per month, volatility of account balance, variable income receipt. Employers like the NHS can be plugged into information that they can use to help employees. A data-centric approach is driving innovation across the public sector and will enhance the financial wellbeing of both organisations and their employees.

The Earnd debacle must not cause public sector employers to retreat into their shells. Staff on the NHS frontline deserve financial wellbeing solutions that help them manage unforeseen expenditure and become better custodians of their earned wages. Implemented properly, these solutions will win back the trust of the public sector once again.


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