Monday, June 6, 2022
Rising above the competition in the EWA landscape
A sea of new Earned Wage Access (EWA) startups are cropping up across Southeast Asia, piquing investor interest and quickly becoming one of the most discussed fintech solutions of 2022, and for good reason.
A solution that at its core aims to alleviate the financial struggles of the low-income workforce by enabling access to earned wages before payday, EWA doesn’t just help employees manage cash flow issues between paychecks, but it also allows employers to play a bigger part in protecting their workforce from predatory money lending.
With 35 per cent of the Southeast Asian workforce falling into the minimum wage income bracket, that’s millions of people living paycheck to paycheck, who are only one unexpected bill away from financial disaster. Given this, the industry’s growth comes as no surprise, with new entrants and competitive solutions propelling the market forward.
The competition is welcome because it’s leading to greater innovation, more localisation and ease of use. So with all EWA players now chasing the same goal and looking to offer the best possible solution to SEA’s low-income workforce and their employers, how do they all stack up?
We believe that there is a lot to learn from the super apps such as Grab, Fave, and Air Asia that provide a wide suite of services to their consumers, be it financial, retail, or even communications and transportation.
These apps excel by consistently developing new solutions and products that add value to users’ lives, even if the link to the initial service offered might not be immediately obvious. EWA solutions need to take a leaf from their playbook and consider leveraging solutions that open new doors for their users.
Fostering financial inclusion
Bain & Company reported that 55 per cent of Malaysian adults are unbanked or severely underbanked, and according to Bank Negara Malaysia the underbanked population consisted mainly of low-income workers. These are trends reflected across other parts of SEA, too.
We believe that given EWA’s financial nature and access to employee payroll information, their solutions have the power to foster financial inclusion among the low-income workforce by building a pathway for them to become a part of the banking system.
While the uptake of digitalisation in banking has doubtless made some aspects of banking more accessible to SEA’s tech-savvy population, many fundamental and necessary financial services such as access to credit cards, housing loans, and car loans still lie in the hands of traditional banks.
For EWAs, this is a golden opportunity to create a solution that doesn’t just help them bridge the cash flow gaps between paydays but also adds other financial benefits to a perennially underserved market. EWA companies can take the next step and put financial inclusion first by partnering with major banks to help people build a credit record, and in turn, add that extra value to the end-user.
The road ahead for EWA in SEA
When we look at the future of this increasingly saturated market, the road ahead is clear. In order to push the industry forward and stay competitive as an EWA player, these companies must look into how they can further add value to the users’ everyday life and stay relevant.
While bridging salary gaps between paychecks is a good start, the next step is to diversify offerings in a way that further benefits the user. In order to do this, it could be a good start to look into other areas of necessities that might not yet be fully available to the low-income workforce, such as insurance.
Given that an EWA solution’s end-user is the lower-income workforce, health insurance is a service that still seems to be out of reach for most workers. EWAs could look at establishing partnerships with insurers to offer unique and affordable insurance plans to keep the workforce safe.
The possibilities for EWAs are endless. Eventually, telecommunications offerings, mental health support, and even child care services could all seamlessly integrate themselves into an EWA platform, as long as the company is brave enough to take the next step into diversification.
By putting users first and enabling access to services and solutions that are not yet available to them, an employer who is looking for an EWA solution and cares about their employees is most likely to choose the solution that adds the most value to their employee.
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