Have you ever heard of ‘financial stress?’ According to experts, this condition refers to that state of anxiety or emotional tension related to money, debt, and expenses. Money, in fact, is one of the most universal sources of stress.
In workplaces, financial stress has been found as one of the main concerns that employees around the world contend with every day. With responsibilities to pay off bills, expenses, unexpected circumstances, and even debts, it’s challenging to not worry about finances all the time, especially if a person does not have savings.
In a recent report, Visa revealed that 84% of 1,000 employees are troubled by their finances while working. This situation affects their health, well-being, and productiveness, as stated by 68% of that study’s surveyed individuals.
Employees in the Philippines share this same experience. According to a study by Backbase, at least 51% of 100 surveyed Filipinos said that they’re currently worried about the state of their finances. It also revealed that the Philippines is the leading country when it comes to financial stress in the Asia-Pacific, indicating that 7 in 10 Filipinos find it challenging to manage their debts.
In most cases, people caught up in these situations resort to borrowing money from their family, friends, or external lenders with interest rates. Another option is to ask for an advance or ‘bale’ from their employers, especially since traditionally, employees receive their salary twice a month on two separate dates.
Helping navigate through the never normal
Two years into the pandemic, things became even more challenging for employees due to some limitations, particularly in mobility. Amid these radical changes, banks have been fast-tracking their digital transformation initiatives to improve their mobile and online banking platforms. This move enables customers to transact digitally, like paying utilities and other bills, without the risk of exposure to the COVID-19 virus.
It shows how banks continuously innovate their services to assist their customers in managing their wealth while caring for their well-being. And as the pandemic reinforces that health is essential to people in the never normal, it also creates an opportunity for banks to help employers in empowering their employees and address the factors that can affect their overall welfare.
For instance, there’s a concept that is now fast becoming a global trend that financial institutions can offer as part of their service offerings. This concept is called Earned Wage Access (EWA), a solution that started in the United States but is now seen around the world, enabling employees to access their salary before payday and release their already earned salary with just a click of a button.
EWA can be integrated and offered by banks to their corporate accounts so employers can incorporate it as a benefit for their employees. In 2022, this white-labeled solution will now be available in the Philippines. Thanks to PayKey, a fintech company based in Israel, which will start offering this solution to leading banks next year.
Through EWA, employees can now access their already earned salaries at any time to pay for their current expenses. It works in simple ways. As a standalone app offered by PayKey for banks, employees can easily see their earned salaries to date. Then, if they want to have an advance on their wages,’ they can just request it through EWA. The requested amount will be transferred to the employee’s bank account as soon as it is approved.
The EWA trend will help employers minimize their workers’ financial stress, which will assist in improving their workplace productivity and employees’ well-being. In addition, as a new type of service for banks, EWA may help encourage unbanked Filipinos to get banked to achieve the Banko Sentral ng Pilipinas’ (BSP) 70 percent goal of Filipinos with bank accounts in 2023.
“EWA is not a loan. It has no interest rate because you’re accessing and withdrawing your earned money. With a fixed transaction fee, it will enable employees to easily advance their wages before payday to pay for their immediate expenses. We hope that with our solution, we can help banks and employers reduce employees’ financial stress and improve their well-being, especially at times like this,” said Roy Gabriel, chief innovation officer, and general manager of PayKey.
To learn more about PayKey, visit its website at https://paykey.com/.
Harnessing the Power of Tech amid Rise of Digital Banking in PH
More than two years into the pandemic, digital transactions are now considered the new norm to ensure safety. As a result, it prompted financial institutions to fast-track their digital transformation.
In a recent study, IDC and Backbase revealed that 60% of more than 1,000 surveyed individuals in the Asia-Pacific are likely to switch to a more digital bank. In fact, in the Philippines, it’s also the same. According to a 2021 survey by Fico, 61% of 1,000 Filipino adults now prefer digital platforms compared to the last year.
To support and improve the digital shift in the country, it paved the way for the Bangko Sentral ng Pilipinas (BSP) to establish a new category for banks, digital banking. Through this, BSP aims to convert 50% of transactions to digital services and achieve its 70% goal of Filipinos with bank accounts in 2023.
Recently, the BSP has given licenses to six banks, whether new or existing financial institutions in PH, to shift towards digital banking. And as several banks emerge due to digitalization, IDC and Backbase remarked in their same report that the Asia-Pacific will have at least 100 new financial institutions by 2025.
With this reality, the study also indicated that 38% of the conventional or brick-and-mortar banks’ revenues will be at risk by 2025 across the region. It puts traditional banks in a difficult position as they find innovative, creative, and fresh offerings so they can compete in the current situation to retain and attract customers.
Elevating banks’ services for customers
The good news is, there is a concept that is now fast becoming a global trend that financial institutions can offer as a part of their service offerings. It is called Earned Wage Access (EWA), a solution that started in the United States but is now seen around the world.
EWA enables employees to access their salary before payday and release their already earned wage with just a click of a button. It can be integrated and offered by banks to their corporate accounts so employers can incorporate it as an employment benefit for their employees.
It works in simple ways. Through the EWA app, employees can easily see their current earned salaries. Then, if they want to have an advance on their wages, they can request it via the platform. The requested amount will be transferred to the employee’s bank account as soon as it’s approved.
Offered by PayKey, a fintech company based in Israel, this white-labeled solution will now be available in the Philippines this year. As it is not a loan, EWA will have no interest rate because employees will access and withdraw their own money. However, it has a fixed transaction fee at every withdrawal.
“Integrating EWA is a great way for banks to elevate their service offerings. This solution is not just innovative, but it will also help address the financial needs of employees in the Philippines. At PayKey, we hope we can aid banks to attract and retain customers as competition in the market gets tougher with the emergence of new financial institutions,” said Roy Gabriel, chief innovation officer and general manager of PayKey.
To learn more about PayKey, visit its website at https://paykey.com/.
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