As earned wage access grows in popularity, the budding financial product is finding itself counted as a leading financial wellness tool.
Self Financial, a fintech that specializes in helping subprime consumers build credit, is the latest fintech to toss its proverbial hat into the EWA ring with the launch of Self Cash, a small-dollar lending product that offers cash advances up to $100.
Advances start at $25 and can increase to up to $100, and can be dispersed through ACH or instant payment rails.
For Self, standing up an
Self’s flagship financial product is a credit builder account, a CD-secured installment loan that allows customers to make monthly payments to Self, which the fintech then reports to the three credit bureaus as a positive payment. At the end of the “term,” instant gives the customer the savings that they made back to them. Self also has a secured Visa credit card that requires a $100 down payment and rent and bill pay reporting tools.
“We think that Self Cash is great when someone is already building credit with us, because things happen. Life doesn’t necessarily wait for your paycheck to come about,” Szudarek said.
Self decided to launch its own EWA product after discovering that many of its customers were using other EWA products and even payday loans, Szudarek said.
Earned wage access also serves as an important new customer acquisition tool for the fintech.
“For existing customers who are already building credit, this helps them continue on that journey,” Szudarek said. “For new customers who aren’t yet building credit with us, we see this as a really good way to find customers who are eventually going to need that kind of help that we’re able to provide them.”
EWA products are increasingly being paired with other financial wellness tools as fintechs look to short-term cash advances as an inroad to underserved populations. Neobank Chime, which also has its own EWA product, this week
“Employers have told us their biggest frustration with existing financial wellness programs is that they don’t make an impact or empower employees to get to the next step in their journey,” Jason Lee, chief of Chime Enterprise, said in a statement in March after the launch of Chime Workplace.
“Multiple vendors, logins, and endless apps only compound this problem and, ultimately, hinder effectiveness,” he said. “Chime Workplace works with employers to solve these challenges by delivering one trusted app that meets employees where they are and gets them to where they want to be.”
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Instant Financial, an employer integrated EWA provider with a focus on hourly and hospitality workers, launched its own employee wellness program with savings, credit building and financial education tools in March.
Instant partnered with fintechs and payment companies to offer its suite of financial wellness products to its customers, including MoneyLion for a high-yield savings account and credit building services, Visa for financial education and Self Financial for rent reporting.
“Our position on this historically has been that financial wellness, unfortunately, is not something that can simply be given to someone,” Chip Harden, chief revenue officer at Instant Financial, told American Banker. “What we were acutely focused on since inception of this company is making sure that we’re able to get our users out of cycles of debt and get them back to even, so to speak, so that they’re in the best position to graduate to true financial wellness.”
Earned wage access has been a
An April study conducted by the University of Connecticut School of Public Policy and commissioned by EWA provider DailyPay found that consumers using EWA turned to short-term, high-cost loans after the state’s prohibition on fees for instant transfers forced many providers out of the state. Connecticut has since