Fostering Financial Inclusion is Trulioo’s exclusive series covering forward-thinking companies that are pushing the envelope in financial accessibility. In this series, you can expect to get a deeper look at some of the world’s leading socially responsible technology companies and learn about their initiatives in supporting those who are financially underserved.
Reinventing the concept of payday
As early as the 1930’s, the timely delivery of the coveted paycheck has been standardized into bi-weekly, semi-monthly or monthly schedules. Why would anyone want to be paid any other way? The short but poignant answer: Financial wellness.
According to studies, the struggle to become financially secure, and the associated pressures of paying off bills on time, building healthy credit scores, etc. take a psychological toll on most Americans. Indeed, problems stemming from a lack of financial insecurity have shown to lower productivity, and create a disenchanted workforce.
If employees work daily, why aren’t they paid daily? The question is at the heart of ZayZoon, a socially responsible fintech company based in Calgary, Alberta. ZayZoon’s flagship product, Wages On-Demand, helps employees get cash as they earn it, instead of waiting for payday. This effectively keeps employees from using predatory lending programs, and protects them from the burden of overdraft penalties, late bill payments and unexpected expenses.
Trulioo spoke to Tate Hackert, founder and President of ZayZoon, about why accessible financial wellness products make a world of difference for everyone in the workplace.
Trulioo: Lenders are charging consumers upwards of 400% in annual interest for products that are marketed as “short-term” loans. Can you tell us more about what animated the idea behind ZayZoon?
Before ZayZoon was even a thing, we had recognized this was a pain point that needed to be solved. The consumer benefits were really the catalyst for ZayZoon. Shortly thereafter, we started recognizing other factors like the negative effect overdraft fees have on financial health; we also recognized other good things like increased workplace productivity and retention.
Trulioo: The payday lending market is in decline, but it still remains a $40 billion industry in the United States alone. What can be done to keep people away from the trappings of payday loans?
It’s all about building a brand that consumers can trust. In the finance space especially, there are a lot of bad players out there and companies that hide behind the small print. With ZayZoon, we make sure to be upfront with customers, provide stellar support and provide a brand story that they want to be part of. Once someone recognizes ZayZoon isn’t a fly-by-night operation, the value prop speaks for itself.
Trulioo: The Consumer Financial Protection Bureau proposed early last month that they wanted to nix underwriting requirements when assessing a borrower’s ability to pay lenders back. What’s your take?
This will only make the case for Early Wages On-Demand stronger. The inability to repay a loan is what makes the payday lending industry so bad. It’s what causes a short-term loan to turn into a long term one and creates a constant roll-over and debt cycle for the consumer.
Trulioo: Is there a particular user success story that’s memorable for you and your team?
We were the first company of our kind to offer instant transfers to customer bank accounts. One time, a customer notified us that they were in the line-up for groceries and took money in real-time to pay for them. Another time, a 56-year-old man let us know we saved him from going hungry and used a heart emoji in his message to us – I thought that was pretty powerful. Lastly, we have countless stories of individuals who have successfully used ZayZoon to access their wages early to get out of a debt spiral and reliance on predatory products.
Trulioo: Your team has built many partnerships since 2014. Can you share with us some results that companies experienced after they implemented ZayZoon?
Increased productivity and retention is something almost all of our employer clients communicate to us as being a benefit of ZayZoon. Probably the most profound scenario that comes to mind would be a small employer that used us through their payroll provider, switched payroll providers and then switched back upon backlash from their employees who missed ZayZoon.
Trulioo: Does ZayZoon have any plans of entering markets outside of the Americas? If so, which international markets would you like ZayZoon to enter?
Absolutely. At a high-level, we like Europe and Mexico.
Trulioo: Are there particular countries that you believe would value greater control over their wages? If so, what problems currently affect these nations?
In Europe, it’s quite normal to be paid monthly. Payday lending has some pretty strong roots in Europe as well, despite consumers touted as being more fiscally responsible. I do believe that access to wages inter-pay cycle would help improve the financial health of this population.
Trulioo: We’ve heard that ZayZoon is working on a suite of financial wellness tools which include an overdraft predictor, low banking balance notification, and a financial health scoring system. As your platform grows, is it ZayZoon’s mission to become a one-stop shop for financial wellness?
Absolutely. ZayZoon’s mission is to improve the emotional health of our customers by offering socially responsible financial solutions. Anything we can do to help with this, specifically during the precarious time between the start of work and ultimately when an employee gets paid (in the traditional sense), is of interest to us.
Trulioo: How is Zayzoon supporting workers who prefer to operate independently, specifically within the gig economy?
The gig economy isn’t just a fad. As this vertical continues to mature, ZayZoon will absolutely be putting further effort into this channel. It’s a demographic of people that normally have more variability than any other sector of the workforce and so ZayZoon feels like we can help them immensely. Aside from additional efforts being placed on the gig economy, ZayZoon is excited to add additional products to our suite of tools. We believe in building our customers something that they will love rather than spreading ourselves too thin over a multitude of various channels.
Trulioo: What’s next for ZayZoon in 2019 and beyond?
In 2019, we’re extremely focused on further expansion of our Early Wages On-Demand product and the introduction of a few key financial wellness tools. Beyond that? There’s an incredible appetite for financial wellness and we’re here to provide a solution.