More Than EWA: Delivering Financial Wellness On Demand
THE COWEN INSIGHT
Embedding adjacent financial wellness functionality around earned wage access (EWA) will mold a more holistic perception of EWA solutions, leading to accelerated on-demand pay adoption. The current state of employee financial wellness is dire. EWA’s better value proposition and upstream positioning present an opportunity.
On-Demand Pay Accelerated Through Broader Financial Wellness Proposition
The notoriety of on-demand pay has grown significantly since we published our Ahead of the Curve ® report on the topic just one year ago, On-Demand Pay: You’ve Already Earned It. We believe embedding adjacent financial wellness functionality around earned wage access (EWA) will mold a more holistic perception of EWA solutions, leading to accelerated On-Demand Pay adoption.
Dire State Of Financial Wellness Yields Opportunity for Earned Wage Access
The current state of employee financial wellness is dire. Workers are seeking solutions from employers. This yields an opportunity for on-demand pay vendors to fill the void. We believe on-demand pay vendors are best positioned to address clear gaps due to the direct integration to wages, the primary source of income for most workers. This uniquely enables on-demand pay vendors to offer more comprehensive and robust financial wellness functionality compared to potential alternatives.
Employers are apt to take an increased interest in the financial wellness of their employees because it can positively impact the bottom line, improve workplace culture, and because employees want their employers to take an interest in their financial wellness. This demonstrates tangible benefits that adjacent financial wellness functionality can provide in conjunction with EWA. This functionality presents a potentially costless benefit for employers too. Further, it satisfies workforce needs that have only been amplified amid the COVID-19 pandemic.
We view the growing emphasis on broadening out with financial wellness functionality as positive for the on-demand pay sector. We believe this trend will shift on-demand pay to a more experiential versus transactional experience. This will drive increased engagement with vendors’ applications and will reinforce the value proposition of offerings. It also opens the door for other monetizable opportunities in the future.