Floatpays CEO, Simon Ward weighs in on the role that employers play in progressing financial inclusion in the country

Financial inclusion; or the universal accessibility and affordability of basic financial services, can be defended as a human right, due to its intersection with other liberties, including the right to equality, the right to housing and the right to freedom of trade, occupation and profession. 

While the responsibility of ensuring South Africans exercise their right to financial inclusion may have previously sat with the public sector, the move towards a more inclusive society can be accelerated by private sector leaders and employers appreciating their role in making quality financial services accessible to workforces. 

This is the opinion of Simon Ward, founder and CEO of Floatpays – a Fintech startup that helps employees build financial wellness. 

As he explains: “As an emerging player in the Fintech space in South Africa, we are acutely aware of our role in building a more financially inclusive country. Our vision is to partner with Africa’s employers to be the catalyst of financial inclusion and wellbeing amongst the continent’s people.Our belief in this basic need is rooted in our conviction that financial inclusion is a fundamental human right. Not only is it the key to socioeconomic development and equality, but it is a highly effective means by which to serve the underserved.” 

The path to financial inclusion differs for people but it usually begins with getting a basic transactional bank account. Significant strides have been made to ‘bank the unbanked’ - data from the FinScope S.A Survey in 2016 showed that 77.13% of the South African population have access to basic transactional banking services. However, there is still a lot more to be done with regards to the accessibility of savings accounts and secured credit from formal financial institutions.  The same survey indicates that only 28.76% of South Africans had a savings account with a formal financial service provider.  With credit specifically, a big barrier to access is poor credit scores - the National Credit Regulator’s 3rd Quarter Credit Bureau Monitor reports that the number of consumers with impaired records increased by 98,892, to 10.17 million - an increase of 0.98% quarter-on-quarter. 

With fintech products that link to payroll systems - such as Floatpays, employers can become the enablers of access to savings products and provide solutions to help people improve their credit scores so that ‘good credit’ becomes within reach. Floatpays provides employees with on-demand access to a portion of their earned wages, disrupting the notion of the 30-day payment cycle that often forces people to turn to ‘easy credit’ when mid-month cash flow is an issue. Floatpays’ on-demand access to earned pay gives people an alternative to the type of credit that hurts people’s credit scores i.e. unsecured lending. Floatpays’ savings account is an interest bearing savings account that links directly to people’s paychecks, making saving highly accessible and easy to do.

Educating consumers around financial literacy; or providing them with the awareness, knowledge and skills to make sound financial decisions, is critical to financial inclusion. Currently, the South African government has ratified several policies and procedures to this effect, but much more support is needed from the private sector and particularly, from employers. Floatpays provides employees with access to a free budgeting tool and free financial education on its app. The focus is on providing financial education that is practical and relevant - educating people on the main areas of personal finance: income, spending, saving, investing, and protection.

A proof of impact study at one of Floatpays’ clients, revealed that over 90% of employees  improved their money management  since using Floatpays. Good personal financial management is critical to long term financial wellness and remaining financially included. As Ward concludes: “At Floatpays, we support employers who hold their leadership teams accountable for helping their employees build financial wellness. We have been encouraged by the results we are seeing in the companies who have been involved and we are confident that as more employers realize and act on their role in helping people become financially included, this fundamental human right becomes the norm and not the exception.”