Monday, January 22, 2024

Take a look at earned wage access framework, Paywatch Malaysia urges govt

PETALING JAYA: The government could explore the earned wage access (EWA) framework to address the issue of financial challenges faced by civil servants before the end of a month, according to Paywatch Malaysia co-founder and CEO Richard Kim.

He said that last year, the government of India’s Rajasthan state introduced its Earned Salary Advance Drawal Access Scheme, providing its employees with an advance salary option.

Kim said the implementation by the Rajasthan state government presents an opportunity for the company to possibly collaborate with the Malaysian government, especially considering the significant civil service workforce in the country.

He added that given a substantial portion of the Malaysian workforce faces financial challenges before the end of a month, implementing an EWA framework could effectively address the issue.

“The government can consider certain aspects, such as the establishment of robust regulatory and legal frameworks, to ensure the success of the programme. Education and awareness initiatives also play a pivotal role in promoting responsible financial practices among government workers.

“The Malaysian government should proactively explore collaboration possibilities, with a focus on tailored EWA solutions that cater to the unique needs of civil servants, while also addressing regulatory and educational prerequisites for a seamless and impactful implementation,” he told SunBiz.

Currently, the EWA service provider has a presence in Malaysia, South Korea, the Philippines and Indonesia.

“While we are eager to explore future expansion, we are currently focused on solidifying our presence and ensuring the utmost satisfaction of our existing markets,” Kim said.

In Malaysia, its customer demographics include blue collar and white collar workers, with clients such as MUI Group, Jaya Grocer, PayNet, Telecontinent and QSR Brands (KFC & Pizza Hut).

Based on its findings, 90% of Malaysian employees face financial emergencies without direct access to extra funds. Hence, the company offers EWA services which allow employees to access a portion of their earned salary before their scheduled paydays.

“Companies such as Jaya Grocer, PayNet, CP Group, Wilmar Group, PPB Group, QSR Brands Group, and publicly listed Shopper360 have implemented Paywatch as a tool to foster a better financial future for their employees (as well as) education industries ... such as University of Nottingham and Unitar,” he said.

On Paywatch’s target for 2024, Kim said it will focus on market expansion and enhancing its service to be more seamless for clients and transform the traditional payroll landscape.

“Additionally, we are committed to democratising financial access, empowering employees and fostering a paradigm shift towards a more equitable, financially inclusive future throughout Southeast Asia.”

At present, the company has grown 1,100% in revenue over the last 12 months, processing over US$5 million (RM23 million) in monthly wages through its app.

Kim said the solution has helped employers improve retention rates, with businesses reporting an average of 40% lower employee turnover, creating immense savings in rehiring costs for companies.

Currently, it has a serviceable base of more than 500,000 employees globally across diverse sectors including retail, manufacturing, hospitality, higher education, business process outsourcing service centres, food and beverage, and financial services.

Its strategic partners include Visa, UOB, OCBC, Hong Leong Bank and Hana Bank, which has enabled it to provide EWA solutions for its clients’ companies. Moreover, it partners with multinational corporations and banks alike to highlight its low-risk approach to traditional banking institutions.

Kim said the collaborations aim to bridge the gap between traditional payroll systems and the growing demand for on-demand financial services.

He said Paywatch’s core business remains its EWA service. However it hopes to extend its offerings with other financial services such as bill payments and savings features, in order to adapt to the evolving needs of its user base.

“At the same time, Paywatch encourages responsible financial habits among our users through education and literacy. By incorporating insightful financial content from Visa into our app, we provide resources that can help our users manage their money responsibly,” said Kim.

On outlook for the financial technology industry, he opined that employers are increasingly prioritising financial wellness and development programmes by integrating education, coaching and low-cost loan initiatives into employee benefits.

“Overall, the widespread emphasis on educating employers about EWA's benefits, the implementation of low-fee structures and the surge in workplace financial wellness tools signal a shift towards alleviating consumer financial stress.

“The trend towards benefits personalisation and investment in internal talent growth and development programmes highlight a movement towards tailored, holistic solutions that can help enhance financial resilience, employee satisfaction and long-term well-being within the workforce,” remarked Kim.

Source: The Sun Daily

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