Improving Financial Well-being through Embedded Finance with Joel Frisch VP Growth at Clair

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[00:00:46] E-A-T-L-E-S-E-O!

[00:01:02] Hey, this is William Tidcup and Ryan Leary, and you are listening and hopefully watching the Use Case Podcast.

[00:01:08] Ryan, how are you doing today?

[00:01:09] I'm doing good.

[00:01:11] Good, good, good. We got Joel on from play.

[00:01:13] I wasn't going to answer you.

[00:01:14] Oh, really?

[00:01:15] I was just going to let you sit in awkward silence.

[00:01:19] Just sit out there on that branch.

[00:01:21] Yeah, but, you know, it's, so for those that are listening, they won't understand.

[00:01:26] But those that are watching, they may understand because they'll see both Joel and myself.

[00:01:32] Yes.

[00:01:32] But I've centered Joel in my screen.

[00:01:35] Yes.

[00:01:35] And so as he's not talking and I'm talking, it's very weird.

[00:01:40] I can see that.

[00:01:41] Because his mouth is not moving and my mouth is moving.

[00:01:44] So I need to...

[00:01:45] That's going to be a little awkward for folks.

[00:01:47] It is, yeah.

[00:01:48] And I feel a little surrounded because both of y'all are Eagles fans.

[00:01:51] So we're going to get past that.

[00:01:54] Joel, would you do us a favor and introduce yourself and introduce the company?

[00:01:59] For sure, for sure.

[00:01:59] It's a pleasure to be here.

[00:02:00] And don't worry, William, by the end of this, we'll get you a nice tight haircut.

[00:02:05] I'm an Eagles fan as well.

[00:02:07] I'm Joel Frisch.

[00:02:08] It's a pleasure to be on.

[00:02:09] Calling in from the great city of Philadelphia today, representing Ryan's favorite teams.

[00:02:15] Yes.

[00:02:16] And excited to talk about Claire.

[00:02:19] Claire is a fintech company based in New York.

[00:02:23] I know that our founder and CEO has been on the show before, a couple of years ago.

[00:02:28] And it's been fun seeing the evolution of the business.

[00:02:32] A lot of the learnings that we've had that have brought us to kind of our strategic focus

[00:02:36] and where we're seeing great success in bringing our solutions to the millions of American workforce.

[00:02:42] So excited to get into it.

[00:02:44] Is there any pressure to call yourself a work tech or an HR tech play as well?

[00:02:52] You cover both.

[00:02:54] Obviously, you're a fintech.

[00:02:55] I'm not taking it out of that category.

[00:02:56] However, you also cover work or cover a part of HR, right?

[00:03:03] For sure.

[00:03:03] Is there any pressure to kind of own that category as well?

[00:03:07] Yeah, I wouldn't say it's pressure.

[00:03:08] Look, I think at the end of the day, we want to become the go-to embedded solution to empower these financial benefits for the American workforce.

[00:03:18] And I think if you think about how others have brought together two different folks on a spectrum.

[00:03:25] So think about something like what Affirm and Klarna have done for retailers, right?

[00:03:29] And so you could say that they're shop tech.

[00:03:31] You could say they're fintech.

[00:03:32] But basically what they've done is they've brought retailers and consumers together to ease that transaction and make it valuable for both sides.

[00:03:39] And so we believe that there is an incredibly strong bond between employers and employees.

[00:03:46] Maybe not alike.

[00:03:47] Maybe they don't like it.

[00:03:48] But they certainly trust them.

[00:03:50] Unionization is up this year.

[00:03:51] Exactly, exactly.

[00:03:53] So there's that trust.

[00:03:55] And so those platforms that connect employers and employees are actually pretty powerful.

[00:03:59] Right.

[00:03:59] And how can they leverage that connectivity to then offer things that make the experience, an embedded experience, you know, more satisfactory for the employees while adding benefits for the employer like retention, attraction, et cetera.

[00:04:13] So, yes, you could call us both.

[00:04:16] Yeah.

[00:04:17] Okay.

[00:04:17] Give us a use case.

[00:04:19] Kind of set the stage here for the audience.

[00:04:22] In work tech, as employers are working with Klarna, give us a use case of what that looks like.

[00:04:31] Klarna.

[00:04:32] Like E-Klar.

[00:04:33] Like E-Klar.

[00:04:33] Like E-Klar.

[00:04:34] Yeah.

[00:04:35] That's how Nico acts.

[00:04:36] We're the same way, right?

[00:04:37] We're beautifully attractive on the outside.

[00:04:42] And everybody wants it, right?

[00:04:43] That's right.

[00:04:44] 100%.

[00:04:45] So, look, the best use case is because we just went through this exercise.

[00:04:49] If you think about like work tech platforms, you're going to call them.

[00:04:53] I'm going to segment them a little differently.

[00:04:54] So I'm going to say that there are human capital management platforms.

[00:04:58] You know, the old payroll started adding HR benefits.

[00:05:00] You have workforce management, which are primarily focused on scheduling the employee, make sure the employee shows up, know that the employee is there, time and attendance.

[00:05:10] Then you have a bit of field service management.

[00:05:13] I'm trying to like get jobs in the field and then assign employees to it.

[00:05:17] So you have those three categories primarily.

[00:05:20] A few different iterations.

[00:05:21] You could include PEOs, et cetera.

[00:05:23] But if you think about those, there's maybe 700 to 1,000 of them in the U.S., roughly.

[00:05:30] Big, small, whatever.

[00:05:31] When you go through that and you really look at like who the best platforms are for engaging employees, not necessarily biggest, but those that actually really engage the employee, the employees are using it on a regular basis.

[00:05:44] This isn't me just checking my, you know, pace of once a year for taxes.

[00:05:48] We see there's a universe of about 100, 150 of these platforms that really present this opportunity to provide highly engaged tools, a financial benefit like on-demand pay right to the employer, right to the employee.

[00:06:05] And the key with that is that the employer comes off as a hero for bringing this in, but they're not required to do anything.

[00:06:13] And that's an important piece because the moment you start introducing friction, trying to bring a solution from provider to market, you're going to slow down how many people get access to it.

[00:06:23] And so to answer your question on a use case, we just announced recently some partnerships.

[00:06:30] Use one like a big partnership like with Gusto, right?

[00:06:32] Gusto, incredibly advanced modern payroll, human capital management provider working with hundreds of thousands of businesses out in the American marketplace.

[00:06:46] And they have been building a wild experience for their members, what they call individuals who get paid, right?

[00:06:55] Before we move on, I need to let you know about my friend Mark Pfeffer and his show, People Tech.

[00:07:02] If you're looking for the latest on product development, marketing, funding, big deals happening in talent acquisition, HR, HCM, that's the show you need to listen to.

[00:07:14] Go to the Work Defined Network, search up People Tech, Mark Pfeffer.

[00:07:19] You can find them anywhere.

[00:07:22] They have the ability now to embed our solution right into that experience.

[00:07:28] So Ryan owns a bakery.

[00:07:30] Ryan has nine employees.

[00:07:32] Ryan uses Gusto to run payroll and HR.

[00:07:34] Now, when Ryan's employees open up their mobile app to clock in or to check their pay stubs,

[00:07:41] they have the ability immediately to take an advance right there and control how frequently they get their pay.

[00:07:49] So that's the ideal use case.

[00:07:51] So you're really bringing this concept of embedded solutions, embedded finance into the HR space.

[00:07:58] So I noticed that you use, and it might be semantics, but you use the phrase on-demand pay versus things that Ryan and I hear, earned wage access.

[00:08:09] Are those synonyms or is there a difference in how you're using the terms?

[00:08:15] Yeah, I think they're relatively used interchangeably.

[00:08:18] I would say the way to think about it is that earned wage access is the category.

[00:08:23] As far as how the products are called, it differs a little bit.

[00:08:27] We call it on-demand pay because we think about it from the customer's perspective, from the employee.

[00:08:32] And they're really the hero in this story, right?

[00:08:35] They're the ones who are trying to take financial control of their lives.

[00:08:38] They're the ones who are trying to determine, hey, I need access now because I need to buy fuel, buy groceries, buy food, get my child to school.

[00:08:47] They think about it like on-demand pay.

[00:08:49] I don't want to get paid now.

[00:08:50] The average person is probably in a biweekly pay period.

[00:08:56] William, you were saying that you only pay Ryan every three months.

[00:08:59] Most people get paid.

[00:09:02] Only after a cowboy win.

[00:09:04] Yeah, I get it.

[00:09:06] Not this season.

[00:09:09] Yeah.

[00:09:12] So you know what's funny?

[00:09:21] How about that?

[00:09:22] You brought it up.

[00:09:23] So, Joel, what's interesting is it seems like on-demand pay seems like a better term than earned wage access.

[00:09:32] Like earned wage access is like a nickel phrase.

[00:09:36] It's hard to say.

[00:09:37] It is.

[00:09:38] And I can see people like, why didn't we just call it?

[00:09:43] You know, like I say, make it easier for people to understand what they were getting.

[00:09:47] Yeah.

[00:09:48] You know, I've had the opportunity to be in financial services and technology for a while now throughout my career and across different customer bases from, you know, executives of companies to international students who are trying to get to school to hourly employees.

[00:10:04] And if there's one consistent theme that I've seen across the board is that it all comes down to control.

[00:10:10] Right.

[00:10:10] When someone feels like they're in control, they feel confident.

[00:10:14] When they feel confident, they make decisions.

[00:10:17] They make decisions that are in the best interest of them and their families.

[00:10:19] And typically when you talk to someone about finance, about banking, about investments, you're like telling them, oh, I have this great idea, whether it's a stock tip or like, hey, here's how you can access a home equity credit line to do that.

[00:10:31] You know, improvements on your on your kitchen line when or even like health insurance.

[00:10:36] Right.

[00:10:36] When people don't understand it, they don't feel confident and they're like they just freeze up like I'm not going to do it.

[00:10:41] And so the reason why I think on demand pay makes sense from the consumer's perspective is because what you're doing is you're really giving them that control.

[00:10:51] Right.

[00:10:52] So when you look at the data to date, there's about, you know, five percent of the American workforce who are already using these tools.

[00:11:00] Right.

[00:11:01] So in 2022, there was like 10 million folks who who access these types of products.

[00:11:06] What's interesting is how frequently they use them.

[00:11:08] So the average person who's using one of these products is taking about 27 advances a year.

[00:11:14] So that tells you that's about twice a month.

[00:11:16] Right.

[00:11:16] And if you line that up to I get paid biweekly, but now I can take advances twice a month.

[00:11:22] Now I'm actually in control because I'm getting paid every week.

[00:11:24] Right.

[00:11:25] And when you look at the use cases, we just rolled out with with with Gusto's.

[00:11:30] We've been getting some amazing customer stories back.

[00:11:33] The use cases are spot on.

[00:11:34] Right.

[00:11:35] It's all about needs, not wants.

[00:11:36] It's all about folks who are like, hey, I was on I was on a trip.

[00:11:41] I don't get my paycheck for two weeks.

[00:11:43] I need I need to pay fuel or, hey, I'm a I'm a single mom.

[00:11:47] I need to pay for my child's child care center every week.

[00:11:52] But I only get paid every two weeks.

[00:11:54] You know, these are things that come up where some people may be solving this with credit cards as a float.

[00:12:01] Some people don't have access to do that.

[00:12:03] They need to figure out, like, how do they actually manage their cash flow?

[00:12:07] And that's why it all comes back to control.

[00:12:08] Have you seen any and it's probably a couple of questions in this, but have you seen or has the data shown that people who are taking weekly or say 20 if they're in that group of people taking 27 on demand pays per year and they're essentially being paid week to week?

[00:12:29] Like, is there a correlation to a to the amount that they're able to save as opposed to those that are getting paid biweekly on a, you know, on what we would consider?

[00:12:39] I don't think anybody saves.

[00:12:41] Well, that's so jaded.

[00:12:43] Yeah, that as well.

[00:12:45] But, I mean, I'm curious.

[00:12:46] Are they getting it and spending it, getting it and spending it more frivolously as opposed to saving it a bit?

[00:12:53] Yeah, no, it's a great question.

[00:12:55] Look, I think, William, to your point, like there's a couple things in there.

[00:12:58] One, financial literacy, like do people understand the power of saving, the power of something like compounding?

[00:13:03] Yeah, right.

[00:13:04] If you listen to good old Professor G, Scott Galloway over at NYU, he's been talking about this a lot recently with regard to, you know, taking responsibility.

[00:13:13] And he has an amazing chart that he shows with Apple, right?

[00:13:17] Instead of buying every iPhone that came out along the way, if you took that same amount of money and you invested in Apple stock, the impact it would have.

[00:13:24] It's something like two, three million dollars.

[00:13:25] It's insane.

[00:13:27] Yeah.

[00:13:27] So I don't think there's enough appreciation for that.

[00:13:29] And I know, William, you've talked about before that, like in America, we don't get a lot of financial literacy in school.

[00:13:34] Right.

[00:13:34] I think that the other component of that is just, you know, the ability to save.

[00:13:39] And I think that if you look at the situation economically that we're in right now, you've obviously seen very impressively high inflation in the last few years.

[00:13:49] So things like food and fuel have increased while wages have relatively kind of staggered off across the last at least a few years, two years.

[00:13:58] So that adds an element of pressure for folks who are already living paycheck to paycheck.

[00:14:04] So the ability to save is pressured.

[00:14:07] That being said, when I think about the Claire product over the last few years, where we were enabling folks to access wages on an actual Claire card.

[00:14:17] This is changing.

[00:14:18] But this is what we've been running the last few years.

[00:14:20] And you are able to see the funds that are coming in and the funds that are utilized.

[00:14:25] They are keeping balances.

[00:14:27] And so I think that there's an opportunity for folks who get it.

[00:14:31] You could actually set this up in advance.

[00:14:33] I've talked about this, you know, with a few folks.

[00:14:35] You could set this kind of set it and forget it, Ryan.

[00:14:37] We're like, you could say, hey, I only get paid every two weeks.

[00:14:39] But I'm actually going to start taking advances on the first of the month, the seventh of the month, the fourth of the month.

[00:14:44] And you can kind of play with that spread.

[00:14:47] And, you know, particularly, you know, in an environment where banks are paying, you know, higher interest rates.

[00:14:54] You know, some of the neo banks, if any of you have, you know, Robinhood, you're getting plastered for their new gold account, paying five and a half percent APY.

[00:15:03] Obviously, you have to, you have to like line it up perfectly.

[00:15:05] But you could play that game because now you're in control.

[00:15:09] Right.

[00:15:09] What did you, what did you think?

[00:15:11] And I still hear it now about, especially from HR, about giving employees access.

[00:15:19] This is similar to Ryan's, but they use it as a cop out to not offer products on demand pay or in wage access, et cetera.

[00:15:27] It's like the employees, they get paid this way so that they don't get into financial trouble.

[00:15:32] Yeah.

[00:15:34] Look, I think it's a very natural reaction.

[00:15:38] Right.

[00:15:38] It's the same type of reaction.

[00:15:39] It's like, oh, I'm going to give my kid a hundred dollar bill.

[00:15:41] Are they going to spend it this month?

[00:15:44] I think that some of that comes on me as a parent, like how have I guided my child?

[00:15:47] And second, that is, that is like making sure we understand how these folks are going to use it.

[00:15:54] Right.

[00:15:54] I think that's why it's really important when you, when you talk to, to users, particularly active users, and they use things like needs, not wants.

[00:16:02] And, you know, again, because of the current product that we've had, we've been able to actually see the trend, excuse me, the monthly transactions.

[00:16:08] And it's pretty impressive to see that they're relatively low dollar transactions.

[00:16:12] Transactions, $14 here, $20 here.

[00:16:16] The retailers that are primarily used on are things like fuel, Walmart, QSRs, you know, food delivery.

[00:16:25] That's a better, that's a better conversation.

[00:16:27] Are people responsibly buying food if you're paying that much in delivery fees?

[00:16:30] But probably a conversation for another episode.

[00:16:33] 100%.

[00:16:34] So, look, I think, I think it's a, it's a fair immediate reaction.

[00:16:37] I'm not going to use the examples of, you know, that I think some of the folks over at Intuit have used about, you know, giving man the access to fire.

[00:16:44] Like, of course they can burn themselves, but like, look what it can do.

[00:16:47] Right, right, right.

[00:16:47] But I think you have to be smart about it.

[00:16:50] And I think that the platforms that we are seeing who are successfully thinking about this are saying, okay, this is, this is a financial benefit, but how can we build on top of it?

[00:16:59] So you can build literacy on top of it.

[00:17:02] I was just talking to a large scheduling and time and attendance platform that was saying, hey, we are really interested in this product because what we want to do is we want to use this to incentivize shifts, incentivize upskilling.

[00:17:15] So it's like, okay, William, you can do job A. By the way, job B is available for Thursday.

[00:17:20] And in order to qualify for job B, take this upskill piece.

[00:17:24] Now you can do both jobs.

[00:17:25] And by the way, when you're done working job B on Thursday, you can access all his money.

[00:17:29] So if you start thinking about this as like multi-layer chess, you're actually improving the opportunity and you can motivate the employee to like make smarter decisions versus just taking this thing of like, well, if I give William $10, he's going to spend it in a bad way.

[00:17:43] Dumb question alert.

[00:17:44] Do you see a future in which they take some of the on-demand pay and put it into savings or automatically route it into savings?

[00:17:53] Absolutely.

[00:17:54] So I think the biggest lesson that we have learned in the last few years, and this is important for anyone in any product who's bringing anything to consumers, is that you need to listen to how they want to use your product.

[00:18:09] Right. So over the last few years, the way that the product was set was that like all of the advances would come to a clear account.

[00:18:16] Then you could access in a variety of ways.

[00:18:18] The users have told us like, hey, I want the advances sent to my account the way I do because I already have things set up like bill pay, savings, et cetera.

[00:18:27] Right, right, right.

[00:18:27] And you see this in the data like the advances would land in a clear account and they would immediately be sending them out to other accounts.

[00:18:35] And so I think, yeah, I think, again, it comes back to like giving them that control.

[00:18:41] If you say, hey, I want it my way and then I'm going to kind of set it up the way I have already or I need, then, yeah, you can absolutely start encouraging like, hey, by the way, take this advance.

[00:18:50] You know, if you were to if you were to direct it here, ability, whatever.

[00:18:54] Exactly. And I think that it comes back to this idea of being embedded in the HR system.

[00:19:01] If you're embedded in that process and it's accessible and convenient and it's tailored to that individual so that I know that Ryan worked X versus William worked Zed, like we can actually then start layering on other benefits for you.

[00:19:15] So like a high yield savings say, hey, you know, you want to take this advance.

[00:19:19] Cool. Do you want to split it up to these two places? You can start doing that.

[00:19:22] Well, getting back to the literacy part, some people, a lot of people, in fact, 100 years ago when I worked for Walmart, they did dollar for dollar matching on stock.

[00:19:32] Right. This is the 80s. So, of course, they could do that type of stuff back then.

[00:19:37] And my bit with payroll was if I don't see it, I'm not going to spend it.

[00:19:41] Yeah.

[00:19:41] But if I see it, I'm going to spend it. So just I'd max out.

[00:19:45] I'd max out every paycheck. We were paid every week.

[00:19:48] But every paycheck I'd max out and get it out of the account.

[00:19:52] And then whatever is there, I'll figure out a way to live off that.

[00:19:55] Yeah. I think I mean, I'm sure people will have lots of comments about the 401k system and early employees.

[00:20:03] However, you could argue that in the last kind of 10 to 15 years, the industry and the HR professionals have done a relatively good job of setting folks up for long term financial benefits.

[00:20:14] Right.

[00:20:14] I think the challenge that we see is that there's not enough attention to short term financial benefits.

[00:20:20] And so when you have employees who need help in the here and now, not thinking about retirement, which is 20, 30 years off.

[00:20:28] Again, appreciate the power of compounding everything we talked about, like why you should do that.

[00:20:31] Right.

[00:20:32] For those folks who need help in the here and now, you're pretty much leaving the employee to take a couple paths.

[00:20:37] One is they go to their manager or their employer and say, hey, I need help.

[00:20:41] Can I take in advance or can I get in advance on my paycheck?

[00:20:45] Or they have to go to friends and family who may or may not be able to help them.

[00:20:48] Or they have to go down the path of like very expensive avenues that could be credit card debt.

[00:20:54] That could be payday loans.

[00:20:55] So I think that the same approach that we took to long term financial benefits, we need to start introducing in short term financial benefits.

[00:21:03] And some of that has to do with like accessing pay.

[00:21:05] Some of that has to do with like, great, did you know that you could take some of this for savings like you're talking about?

[00:21:11] And start to increase that financial literacy of like, cool, how do I manage this week, this month, this year?

[00:21:16] Not just like what happens when William finally wants to go California dreaming in 20 years.

[00:21:23] So how does an employer know that they need you?

[00:21:29] One background check is always enough to protect your business.

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[00:21:40] Giving you the peace of mind after onboarding.

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[00:21:56] Because workplace safety doesn't stop after hiring.

[00:22:00] Hi there, I'm Peter Zollman.

[00:22:02] I'm a co-host of the Inside Job Boards and Recruitment Marketplaces podcast.

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[00:22:25] Yeah, so I mean, I would tell you that most employers know because they hear it from their employees.

[00:22:30] I think any employer that has either encountered employees asking for advances, any employer who has encountered losing employees because they go across the street for, you know, a small hourly increase in their wages.

[00:22:43] Or has struggled to attract folks.

[00:22:45] I mean, I was just on a podcast case study the other day with a group that runs home health care nurses.

[00:22:54] And they were talking about that this has become table stakes for them.

[00:22:57] Because if they don't have this, they're literally losing nurses in the interview process who are like, well, but if I can't get paid today, I'm going to go to ABC Co. across the street.

[00:23:06] So I think the employers recognize it.

[00:23:10] I think that the challenge in only being able to offer these solutions direct to consumer is that that becomes like very, you know, very challenging problem, very expensive problem.

[00:23:22] Like you're seeing with a lot of like, you know, young fintechs, neobanks, et cetera, trying to buy ads on Instagram.

[00:23:28] The problem with going direct to employers, besides the fact that it's tough to scale, is that you're placing a lot of onus on the employer.

[00:23:36] And I think that you can't treat the professional HR staff at a enterprise organization the same way I treat Ryan, who runs a chain of bakeries.

[00:23:45] He's right.

[00:23:46] And has a million things that he has to do.

[00:23:48] And this is just one of them.

[00:23:49] And so he's not interested in setting us all up.

[00:23:51] And so that's why I do think it comes back to the HR tech platforms, the platforms that are connecting for payroll, for scheduling, for time and attendance.

[00:24:01] And if we can bring this concept of embedded finance that has worked so well, and things like payments, think about Uber, and things like insurance, think about like, you know, you're buying your airfare on American Airways.

[00:24:14] And Allianz is right there.

[00:24:16] You don't have to think about how much you need.

[00:24:17] They've already done the calcs for you.

[00:24:19] You think about like going to Best Buy, buying that big TV.

[00:24:22] I can just grab it and, you know, pay a firm right now, you know, $7 a month for the, you know, the rest of the period.

[00:24:30] And now HR, like HR is connecting them.

[00:24:33] So why shouldn't this be a seamless process?

[00:24:35] So now me as an employer, I'm hearing this.

[00:24:39] Right.

[00:24:39] And it's like, oh, cool.

[00:24:40] It's already here.

[00:24:40] I don't have to do anything.

[00:24:41] So I think that's the key differentiator.

[00:24:44] How fast is it or how is it to stand up?

[00:24:48] So we've come to me.

[00:24:50] So let's say it's an enterprise company and they say, okay, yep, this is it.

[00:24:53] They've looked at other stuff.

[00:24:55] They're like, okay, we definitely are going to go with Claire.

[00:24:57] This is awesome.

[00:24:59] Now what?

[00:24:59] Like the, okay, proposals are signed and all that other stuff.

[00:25:02] But like, okay, how long does it take them to stand it up and get it to their employees?

[00:25:08] Yeah.

[00:25:08] So again, we're standing it up with the platform, right?

[00:25:11] So let's take a workforce management platform, field service management platform, like service

[00:25:18] titan, somebody who's, you know, out in a field.

[00:25:20] Right.

[00:25:20] To stand up with a platform like that.

[00:25:23] You're probably talking, I've seen as fast as three months to get it fully ready, tested, you know, make it seem seamless for the users.

[00:25:30] And then their ability is to turn it on at once with advanced notice to employers, still giving the employer the control to say, hey, do I want my employees to have this or not?

[00:25:41] And I will tell you that when we do this, we just did this recently.

[00:25:45] Advanced notice went out to 72,000 employers on this one platform and said, hey, new feature.

[00:25:49] Here, you can opt out if you want.

[00:25:52] 60, 60 out of 72,000 said for whatever reason, they don't want to provide this benefit to their employees.

[00:25:58] But the rest who didn't opt out, that becomes immediately available to all their employees.

[00:26:03] And so it's because it's embedded in the tool that they already are using to share, you know, clocks, share schedules, get access to time punches, share payroll.

[00:26:13] It becomes available instantly.

[00:26:15] Can the employer put like percentages of what they can draw down on?

[00:26:20] So we typically set that at a max of about 50% of gross wages.

[00:26:28] We do that in order to make room for taxes, any other deductions and to ensure that the individual is not pushing themselves right up to the limit.

[00:26:37] I think in conversations with different HR platforms, we have the ability to reduce that even further.

[00:26:44] But it's not really dictated by the employer.

[00:26:46] Got it.

[00:26:48] Got it.

[00:26:48] Now, is that – so it's interesting that you're capping that for obvious reasons.

[00:26:56] Is that a you thing?

[00:26:59] Is that a Claire thing where you don't want to make this predatory?

[00:27:04] Or is that an employer thing where they're just – in order for them to leverage the service, they need to see this?

[00:27:11] Yeah.

[00:27:13] It's really about us, Claire.

[00:27:14] Because at the end of the day, this is a consumer product.

[00:27:19] This is a consumer product.

[00:27:21] And so the relationship in the advance with that individual taking that pay on demand is between that employee and Claire with our partner bank.

[00:27:31] It is not related to the employer.

[00:27:33] So while it's offered via the platform that the employer uses for any of those tools, the relationship still sits with the consumer.

[00:27:41] And the consumer is the hero.

[00:27:42] And so we want to make sure that that consumer, that American employee is having access to that tool without putting themselves in a situation where it would be inappropriate.

[00:27:54] Hi, I'm Stephen Rothberg.

[00:27:55] And I'm Jeanette Leeds.

[00:27:56] And together, we're the co-hosts of the High Volume Hiring Podcast.

[00:28:00] Are you involved in hiring dozens or even hundreds of employees a year?

[00:28:04] If so, you know that the typical sourcing tools, tactics, and strategies, they just don't scale.

[00:28:10] Yeah.

[00:28:11] Our biweekly podcast features news, tips, case studies, and interviews with the world's leading experts about the good, the bad, and the ugly when it comes to high volume hiring.

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[00:28:24] I love that you interchange consumer and employee.

[00:28:28] I just love that throughout the podcast, I've noticed how you say consumer and then you go, you'll say employee.

[00:28:33] So you use those words in such a way that's powerful.

[00:28:36] That's not normal with a lot of HR tech plays, clearly, for obvious reasons.

[00:28:42] The question I have is about the unbanked.

[00:28:44] Yeah.

[00:28:45] So, again, maybe does it do stored value cards?

[00:28:48] Or like, okay, how do we take care of the folks that aren't banked for whatever reason?

[00:28:54] Yeah.

[00:28:54] It's a great question.

[00:28:55] And truthfully, if you go back to your conversation with Nico a few years back, that was certainly the early model for Claire was that the vast majority of these folks were unbanked.

[00:29:06] I think what's interesting that we've seen in the employee feedback and also in the conversion throughout our kind of process, the vast majority of folks do have a bank relationship.

[00:29:19] Now, they may not have a satisfactory relationship.

[00:29:21] They may not be getting the benefits that they could get from some of these newer providers.

[00:29:28] But what we've seen is that, number one, requiring them to create a new bank account creates a friction point for those who have one.

[00:29:35] And also, you've seen in the data for those who have taken the advances, the vast majority, it's like 80%, 90% are already kind of transferring out to their own account.

[00:29:44] So the approach that we are working towards now is that in order to give optionality, another component of control, right?

[00:29:53] In order to give optionality to the employee, we want to be able to push to any account, push to any card they have.

[00:30:00] However, for those that don't have an account, we will guide them towards a partner solution to get them set up.

[00:30:08] And we will only be offering a provider that makes sense for these individuals.

[00:30:13] So, you know, a very kind of modern platform, you know, focused on low or no fees, providing access to a variety of financial tools.

[00:30:23] But I think trying to put the cart before the horse and require somebody to set that up in order to access this tool has shown that it's actually the reverse.

[00:30:32] Right.

[00:30:33] Where does this go over the next couple of years?

[00:30:36] So you guys obviously have – you've evolved over the last few years since the previous conversation.

[00:30:43] Where does this go from here?

[00:30:45] What are you seeing in the future?

[00:30:48] Yeah.

[00:30:48] So I think we are going to see within HR because of, again, that connectivity between employer and employee, the sheer amount of data and also dollars, right?

[00:31:00] I mean you have payroll companies who are moving all this money on behalf of employers either to employees or to the government.

[00:31:09] There are lots of – there are some – not lots.

[00:31:11] There are some payroll companies who are already getting ahead of this and saying, hey, like we keep running payroll but then we're sending it out to different banks.

[00:31:17] Why don't we just create our own?

[00:31:18] And so you've seen this with Gusto.

[00:31:20] You mentioned Sertian earlier in our chat, William.

[00:31:22] Like they're saying, hey, we could have a wallet experience.

[00:31:24] Like we're going to run payroll but we're going to keep those funds and allow you to kind of have full banking here.

[00:31:30] You're even hearing in the retail space, you know, big brands are like, hey, we're just going to create our own bank, Nike, Disney, right?

[00:31:37] They're going to come back with the old Disney bank account.

[00:31:39] So I think you're going to see this approach to embedded financial solutions continue to permeate in any non-financial platform that has a really engaged user base.

[00:31:52] It's too valuable in terms of bringing value to the user, to the consumer, or in our case the employee.

[00:31:58] And it's too valuable for that platform to not try to monetize that opportunity.

[00:32:03] And so I think if you play this out, I think within HR tech, work tech, they will start introducing embedded finance into their platforms because they have incredible engagement.

[00:32:16] You look at some of these mobile app ratings in the iOS or Android store.

[00:32:19] I mean some of these top platforms of the, you know, 100, 150 I mentioned before.

[00:32:23] These guys have, you know, tens of thousands of reviews that are 4.8, 4.9.

[00:32:28] These folks love using it for their schedule and to check.

[00:32:33] So that's an incredibly incredible opportunity to say, hey, we can offer you, you know, you know, financial tools that are accessible, that are convenient, that are tailored.

[00:32:41] And so I think that using something like on-demand pay is the first benefit in that embedded finance play is extremely powerful because it's relevant, right?

[00:32:54] Like, okay, I want to get paid.

[00:32:55] So this makes a lot of sense to me.

[00:32:57] Okay, now I see I can get paid from here.

[00:32:59] Now to your point, like how can I save from here?

[00:33:01] Okay, maybe I need high yield savings.

[00:33:03] How can I put myself on a better path for future?

[00:33:06] How can I use this to help build my credit so that I can access other tools down the road?

[00:33:11] Like I think this is just step one of being able to say, hey, this plugs in here and now we're really starting to take care of the employee because you, William, the payroll platform or you, Ryan, the employer, this is the best way to get to the employee and not throw them out onto Main Street and make them make all these decisions on their own.

[00:33:30] Going back to my comment about confidence, where now you have this consumer on Main Street like, oh, is that account good for me?

[00:33:36] Should I make that investment decision?

[00:33:38] I don't have enough credit to get that paycheck, excuse me, to get that credit card.

[00:33:42] You start to control this a little bit more and really guide them.

[00:33:47] You know, and I think too, Ryan, I think one of the ways I'd answer that is consumers are going to drive this.

[00:33:53] A lot of what's going to happen over the next couple of years as they have now.

[00:33:57] I mean, we wouldn't be here right now if it weren't for consumers saying, yeah, I want this and recruiting and retention, et cetera.

[00:34:06] So it seems that, Joel, we've talked about the kind of four walls of the United States.

[00:34:11] Are there plans to be in other countries?

[00:34:16] I want to say Canada and Mexico just kind of because I want to annex them and just, you know, make it be done with it.

[00:34:22] But do you see this going?

[00:34:26] Canadians hate that, by the way.

[00:34:27] Every time I talk to them about annexing Canada, they're like, that's not really funny.

[00:34:32] Whatever.

[00:34:34] But do you see this kind of growing and becoming a global play?

[00:34:38] Yeah.

[00:34:38] So, look, the value that this can bring to consumers based on their relationship as an employee to employer, I think, is global.

[00:34:47] I think that doesn't change.

[00:34:49] I think that the constructs of the way businesses pay employees.

[00:34:55] It's one thing in the U.S. where we see relatively majority on biweekly pay cycles.

[00:34:59] If you move to Europe, you see primarily on a monthly pay cycle.

[00:35:02] That makes it incredibly challenging for folks to budget and to plan, to kind of handle things throughout the month.

[00:35:09] I just came from working abroad the last nine years and had a lot of employees based in South Africa as well as India and other places.

[00:35:17] And these folks had to line up everything perfectly, right?

[00:35:20] Like you had to make sure that when you get paid on the 30th and everything was paid right then.

[00:35:24] That's incredibly onerous on the individual.

[00:35:26] So I think that there are absolutely opportunities abroad.

[00:35:30] And I think that we're starting to be pulled in that direction as some of these HR platforms, these HCMs or workforce management platforms are taking a more global approach.

[00:35:40] You were talking about this earlier, kind of that evolution.

[00:35:42] We've seen a few of these brands really start going after it.

[00:35:47] In the U.S., we have like Deal, there's Multiplier, there's a few other folks like that.

[00:35:52] And it's really hard for them to try to find best in breed in every country and then kind of cobble that together because now they have a hard time managing their platform.

[00:36:01] So I think we're certainly seeing pull to say, hey, cool, you can offer this in the U.S., great.

[00:36:04] Can you do it in Canada?

[00:36:05] Can you do it in Europe?

[00:36:06] Can you do it in other places?

[00:36:07] So I think that certainly it'll be something that we'll be looking at.

[00:36:12] I think that we will want to replicate our approach to doing it with a compliant infrastructure that partners with banks.

[00:36:18] Because most important is that we want to provide an uninterrupted solution.

[00:36:24] Like an embedded solution only works if it's uninterrupted.

[00:36:27] If Ryan goes to grab an Uber and that connection to his bank doesn't work, he can't book that Uber.

[00:36:33] So we need to make sure we kind of replicate it in the same way.

[00:36:37] But yeah, we do look to expand.

[00:36:41] Do employers get hip to the fact that employees want weekly pay?

[00:36:48] And do they just move to a weekly pay system and avoid this altogether?

[00:36:55] Interesting.

[00:36:55] Yeah.

[00:36:56] I mean, look, I think that's the elephant in the room, right?

[00:36:58] Is that the current model of paying individuals on an elongated cycle?

[00:37:06] I mean, you could argue that anything more than the day that you work is elongated.

[00:37:09] Like if William works today, he should be paid today.

[00:37:13] I think the question is, will they do this?

[00:37:16] For a lot of businesses, this is how they manage their cash flow.

[00:37:19] Right.

[00:37:19] They can't afford it to other, yeah.

[00:37:21] Yeah.

[00:37:21] I mean, think about like the restaurant example.

[00:37:24] And I think it's been talked about on your show before.

[00:37:25] But like we go to a restaurant, we charge our card.

[00:37:27] That restaurant doesn't get paid from the bank for two days.

[00:37:29] So they can't pay their employee that day.

[00:37:31] But that's a really tight example.

[00:37:34] I think that, you know, you also have, you know, the way that the payroll system is set

[00:37:40] up where they're collecting wages to pay employees and to hold for taxes and then only paying

[00:37:45] taxes on a later cycle.

[00:37:47] That's a big component of their business model.

[00:37:49] Is that going to change?

[00:37:51] Probably not, but possible.

[00:37:53] But it is very interesting because you have a lot of these kind of newer players in the

[00:37:58] gig industry.

[00:37:59] You talked about Uber before.

[00:38:00] We talked about Lyft where that driver, the moment he drops you off at the airport, he

[00:38:05] hits that button and he gets paid.

[00:38:06] And so now you're starting to put some pressure on the market that if you're an employee and

[00:38:11] you're looking for your next role, do you want to have that control of like the moment

[00:38:16] I am finished my job, I get paid?

[00:38:19] Or do I need to fight with my employer that like, hey, I need access to this?

[00:38:25] So I think it's a good question.

[00:38:27] I think that there are a lot of pressures at play here.

[00:38:29] And I think that's why something like an embedded on-demand pay solution just provides

[00:38:35] that control right to the employee now while the rest of these very large questions get

[00:38:39] sorted out.

[00:38:40] I think the last question for me, but one of the things I love about Claire is that you'll

[00:38:46] provide transparency in that transaction.

[00:38:49] So the consumer, we'll use the word that you use a lot.

[00:38:53] The consumer, there's no shock at all.

[00:38:55] They know exactly.

[00:38:56] And I think that's one of the things that the payday loans and some of the other types

[00:39:01] of things that happen, there's no transparency or very little transparency.

[00:39:07] So it's kind of like seen as taking advantage of someone.

[00:39:12] And in y'all's case, it's like, no, everything's up front.

[00:39:15] Like everything's transparent.

[00:39:16] The employee knows exactly what's going on.

[00:39:19] I love that.

[00:39:20] And I don't...

[00:39:21] That's not a standard in our industry.

[00:39:25] Yeah.

[00:39:25] Look, I think you got to really breathe it.

[00:39:28] You got to live it.

[00:39:29] I think transparency doesn't just mean like transparent pricing.

[00:39:32] I think transparency means showing people exactly what they're getting, showing people

[00:39:37] exactly how it works when they call in or email or text in to service, getting the answer

[00:39:43] up front what they want.

[00:39:45] I mean, we're all consumers, right?

[00:39:47] We're all employees.

[00:39:47] We all go through this every day.

[00:39:50] The times where you get frustrated is because you're like, I don't understand why is it

[00:39:53] this way?

[00:39:54] But when you can introduce a little bit more of that clarity, pun intended, you kind of,

[00:40:01] you know, you make people feel a bit more confident.

[00:40:05] Ryan?

[00:40:06] I'm good.

[00:40:07] I'm financed out.

[00:40:08] I just want to get paid.

[00:40:11] All this talk of money.

[00:40:13] And I do want to play.

[00:40:49] Does it not sound like a college fight song?

[00:40:52] Does it?

[00:40:52] I mean, I'm no.

[00:40:54] We've already passed the fight song.

[00:40:56] I mean, an incredibly successful college.

[00:40:58] I'm sure.

[00:40:58] Yeah.

[00:41:00] I went to Alabama.

[00:41:01] I'm comfortable with successful college football.

[00:41:04] You know what it's like to root for a good team.

[00:41:06] You must have worked for a good team.

[00:41:08] Just not in the last 40 years.

[00:41:12] Joel, you've been wonderful.

[00:41:13] We love Claire.

[00:41:14] Thank you so much for coming on the show, spending some time educating our audience.

[00:41:18] Absolutely appreciate it.

[00:41:19] Appreciate you.

[00:41:19] Appreciate the time.

[00:41:20] And go Birds.