By James Herbert, CEO and Founder of Hastee
UK businesses and consumers face unprecedented social and economic disruption as a result of the COVID-19 pandemic. Many have seen their incomes and businesses collapse, while countless otherwise productive members of society are unable to work, protecting their communities in mass self-isolation.
This effort from the British public is not going unnoticed and as we know Chancellor Rishi Sunak outlined a number of support packages created to help all throughout this arduous time. While the government must be applauded for these unprecedented measures, there is more they can do in unison with the UK fintech sector to ensure that people are given the best chance of fighting this virus with access to liquidity when they need it the most.
People need access to their earnings, benefits and relief payments now in order to pay for urgent necessities and to help avoid getting into unmanageable debt. Whether they be citizens requiring access to Universal Credit, Statutory Sick Pay, Furlough payments, or other forms of government emergency relief, the waiting times for such benefits are and will continue to cause hardship for those whose regular income has been disrupted. Many simply do not have the savings to wait. A recent report by DeVere Group suggests that British consumers are turning to fintech apps in order to find ways of managing money during this time.
While there is no problem with consumers looking for innovative solutions to accessing their funds, this suggests that there is an overriding feeling that the payment of these crucial funds may take longer than anticipated.
Even in seemingly less unchallenging times, there are big cash flow issues for a large proportion of the UK workforce. Our 2019 Workplace Wellbeing study suggested that a third of workers feel they often need to borrow money, and that many rely on high-cost credit to obtain it. 38% of workers surveyed have applied for high cost credit options despite knowing they would struggle to keep up with repayments. As people turn to unemployment, statutory sick pay and furlough these potential issues will only be amplified and the presence of innovative financial solutions can go some way to easing people’s financial worries.
This is where the collaboration between leading, innovative fintechs and the UK government must take place. Technology can go some way to bridging the gap between the two, the presence of a huge startup community in the UK, an advantage we hold over our continental partners can be the catalyst for faster payments for those who need it.
There is technology that sits within the UK fintech scene that could speed up this process, taking the wait for workers down from weeks and months to potentially days and hours. All that is needed is the data – who needs to receive what money, when, how much and by whom. The agile models that most fintechs are built on provides a more malleable infrastructure in which to make these payments, and leaning on the expertise of financial leaders to pay these unprecedented sums will lend credibility to the government’s scheme.
The government must seek out the skills that lie within financial services companies, championing innovative tech in order to reduce the strain on individuals, families, and, not least, the state’s financial systems. These payments can be massively simplified by the presence of financial technology, allowing for a more personalised service for consumers. The success of major fintech players such as Monzo and N26 shows that many feel more comfortable and in control of their finances when they are able to see them go in and out of their account.
The nature of modern life is formed on the transactions made by consumers to businesses. For many years, cash was the only way to pay for your goods, but with the integration of card payments and then the subsequent creation of contactless payments, fintech has disrupted the system. It is likely that contactless and digital payments will become the most common forms of payment in the aftermath of the coronavirus pandemic. This should be no surprise to most, with the virus playing a catalyst for the acceleration of an already emerging trend with contactless payments surpassing cash payments in 2018, rising ever since.
However, the presence of neo-banks and their personalised services will likely take on a more common role in the UK, with many looking to replicate the experience of a traditional high-street bank plus a raft of extra services. These extra services will be pivotal to the re-emergence of the UK finance sector.
For example, with bank branches shut, many will be looking to access financial advice services without the option of going to branches and talking with a consultant. For some, these are essential to financial wellbeing. Services such as The Money Charity are championing the movement of financial education, and this is certainly something that is deep-rooted in the work we do at Hastee.
In addition to this, conversation is already steering towards what patterns the job market will follow once the pandemic is over. It’s likely we’ll see many workers looking to change jobs based on the support and compassion of their employers during this difficult time.
More and more companies are realising that Earnings on Demand platforms are fast becoming a strong tool for recruitment and retention, allowing employees to access their wages as they earn them. This model is disrupting the traditional ‘monthly pay model’ and allows workers to make more informed, sensible financial decisions with money that they have already earned.
There are many things that are still uncertain right now, but what we do know is that the world we lived in six weeks ago is not coming back anytime soon. We have already seen that in the face of great adversity, many different industries and communities have come together to make the best of a bad situation – fintech is but another area in which we can make the current situation, and that of the impending future, a little bit more comfortable and bearable for all.