Representing the largest ever ‘fintech-for-good’ fundraise, Wagestream’s round is comprised of a $115 million combined venture debt and funding facility from Silicon Valley Bank, a $60 million equity investment led by US-based investment firm, Smash Capital, and funds and accounts managed by BlackRock.

The funds will be used to scale up employee growth outside the UK and build out Wagestream’s suite of app-based financial services. According to the firm, there are currently 200 million workers in the US that could benefit from the app.

Currently, Wagestream’s services include financial education, financial coaching, budgeting tools, and flexible pay - otherwise known as ‘earned wage access’.

The impact of Wagestream’s services is measured with open banking data sourced from the app. The fintech can see, for instance, how much credit employees are taking out, whether they are paying overdraft fees, and the extent to which savings are being made. All this information indicates how financially healthy an individual is.

In an exclusive interview with Finextra, Briffett explains that “the aim was to enable even more low-income shift workers to access the money their companies owe them in unpaid wages. This is how to stop people accumulating overdraft fees or going into debt cycles between pay days. Now we've built on that with a broader range of financial wellbeing tools - from savings, to financial coaching, to fairer deals on financial products.”

Ultimately, Wagestream seeks to be a payday loan killer.

The poverty premium

Historically, frontline workers (employees who provide key public services) have accessed financial services at a higher cost than those on set salaries and higher wages. A University of Bristol study revealed that frontline workers pay a premium of £490 more for basic household and financial services per annum. This is the equivalent of 14 weeks’ food shopping.

“If you're a low-income worker on volatile pay, a bank is going to see you as high risk and they're going to give you a certain set of financial products which will be much more costly, compared to what the rich guy who just walked in can get,” commented Briffett. “That’s known as the poverty premium.”

Brad Twohig, managing partner at Smash Capital, adds: “Financial exclusion and a rising cost of living have created severe financial stress for frontline workers, who are overlooked by the financial system despite working so hard to keep our economy and healthcare systems running over the past two years.”

Correcting the status quo

Wagestream was founded in 2018 to address these issues - delivering to frontline workers earned wage access, through employers that subsidise the service. With the Wagestream app - leveraging banking technologies such as Faster Payments and smart ledgers - employees can choose their own pay cycles, manage budgeting, get advice from a personal money coach, and receive fairer deals on products such as insurance, utilities, and credit for essential services.

“When we launched Wagestream, many employers viewed financial wellbeing in the workplace as a long-term aspiration; now they realise it is a national emergency,” said Briffett. “For example, 93% of companies plan to put a financial wellbeing program in place - up from 51% just one year ago. This sentiment shift is partly due to the cost-of-living crisis, and partly due to the fact that moving away from the draconian model of serving pay every 30 days can be an incredibly powerful benefit for employees. It improves recruitment and retention rates.”

According to Briffett, one million workers already have access to Wagestream’s services, via 300 firms across the US, UK, Spain and Australia - including Bupa, Hilton, Halfords, Travis Perkins, Pizza Hut, Next, Greene King, Co-op and the NHS.

Katie Duxbury, head of payroll services, Bupa, notes: “Wagestream has been amazing for our people. By offering a range of charity-backed financial wellbeing tools built around pay, we’ve been able to empower them to build better financial health.”

This is borne out in the figures. Wagestream is accountable to an Impact Advisory Board and therefore reports - through a bi-annual Impact Assessment - on its social impact to shareholders. According to the firm, Wagestream outperforms global benchmarks on financial inclusion, set by independent impact measurement firm, 60 Decibels, with 77% of people reporting feeling less stressed, and 72% reporting an improved quality of life.

“Pay is the biggest contract between the employer and employee, so if you make that benefit more flexible, more real, and more meaningful to people, then everyone will reap the rewards,” said Briffett.