Nico, we’re delighted to have you at FintecBuzz. Could you start by sharing your professional journey and how it led you to co-found Clair?
I began my professional career after college at J.P. Morgan, where I worked on projects involving hourly rideshare drivers. This helped me gain a deeper understanding of the fintech space and the obstacles that workers face to reach financial stability. Despite already earning their pay, they don’t have immediate access to it, if they need to cover for unexpected expenses. After working an hourly job in college, I experienced firsthand how incredibly frustrating it could be to wait weeks for my paycheck, and sometimes even longer as a result of processing errors. As a student managing my personal budget, in a new country, I could only imagine the level of frustration for individuals providing for their families financially.

This served as my inspiration for creating Clair, a solution to provide a flexible way for employees to get a portion of their pay before payday. Solving the gap between work and pay, and with 78% of Americans living paycheck to paycheck the ability to access their next paycheck ahead of the designated date can make all the difference.

How has payroll technology traditionally operated, and why do these methods no longer meet the needs of today’s employees?
While payroll providers have traditionally issued paychecks on a biweekly cycle, the world is moving toward faster technology and instant money transfers, yet payday remains stuck in an outdated system. Our perspective at Clair is that people should be allowed to get paid as soon as they clock out, especially since they’ve already done the work to earn that money.

Additionally, payroll technology has historically been clunky, which means it’s difficult and time-consuming for employees to use. More employers are recognizing these pain points, as 58% mentioned technology integration as one of the top areas of improvement for their payroll providers, and another 29% said tech modernization is a major concern. In order to meet the needs of the modern workforce, Clair decided to partner with a national bank to provide compliant earned wage access (EWA) to America’s workforce. Our team has worked tirelessly over the past few years to offer a banking infrastructure and compliance framework that makes accessing on-demand pay seamless. We’ve brought this – and our proprietary technology – to industry-leading HR platform partners like Gusto and TriNet, so the companies using their tools can easily offer on-demand pay to their workers.

We just announced in July that Clair grants employees at many of Gusto’s 300K supported businesses access to sign up for On-Demand Pay right in the Gusto Wallet app. This makes Gusto the first partner to announce Clair’s new embedded On-Demand Pay product, which leverages proprietary technology to provide an embedded, compliant EWA solution that integrates directly into workforce management and payroll applications.

We also recently partnered with payroll infrastructure company Check, which selected Clair as its first EWA partner. HR platforms using Check to build and launch their payroll businesses can seamlessly opt into offering Clair’s fully compliant, On-Demand Pay solution, without any impact to payroll and changes to HR.

It’s been a busy year for our team, but we’re happy to be at the forefront of a larger shift toward embedded finance in the HR and payroll industry.

Can you explain how embedded finance is converging with payroll technology and what benefits this convergence brings to both employers and employees?
We’re seeing more embedded finance tools integrated into HCM platforms for seamless use and adoption. APIs, for example, allow for financial experiences to be embedded into existing HR apps to create a “one-stop shop,” providing a more user-friendly design similar to that of consumer apps. About 41% of employees are already overwhelmed by the number of tools and technologies they’re required to use, so streamlining their HR tech stack is key.

By providing employees with one platform where they can access multiple benefits, including financial wellness tools, HR can have a better view of what’s important to employees in the workplace. This can help executives make data-driven choices, reduce the time and resources required to train employees on new benefit tools and help overall employee satisfaction and productivity.

With a top-requested benefit like earned wage access, for example, building an embedded experience is key. It’s typically complicated for HR tech to build, so finding a compliant partner that has the right tech infrastructure in place is critical. Clair’s On-Demand Pay product removes all manual work required to roll out the benefit, and that includes any manual changes to employee counts or payroll.

Why is it important to give employees flexibility when they get paid, and how does this flexibility impact employee satisfaction and retention?
For employers who are still dealing with labor shortages in essential fields like healthcare and manufacturing, offering flexible benefits like on-demand pay can be a game changer in employee satisfaction, which leads to retention. With benefits like on-demand pay, employers can help their workers get better financial footing and stand out in the labor market. Companies that go one step further to ensure embedded finance benefits are available within their existing HR apps can also gain a significant advantage, such as lessening burnout among their HR teams and prioritizing workers’ well-being and user experience, to ultimately differentiate themselves as a top employer.

With 68% of employees using financial wellness services provided by their employers in 2023, up from 51% in 2012, what does this trend indicate about the evolving needs of the workforce?
This indicates a few things about today’s workforce. They’re dealing with stressors – like unexpected expenses, student loan payments, or inflation increasing the cost of living – and they appreciate the help and support of their employers. They also want both long-term and short-term financial wellness benefits. Offering 401(k)s for long-term savings is important but many workers need help now and can benefit from access to their pay outside of the bi-weekly pay cycle, budgeting tools, financial education and more. Simply put: Employees want more flexibility and control over their finances and financial wellness benefits help deliver that.

Why is it crucial for payroll tech providers to partner with financial wellness benefit providers who understand regulatory complexities and ensure long-term compliance?
Service disruptions can be a headache and if a financial wellness benefits partner isn’t compliant, it can turn into a nightmare for employers and their employees. That’s why it’s critical to identify a partner who not only understands regulatory complexities but is also compliant, which gives employers peace of mind while extending support and buy-in from executives. When it comes to EWA in particular, it’s no longer just an advantage but rather a need as the CFPB recently proposed that EWA products should be recognized as loans, and states are also constantly enacting their own laws. This can lead to interrupted service with EWA providers that are not compliant, when laws change.

Additionally, Millennials and Gen Z-ers make up the majority of today’s professionals and have grown up with consumer-friendly apps with embedded finance experiences, like Venmo and Uber. As a result, they now expect the same app and software experiences that prioritize convenience and are designed with sleek and simple interfaces. By embedding financial offerings into HR management apps, users can easily find what they need without the extra step of extensively searching workflow documents or contacting customer support. With the help of innovative HR tech and fintech teams leveraging APIs and building proprietary technology, this experience can be brought to life. By minimizing employee confusion and lessening time-consuming questions for HR teams, workplaces can also see a rise in employee engagement rates.

Based on your experience, what advice would you give to employers looking to update their Workforce Management and Human Capital Management systems to better meet the needs of their employees?
Make it as easy as possible to keep everything integrated! Employees do not have the time or energy to navigate a new app or tool in their workflow management processes. They’re already occupied with their daily job responsibilities, so the additional task of spending time updating payroll information or logging into yet another insurance portal creates productivity obstacles. By making tools simpler and more seamless, workers are more likely to utilize them on a day-to-day basis and it makes it easier to onboard future employees.

In closing, what final thoughts or key messages would you like to share about the future of payroll technology and the importance of integrating financial wellness services for a modern workforce?
Embedded finance is key to reshaping the way employers approach employee benefits and workplace management. It’s been exciting to see the demand for financial wellness benefits increasing recently among employers and professionals. We’re excited about expanding access to On-Demand Pay and to see the noticeable impacts on employees’ lives.

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1.Can you share a brief overview of your professional journey, highlighting key milestones that led you to your current role as co-founder and CEO of Clair?

I grew up in Geneva, Switzerland to a family of entrepreneurs and moved to the United States to study Economics at Harvard University. During my time as a student I worked an hourly job and it was frustrating to have to wait weeks to receive my paycheck in the mail. As a college student, managing my expenses was hard enough, and it made me realize how this problem could be even more difficult for the hourly workers working to support their entire family.

After college, I began my professional career at J.P. Morgan, where I worked on deals involving hourly rideshare drivers, which helped me gain a deeper understanding of the fintech space and the insane hurdles frontline workers faced to achieve financial stability. It’s a problem that is core to what Clair is aiming to solve, where workers are caught in a Catch-22 that could lead to unnecessary debt.

With more than half of Americans living paycheck to paycheck and having less than $500 in savings, surprise expenses can bring the most hardworking employees into toxic debt cycles. Knowing this, I’m proud to be the Co-Founder and CEO of Clair, the only fintech company that offers completely free wage advances coupled with better banking services than most Americans have today. By helping front-line employees get paid as soon as they clock out, Clair is providing alternatives to payday loans from predatory lenders and instead, providing access to better banking features that can help build wealth.

2.With the recent EWA legislation and regulation impacting employers and workers, how do you see this shaping the landscape for financial wellness solutions, particularly in the realm of on-demand pay?

For fintech companies that are not compliant with lending regulations in certain states, they’ll need to reevaluate their business models, which can lead to interrupted services among consumers – we’re already seeing this take shape in Connecticut. My co-founder Alex Kostecki and I wanted to make sure Clair was set up for success when considering potential changes in regulation so we prioritized compliance from the early days. Instead of making money when our customers borrow, we generate revenue from merchants through interchange when customers spend with their Clair Debit Mastercards. Through this model, we hope to financially empower consumers to save and spend responsibly. And data shows we’ve been doing just that – Clair has provided over $10 million in free advances to employees with the help of our national bank partner Pathward, and our customers take fewer advances over time as their financial situations stabilize.

3.As a leader in the fintech industry, what personal strategies do you employ to stay informed about evolving legislation and regulations, such as those surrounding EWA and its implications?

At Clair, we strongly agree with legislators working to establish EWA as a loan and that lending regulations should be put in place to protect hard-working Americans. To make sure Clair’s perspective is a part of the ongoing conversations between legislators, I personally travel to Washington D.C. to meet with representatives and other lawmakers on how to best approach the gray areas within the regulatory landscape as it applies to EWA.

4.The Biden Administration has emphasized efforts to curb bank overdraft fees. How do you anticipate this initiative will influence the relationship between consumers and banks, and what opportunities might arise for fintech companies like Clair?

Should the Biden administration be successful in curbing bank overdraft fees, banks will no longer be able to target low-income Americans with predatory lending charges. For fintech companies like Clair, who are EWA compliant and do not charge overdraft fees to their customers, they’ll serve as the blueprint for those needing to adjust to these new regulations. Additionally, Clair currently provides banking features for those with Clair Spending Accounts, including 3% cash back on gas and groceries purchased on their Clair Debit Mastercards – ensuring that consumers utilizing their services are receiving access to the valuable financial wellness features they need and deserve.

5.In light of the push to reduce bank overdraft fees, what innovative solutions do you believe fintech companies can offer to enhance financial empowerment for consumers while remaining profitable?

We like to think the sky’s the limit for fintech companies and the solutions they can offer to enhance financial empowerment while remaining profitable. My vision for the future is to build Clair as the best bank for America’s workforce, providing features that help people put their money to work for them. For employees, we often believe that much like getting a 401k, you’re leaving something on the table if you don’t use Clair. Learning from the 401k dynamic, we hope fintech companies will consider offering financial wellness tools that are more accessible and help consumers build wealth.

6.Reflecting on your experience as a co-founder, what personal advice would you offer to aspiring entrepreneurs navigating the fintech sector, particularly those interested in addressing financial accessibility and equity?

For aspiring entrepreneurs in the fintech industry, don’t be afraid to put more of your business’ time and efforts upfront into something that can position you for long-term success, even if it means slowly scaling the business at its start. Clair’s business model is fit to serve people and companies nationwide, but to do that, we needed licensing from all 50 states. This wasn’t an easy journey, but looking back it was the right choice as we continue to see regulatory turmoil in the EWA industry as legislation updates are made.

It’s important to focus on your mission and values above all else, and that also applies to the team you hire. You may be tempted to focus solely on your company’s capital, but hiring a thoughtful team that aligns with your business’ mission and values is the base of your company’s success and what will ultimately achieve the success you’re looking for.

7.Considering the dynamic regulatory environment surrounding fintech, how does Clair prioritize compliance while maintaining a focus on innovation and growth?

From the start, we wanted to ensure compliance with lending regulations was a top priority for our business. With a national bank partner like Pathward and through years of development, should updates be made to regulation policies, we’re now uniquely qualified to provide an uninterrupted service that’s innovative and positioned for growth for our customers. This allows for our partner employers to have peace of mind and create a greater incentive to work with a company like ours.

8.With the evolving landscape of financial services, including the rise of alternative banking solutions, how does Clair adapt its strategies to meet the changing needs and preferences of consumers?

A large majority of our customers are Gen Z-ers and millennials who are trying to position themselves for bright financial futures, but are navigating a tougher economy than the generations before them.
For Clair, we always want to make sure we’re listening to our customers and using data to make the most well-thought-out decisions as possible. Recently, we released report findings on front-line workers’ money habits by surveying our customers, further supporting the idea that workers can get better financial footing through on-demand pay.

Clair is primarily offered through integrations with more than a dozen HR systems including When I Work and Gusto Embedded. However, to meet the demand of employers not on those HR platforms we launched Clair for Employers – a set of free, holistic financial wellness benefits –with new technology to connect to companies’ payrolls and onboard companies directly. The integration costs nothing for employers and doesn’t require ongoing maintenance, making it easy to manage after signing up. Clair does all the work, from connecting to payroll to educating employees on how to use the app.

9.As we near the conclusion of our discussion, what final thoughts or insights would you like to share with our audience regarding the intersection of fintech, regulatory changes, and financial inclusion?

2023 was a year of progress for those of us who are actively advocating for modernized regulations in the fintech and EWA spaces. We saw California, Missouri, Maryland, and Connecticut join the list of states making decisions about EWA classifications – if it’s a loan or not – and determining whether existing lending regulations should apply. Meanwhile, states like Michigan and Minnesota cracked down on predatory payday lenders that charge interest rates of up to 800%, filing lawsuits and capping allowable rates. These are all conversations that are important to have, in order to protect consumers.

At Clair, we fully support clear regulations that protect consumers and encourage the building of modern financial tools that help with everyday life. As the number of Americans unable to cover unexpected expenses and living paycheck to paycheck grows, there is heightened pressure on innovators to offer alternatives to high fee earned wage advance products. As the only fintech company offering completely free earned wage advances originated by a national bank, we want to ensure we’re putting our customers’ and partner employers’ minds at ease with FDIC-insured accounts to bring them one step closer to financial inclusion.

10.Lastly, looking ahead, what exciting developments or initiatives can we expect from Clair in the coming months or years, and how do you envision contributing to the future of financial empowerment and accessibility?

We believe everyone deserves access to easy-to-use banking accounts and money management tools to ultimately achieve financial wellness. With financial inclusion being fundamental to Clair’s mission, we hope to focus on helping the underserved, underbanked workers who need these resources more than anyone. Today, Clair has helped more than 80,000 employees and is available through 10,000 employers, including EverView, Viking Ranges, and SanStone Health & Rehabilitation.

For the front-line workers who currently use Clair, we hope this helps bring the worker shortage one step closer to a solution. A goal for our services is to also spark a conversation on why the bi-weekly pay cycle is an outdated payroll system that no longer works for anyone. To move this along, we hope to show the opportunities people can come across when they no longer need to wait to get paid with the money they’ve already earned. We’re currently exploring new offerings that will add value to this goal, so we’ll have more to share in the near future on that end.