FinTech Interview with Nico Simko, Co-founder and CEO of Clair

Explore innovative solutions from fintech companies aiming to enhance financial empowerment while remaining profitable amidst the push to reduce bank overdraft fees.

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.