Host: The UAE has some of the highest remittance costs in the world, and millions of middle income workers who live paycheque to paycheque. A fintech born in Qatar is now trying to change that by turning payroll into a financial wellness platform. Joining me is Allan Villegas, Founder and CEO of Liabify. What is earned wage access, and why does it matter now for workers in the UAE specifically?
Allan Villegas: Normally we get paid every 30 days in this region. Our earned wage access is calculated on the days you have already worked. We provide that amount in advance, and the rest of the days you receive on payday at the end of the 30 day cycle.
Host: So you pay in advance.
Allan Villegas: Yes, correct.
Host: The central bank of the UAE just cleared your partnership with a local finance company. What does that regulatory approval unlock?
Allan Villegas: For us it is a B2B2C model. We are approved to conduct payroll financing with our partner, and we are also approved to issue prepaid cards. We partner with the company and do the payroll financing, and then we use that credit line to provide the access through the prepaid cards that we also issue. So the worker is given the card with the access.
Host: What can a worker actually do with the prepaid card?
Allan Villegas: Employees, mainly anyone sponsored by a company that is our client, can request wage access. We don’t allow more than 50% of the monthly salary, because people still have other bills to pay by the end of the month, like rent and school fees. We credit the amount in a few minutes to the prepaid card that we give them. We can issue the cards virtually and physically, and the physical card lets you withdraw cash at any ATM or travel with it.
Host: Liabify is built for middle income people, expats and workers. Why is that segment so underserved by traditional finance?
Allan Villegas: We started the company because we lived the problem. Even well paid professionals have trouble getting a credit card or a car loan. It depends on who your employer is and which bank your salary goes to. Most of the time you can only request certain products from the bank where you receive your salary, and with all the others you are disqualified immediately. Because we partner and integrate with payroll, we can do a pre-approval without credit history for the wage access.
Host: So there are many bank products workers can’t access, and you can help with that.
Allan Villegas: Yes, and we do it seamlessly and in a few minutes. The prepaid card is free and internationally accepted, because we work with the Mastercard scheme. Then from there the wage access takes a few minutes, compared with the normal process of going through the HR department or the manager.
Host: Can they withdraw anywhere in the world?
Allan Villegas: Yes, because it is a global network of ATMs. It is also possible to remit the money, or just pay like a normal card, because it is tokenised for Apple Wallet, Samsung Wallet and others.
Host: You deliver embedded financial services through employers, not directly through the employee. Why that model?
Allan Villegas: It is all about risk, and that is the reason banks traditionally don’t serve this segment, which was part of your previous question. The rotation of people in the Gulf is high, and the mix of nationalities adds financial risk. Because we work B2B2C with the employer first, the guarantee of collection and repayment sits with them. They are approving us to take whatever we provide during the month from the payroll on the next payday.
Host: Open finance and embedded finance are now regulatory priorities in the UAE. How does that help with what you are building?
Allan Villegas: We are building an alternative credit scoring, using employment data. The future we see is connecting to open banking data, and in the sense of open finance that is our growth opportunity. We can do loan origination for products beyond wage access, such as a car loan, a mortgage or insurance, working with other financial institutions or applying for regulatory licences ourselves. We give the scoring of the person without giving away the raw data, and that is more reliable.
Host: Financial wellness is still seen as a nice to have by most employers. How do you make the business case a bottom line issue?
Allan Villegas: We went very deep to analyse why people need money and why this access is needed. When we surveyed and interviewed hundreds of people, the answer was always emergencies and unexpected expenses. If you don’t have access to a credit card, which is difficult in the region, you go to predatory lenders, or if you do have a credit card you end up paying high interest. We try to solve that. The cost is low, and it is not a loan, because you repay it on payday. It also lets us understand people’s behaviour and what they use the money for, so we can help them invest, save and send money home. We have an AI financial wellness assistant in the app for this.
Host: Thank you so much, Allan, for the work you are doing for people.
Allan Villegas: Thanks for hosting me.
