Everything You Need to Know About Financial Inclusion

An Exclusive Interview with Asesh Sarkar, Global CEO and Co-founder at Salary Finance, and Dhiren Master, Chief Marketing Officer at Salary Finance.

If you were new to a country, didn’t have a credit score, and had no access to mainstream banking, where would you go for financial assistance? Payday lenders? Credit cards?

What about a worker who experiences an unexpected change in financial circumstances? How does that person’s stress affect themselves, their families, and their employers?

Financial wellness can contribute to an inclusive economy and social order.

In this interview, you’ll learn:

• • How financial worries are related to your spending, saving, and borrowing habits.
  • How people with money worries are five times more likely to have troubled relationships with their colleagues and eight times more likely to have trouble concentrating.
  • The importance of empowering the individual to take better control over the situation that they’re in rather than solve the problem for them.

Listen in above (cc available), or read below the transcript of our interview with Asesh Sarkar and Dhiren Master. You can also listen on Spotify, iTunes, or wherever you get your podcasts.

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FIONA: Welcome back to Inclusion Works. I’m your host Fiona Young and I run the diversity, inclusion and belonging practice at Hive Learning. The peer learning platform for enterprises. We have two guests here today, who are striving to make the lives of millions of people less stressful, more productive and much happier. Asesh Sarkar and Dhiren Master are leading figures at Salary Finance, an award-winning global FinTech start-up underpinned by a social mission to improve the financial health of workers in the UK and the US where reported 48% of employees have financial worries. The company has been lauded by the industry for its innovation and social purpose.

Asesh is the co-founder and global CEO and Dhiren has made a huge impact as chief marketing officer and insights director since joining the company in July 2018. In the spirit of full disclosure, Salary Finance is actually a sister company to Hive Learning which is one of the reasons I’m so excited to welcome Asesh and Dhiren to the podcast today. Welcome.

ASESH: Thank you so much.

FIONA: So first off Asesh could you give us a quick overview of what you’ve been up to lately at Salary Finance?

ASESH: Sure. We are about four to five years in building Salary Finance now and I guess when we started the industry in which I guess is kind of now called Financial Wellness and Employee Financial Wellness didn’t really exist and so first few years were really about helping employees to understand that there is lots of financial stress their employees have in the workplace and then that stress doesn’t leave, isn’t just at home, it also kind of impacts at work and if together we can help employees reduce some of that stress, actually they can do much better things that work.

And so thankfully the HR community has been very receptive to that and now the product has gone from not really existing to actually growing quite quickly and so in the UK we’re growing pretty fast and so we have about 160 enterprise clients now. They employ about 1.5 million employees and we’re helping their employees in a whole series of ways. We’re helping them pay off their debts through low-interest loans. We’re helping them save directly from their salary. We’re helping them access their pay at a frequency which works for them. We’re helping them for education. We’ve got some new exciting products coming up too and then we are also now live request to US, so we have a lot of focus on kind of going on US businesses as well.

And then internally we have a team of about 150 people now spanning the UK, US, India and so we try to be a great employer for our own people as well.

FIONA: Brilliant. I mean just from the conversations I’ve been in with talent people, HR people. I feel like financial wellness is on everyone’s agenda at the moment. It’s really brilliant to have you here. So first I want to ask you something that we ask all of our guests on Inclusion Works. Can you tell us what experiences made you aware of diversity and inclusion issues?

ASESH: Sure. So probably two things. So the first thing is I guess you know what we focus on is financial inclusion and the founding story of Salary Finance is that I use to be a management consultant. I used to work in the city with banks and my wife works in a hospital and it kind of seemed and so we had a nanny to help look after our children and so it just kind of seemed very strange to me that I would be able to go to the bank and get a loan of you know you know single-digit interest rates but actually my children’s nanny who was new to UK didn’t have so much of credit score built up, would have no access to kind of mainstream banks and so it would be then forced to take high-cost payday loans or credit cards and so forth.

And so it kind of really occurred to me that there were some people that I guess included in the mainstream financial system which tends to be about kind of you know about kind of 30 or 40%, but then there’s actually a lot to actually excluded from the mainstream system and their life becomes pretty tough and so in the case of my children nanny, for example, we would pay her each month but a high proportion of their income would go paying off interest on high-cost debt since it was very little left for her and then we could see the stress that would cause her, you know the impact that would have on you know I guess looking after our children so on and so [Unintelligible] Salary Finance was helping our children’s nanny to pay off her debts with a salary linked loan and that seemed to work quite well and then we’ve kind of scaled the business from there.

FIONA: Yes, so and so for people who don’t know Salary Finance actually, so this is a free offering from employers, right? So employers don’t actually pay you to be able to offer those loans to their people.

ASESH: Yes. That’s right. So we offer a financial wellness platform for employers, like you said there’s absolutely no cost to sign up and the advantage of us working with employers is that we’re part of the benefits package for an employee and so we don’t have the traditional cost of acquiring a customer as a bank ordinary would do. So we save a lot of costs there and also because all of our products are payroll linked, we make a lot of efficiency savings. A lot of cost savings that are risk savings. All of those things create efficiencies, create cost savings, so we can pass that back onto the employee who gets a much better rate as well but as a result we don’t need to charge the employer.

FIONA: So I know at Salary Finance have since done a lot of research in this area of financial wellness and socio-economic diversity or financial health is actually one of the areas that diversity that doesn’t get much airtime. So I was wondering Dhiren maybe if you could share with me some insight into what you mean by financial well-being and what the impact is when people don’t have it.

DHIREN: Sure. I think that’s an excellent question and financial well-being means different things to different people. In essence that there is a core definition is that you have poor financial well-being is when you don’t feel in control of your finances and then that can manifest itself in many different ways. Sometimes when things are apparently quite trivial, so, for example, an unpaid parking ticket which you know you’ve got to pay but you just don’t get around to it and then that can cause you to think about it and fret about it until you actually get that out of way. So it can be as trivial as that, trivial as that.

Other things that are more difficult to deal with is that what happens when you run out of money before pay cheque, and you’ve still got another week to go and you’ve got bills that are coming in there. You’ve maxed out your credit card, the overdrafts gone. You borrowed money from friends and family, and you can’t go back to that. That is an incredibly stressful situation for a lot of people.

For others still, it’s kind of worrying about you know is my pension going to be enough. Will I be able to retire safely? For others still, it’s maybe they’ve had a life event, so maybe be going through a divorce or a critical illness and suddenly there is a significant change in their financial circumstances. Either there is an increase in expenses or unexpected drop in their expenses– in their income and all of that can lead to financial stress as well.

So financial well-being essentially means different things to different people and one of the things that we’ve been able to do that really helps HR people is to get to the anatomy and dissect what financial well-being is. What we did was and the other thing to note is that financial well-being is not a function of income. There are people where it’s true that those are lower-income have the highest level of financial worries. I’m going to quote UK stats now 46% of those are earning between 10 and 15 K have got financial worries.

And it’s also true as financial as you earn more the financial worries go down. The lowest group with the lowest financial worries those earning between 40 and 100,000 pounds and that financial worries drop down to 29%. It’s still not zero, we still have one-third of that group still having financial worries and 40 to 100,000 pounds is quite a fair bit of cash.

And the surprising thing is there is this group that earns over 100,000 pounds that have the same level of financial worries as that group that earns 10 to 15 K and we’ve found this out from surveying almost 13,000 UK employees, okay. So we have over 600 people in that group that have this high level of financial worries.

And the truth is that financial worries are somewhat related to how much you’re getting but more related to your spending, saving and borrowing habits and it’s because of that that we came up with this concept of a financial fitness score which is a score that you get between one and five based on a set of your responses to a set of 10 behavioral questions about your borrowing, saving and spending habits. And so score one is a struggler. They typically run out of money 10 to 12 times a year before paycheque. They have the highest level of financial stress typically 89% of those people are suffering from poor from worrying about money.

In the next group are copers. They typically run out of money once or twice a year, but 67% of that group have financial worries. And then you have the builders who can get to paycheque pretty well much consistently throughout the year but they’ve got less than one month’s worth of savings which means that if there is a number of unexpected expenses, let’s say the boiler breaks down and let’s say your car needs a new set of tires, they’re in a little bit of trouble.

And then you’ve got the next group, the planer. They have things pretty much in control. They have about three months’ worth of savings. The level of financial stress in that group is less than 20% and then finally you’ve got the prosperous, the fifth group and they pretty well much have sorted out their finances and they can live a life which is not constrained and about 6% of those have got financial worries, but they’re worried about whether their investments are maxing out or not. So it’s different kinds of worries.

FIONA: So I know your research has found that people with money worries are five times more likely to have troubled relationships with their colleagues than those without those worries and are eight times more likely to have trouble concentrating and finishing tasks at work. So money and finance are one of the most stressful parts of being a grown-up. I think we can all agree but talking about money can be quite taboo and in our Inclusion Works program, we have a lot of content about how to talk about diversity. How to support that kind of underrepresented groups. I’m wondering what advice can you give to our listeners on how to sense and respond to people who are experiencing financial well-being challenges?

DHIREN: That’s a great question and it’s a question that we get asked by a lot of HRDs and HR professionals. Now one of the things that you did mention about taboo and I just want to quote you another stat which we all find very very interesting is in October the BITC launched a report on mental health.

And they asked to what extent do you feel comfortable talking about mental health issues at work? And 52% of people said that they were now comfortable talking about mental health issues which is you know it’s not bad, it could be better but it’s 52%. We asked the same question in our most recent survey and we found that only 13% of people were ready to talk about their financial issues in the workplace, personal financial issues in the workplace. I guess you know if we had gone back like four or five years ago and we asked that question about how ready are you to talk about mental health issues at work, you probably would’ve got a figure of 13%.

And so like financial wellness and talking about personal financial issues is probably the last great taboo here in the UK and in the US it’s actually an even greater taboo. And when you think about taboo is why is it that people are reluctant to talk about these issues and it basically comes down to one thing is that I won’t share with you or I won’t share with Asesh what’s going on my personal life especially with my finances, if I feel I’m going to be judged.

If I tell Asesh, my boss that look I’m having an issue with my personal finances. I am worried that Asesh is going to think, oh my God, I’ve got Dhiren in charge of the entire marketing budget for the UK. If he can’t manage his own personal finances, I don’t know whether I made the right choice to give him this huge budget the budget on marketing.

So and I will just be very very reluctant to talk if I get that if I feel judged and this is one of the critical challenges I think that every HR professional has is that you want to help people and you want to nurture and care for your people, but the most important thing is that you don’t come over as an adult caring for a child but you actually transform that relationship into an adult conversation is that that’s so difficult when you care there will be a tendency to kind of over care and take the responsibility for solving that issue away from the person and for you to take that and say look I’m going to tell you what to do. You do A, B, C and D and your problem is going to be solved.

So the greatest challenge that HR professionals have is how do you foster that adult to adult conversation? How do you empower the individual to be able to take better control over the situation that they’re in and figure out together collaboratively as to what that solution ought to be for them and give them the power to take control back rather than solve the problem which is just exasperating in the situation because what you’re now doing is you’re taking control away from them and now you are taking control and solving the problem.

It doesn’t help them in terms of dealing with and becoming more confident in the future, dealing with their personal financial issues. So that is the crux of it is that to create a culture and an environment where it’s no longer parent-child, where the employer isn’t the parent and the employee isn’t the child but it’s an adult to adult conversation.

FIONA: And practically how do you think you can start like as an individual, how can you start to build this adult toadult relationship in a sort of on it every day or every week sort of basis, is this like being more vulnerable or are there any tips or tricks that you could give?

DHIREN: Yes, sure. You know this is another great question and at the end of the day it all comes down to what you do in practice. It’s one thing to say all these things, another thing in terms of what you actually do. So what we what we recommend is that some of the techniques that many HR professionals already out there being using to break down those mental health taboos is also applicable and relevant to financial well-being and breaking down those personal and breaking on the taboo about talking about financial well-being.

So the first and foremost is that we find that if you can. If you can get a C suite or senior management to openly talk about personal financial issues that they have. It shows what it does is that it demonstrates to the rest of the organization that it’s okay to talk about these things if either the CEO, CFO or the CMO or the chief operation officer or the operations director is talking about their personal financial issues and you can see here’s somebody who is clearly in a senior position who has been given a lot of responsibility and they are still also struggling with their personal financial issues and they’re not being judged in any way. That’s a huge thing.

But more importantly, is that right throughout is the feeling of whether or not I’m going to be judged or not is all about how effectively you are as a listener. Is your organization a listening organization? And you know what people want do people do want to talk about these things and they want to know that the person that they’re talking to is really listening and is being empathetic and is understanding their situation.

So Epictetus a Greek philosopher said you know we have two ears and one mouth and so we need to listen more and speak less. So an organization is that you know in HR or wherever it is whatever you are is that the more you listen and the more you’re showing that you’re listening to someone, it means that they start to feel that you’re understanding rather than you telling them what to do. So that’s actually a critical part of it.

FIONA: Thank you. Yes, that’s really interesting to hear about and I feel like I’ve learned a lot already actually from this episode and so just to close off I wanted to ask both of you one question which we love to ask all of our listeners is what’s one simple thing anyone could do this week to build inclusion in their workplace. This could be financial inclusion, or this could be more generally inclusion.

DHIREN: Okay, so I’m sorry Dhiren here again, I just carry on from what I was saying earlier is that inclusion is when people feel excluded when they feel that they’re different and it could be and you know you it’s our human nature is that those people that are different from us, it could be a different age, gender, race a level of it might be to do with physical attributes like disability or it may be sexual orientation.

As soon as we encounter somebody who is different from us is that we have a tendency to fall into a trap of not including them and excluding them. And one of the things there is that it’s critical for inclusion to take place that you understand who that person is. That you go past the visible differences, be age, gender or whatever and you start to get to know them.

When you get to know a person for who they are rather than what age they are, what color they, are what gender they are. When you get to know a person that is when true barriers go down. That’s when we can challenge our own prejudices about us the own kind of models of stereotypical behavior and patterns that we have for people and we need to challenge ourselves constantly and the only way to do that is to start talking to them and get to know them.

And when you get to know that person is that you go past the labels, you go past the all of those kinds of things and you get to know them and that is actually, one thing is that if anybody can do is that if there is someone in your organization or someone in your team that’s different from you and you’ve never you haven’t really talked to them, never really found out you know who they are, have a chat. Get to know them. That’s what I would say is the greatest thing that you can do. It’s a very simple step that you can take but it’s a very important step.

FIONA: I love that and seeing the whole person, right? And Asesh over to you.

ASESH: Try to build on that, to borrow a phrase that Anthony our chief risk officer kind of often uses which is assuming kind of everyone has positive intent and so you know building on what Dhiren said you know if people you know maybe look different to you maybe if they’re even working style is different to you. If their backgrounds different to you. If they’re you know finances are different to you, but you know it doesn’t mean that just because they’re different than their intent is in any way negative.

There are lots of ways to achieve a kind of a great outcome and so I think quite often I kind of see. I also say in a passive organizations you know you kind of see people where if someone does something a bit different, they present something a different way or they speak a different way, actually they immediately you know they’re immediately make a judgment and so I guess you know one other thing Anthony you know taught me and one of the things you know he instills in our team is you know just assume everyone you know has that positive intent, start from positive and then you get to much better position for all.

FIONA: Thank you. That’s brilliant and thank you both for sharing all these insights with us. I’m sure there’s a lot for listeners to take away from this session and so if anyone wants to stay connected with you with Salary Finance. What’s the best way for them to do that?

DHIREN: The best way to contact Salary Finance is to go to our website salaryfinance.com, there is a contact us page. Fill in your details and somebody will get back to you ASAP.

FIONA: Brilliant. Thank you so much.

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An Exclusive Interview with Asesh Sarkar, Global CEO and Co-founder at Salary Finance, and Dhiren Master, Chief Marketing Officer at Salary Finance.