Meet the Entrepreneur: Simon Ward, Floatpays
At FINCA Ventures, we look for entrepreneurs leveraging market-based solutions to create large-scale, lasting social impact. In this series, “Meet the Entrepreneur,” we’ll be taking you into the minds of the intrepid leaders at our portfolio companies who boldly venture into markets in need of positive disruption.
According to recent Proof of Impact research in South Africa, 76 percent of workers surveyed run out of money before the end of the month. Rather than addressing issues of financial stability, the presence of predatory lenders causes 40 percent of these people to spend between 40 and 100 percent of their wages to pay off debt. Financial stress driven by the inability to make ends meet and the debt that occurs as a result, has a negative impact on the health and productivity of workers. In this interview, we spoke with Simon Ward, co-founder of Floatpays, to learn more about how the company is helping workers reduce their reliance on debt by solving their liquidity challenge; save and learn how to manage their money better – ultimately building financial wellness.
You have extensive experience as CTO for numerous tech companies globally – what is the most important lesson you’ve learned about building a business over the course of your career?
Simon: The most important lesson I’ve learned is to be clear about your organization’s strategic direction. A strategic direction encompasses the business’s vision; mission and goals; its value network and strategy. The vision gives your people a motivating reason to perform at a high level. An organization’s mission and goals map out what you want the business to achieve. A value network is the relationships the organization has with stakeholders with whom you will co-create & capture economic value. Finally, strategy is about how you will allocate resources to accomplish your mission & goals in the context of your value network. Clear direction and focus is key to building a successful business.
The most important lesson I’ve learned is to be clear about the strategic purpose and mission of the business you are building and what you’re aiming to achieve in the early stages of growth, so that you can create your initial roadmap. The roadmap acts as a guide, and then we utilize data to determine whether to pivot along the journey. Create a thesis for what you’re going to build, gather data to launch that initial product, and then track it to see how you can improve it. I believe the second part of that is to not over-polish your strategy for achieving your long-term objectives.
How did joining Founders Factory Africa inspire you to launch Floatpays in 2019?
Simon: When I returned to South Africa after spending 16 years overseas, I felt that more could be done to change the economic trajectory of the country’s economically vulnerable people. I wanted to contribute to making financial inclusion a reality for more people in the country and continent. Being a part of Founders Factory Africa meant collaborating with like-minded people who wanted to build businesses that solve some of Africa’s most pressing challenges. I believe that having a startup ecosystem that tries to solve problems unique to the continent in a sustainable manner, is critical for its development. That was the primary source of motivation for me joining the team.
Early wage access is simply one step on this journey. Floatpays began with a shared interest between the FFA and me in startups, the growth of the African ecosystem, solving challenges in Africa and around the world, and financial inclusion and access to wealth, all of which we agreed needed to be addressed.
Floatpays offers early wage access to employees as its core product. How does the company bundle this with savings and financial education to revolutionize the way workers improve their financial well-being?
Simon: We have four pillars that we look at when it comes to financial wellbeing. The first is having a manageable level of debt or none at all. Early wage access gives people an alternative to the expensive credit that they are currently turning to when mid-month cash flow becomes a problem. Using earned wage access as an alternative to credit means that an employee frees up more of their future earnings from debt.
The second financial wellness pillar is to be financially prepared for an emergency or to achieve a financial goal. Reducing debt with the help of earned wage access can free up money for saving. Our paycheck-linked savings account drives a savings discipline that is critical for being financially prepared for an emergency or to achieve a financial goal.
The third pillar emphasizes financial acumen and the capacity to better handle one’s own finances. This is where our budget planning tool and financial education come in handy. Helping our users to understand the fundamentals of managing one’s money well, as well as having the tools to put that knowledge into practice. This is critical to sustaining financial wellness.
The final pillar is having a manageable level of financial stress. Reducing reliance on debt, saving and having the skills and knowledge to manage one’s money well, ultimately helps reduce stress.
What is the most interesting lesson you’ve learned from working with Floatpays’ customers?
Simon: Small improvements can have a significant impact on the way people live their lives. So, if you run out of money and have no alternative but to go to a payday lender, simply providing early wage access to that person is a huge money saver. It’s reassuring to know that someone is on hand to assist you when you need it most. It may appear simple, but it can have a significant impact on a person’s sense of security and, in essence, their capacity to acquire access to a safety blanket. And that is extremely important.
While the main customer in your business is the employee, how are you also addressing the needs of the employers that you partner with?
Simon: Attracting, retaining and engaging the best people at all levels in an organization remains a big focus and challenge for many employers. Floatpays provides employers with a free, innovative employee benefit that can be leveraged to enhance their employee value proposition to solve this challenge. Our product is also designed to help reduce employees’ financial stress, which in turn has a positive effect on a business’s productivity levels. In other words there is a direct impact on the employer’s bottom line. Finally, if an employer experiences operational overload due to salary advance or staff loan requests, Floatpays helps resolve this challenge by removing the need for such employer financial support.
From your point of view, how did COVID-19 affect the workers’ financial wellness?
Simon: The onset of the pandemic meant that many businesses couldn’t offer full-time employment, and a large number of employees were forced to work part-time. Obviously, this has a considerable impact on an employees overall salary. Those who were lucky enough to have savings were able to dip into it to survive. I believe it was estimated that most people in South Africa only had enough money to last two months if they lost their job. Those were the numbers before COVID. After COVID lockdown, I think that would read a lot worse. Where financial resilience may have existed pre-COVID, it is likely to no longer exist. The impact of COVID-19 on the workforce increased the reliance on credit – leaving people in a debt trap in its wake. Now it’s about breaking free from those vicious debt cycles and rebuilding financial resilience.
In what way have you designed your platform to be broadly accessible to employees?
Simon: We have designed our product so that our services can be accessed by employees at any technological level. Meaning, for employees who still use a feature phone because they can’t afford a smartphone or don’t want the added cost of a modern smartphone in their lives, we were able to provide our product as a USSD app, which is essentially a text-based messaging system. We wanted to use the simplest technology available to make our solution as accessible and inclusive as possible. We then build on the base feature set for advanced smartphone application use for those who can afford to purchase and use the technology.
A lower level of digital financial service penetration has a disproportionate impact on women across South Africa. Does Floatpays have plans to empower more women and industries that are specific to them?
Simon: Our strategy has been to conduct ongoing research with our clients to better understand their financial problems, why they would use a service like FloatPays, and how we can help improve our product. Our roadmap is heavily influenced by consumer demands and suggestions. Many of the single mothers on the site were seeking medical help, and the responsible spend vouchers are an excellent example of those requests for new features. The ability to purchase a voucher and see a doctor from a young age allows them to support their family. We also discovered that in South Africa, female employees are less likely than male employees to hold savings, making savings an excellent product addition that helps both men and women.
When you look at what Floatpays customers are spending their earned wages on, how does this influence your product roadmap and what new initiatives are on the horizon for the company?
Simon: It has a direct bearing on our roadmap. Our voucher program was developed because of user feedback. For example, in South Africa, the top five reasons why people use early age access include transportation, essential services, such as prepaid electricity and water, mobile airtime and data, and medical necessities. We respond to those needs through our voucher program – we leverage partnerships with businesses that can provide those services at a low cost. And at the end of 2021, we launched our savings feature, which is currently gaining a lot of traction with both existing and new customers.
Imagine it’s five years from now and Floatpays is making international headlines. What would that headline be and why is this important to you?
Simon: It all stems from the vision. I see the headline reading, “FloatPays makes financial inclusion and wellbeing a possibility for every working person in Sub Saharan Africa”. That would be a testament to our work in this space and give the whole Floapays team a real sense of pride and achievement.
What about partnering with FINCA Ventures excites you the most?
Simon: I feel it has to do with the synergy we discovered between investor and startup. We talked about FINCA Ventures’ influence in Africa when I first met the team. We also discussed financial inclusion, microfinance, and the various savings choices that FINCA has made available to so many people. And that is very much in line with what we are building. Working with socially conscious investors and having a clear criteria to hold us accountable to are critical. Those that wish to work with us and give their skills in this space to help us expand our product feels like a great alignment to me. Furthermore, what FINCA has done and their approach of leveraging startups to help them reach their end goals are practically identical. That was ideal for what we were trying to achieve.