Report: The Power of the Salary Link

This academic report from Harvard Kennedy School focuses on a different approach to managing financial stress among low-income working Americans: employer-sponsored FinTech benefits, such as short-term loans and advances, emergency savings accounts and online and mobile financial management apps.

Key findings

• Employer-sponsored Fintech-based benefits that take advantage of automatic repayment through salary deduction can provide more efficient, less costly and more inclusive liquidity and credit solutions for employees.
• Fintech products show ‘tantalizing’ potential for significantly reducing employee turnover and saving businesses millions.
• The Fintech products studied were much less expensive than the alternatives available to most low-income employees in the market, due to the Fintech provider’s ability to access the employee’s salary to ensure repayment.
• The Fintech products studies could also be used by a much wider range of employees – many of whom are credit-damaged or credit-invisible – who could not access traditional financial products in the market. Again the link to the individual’s salary was key.

This report The Power of the Salary Link: Assessing the Benefits of Employer-Sponsored FinTech Liquidity and Credit Solutions for Low-Wage Working Americans and their Employers was authored by Todd Baker and Snigdha Kumar.