Abdul Malek is a factory worker at SQ Group, a leading apparel manufacturing company. Earlier this year, due to kidney-related health issues, he was in dire need of money, but it was the middle of the month.
He turned to friends and relatives, but no one had money to spare. But eventually he discovered that his employers were signed up with Wagely, which allowed him to withdraw around Tk3,000 of the salary he had already worked for.
Wagely works on a simple enough idea. Almost every one of us who work fixed jobs find ourselves a little short of money, usually towards the end of a month. Wagely, who started operations in only November of last year, is ready to forward you the money you have already earned by rendering your services, but would not be able to collect until the month ends.
The company has already managed to sign up Classic Composite and Vision Garments to this scheme, besides SQ Group; and it usually charges a flat or fixed fee per transaction of between Tk50 to Tk100 on the advance, which is paid for by the employer or employee, depending on the arrangement with the company.
Wagely, however, envisions themselves as a holistic platform working to ensure financial wellness of workers. This March, it raised around $8.3 in pre series A funding which it plans to use to introduce schemes to encourage savings, insurance, long-term instalment loans and financial literacy.
East Ventures (Growth Fund), Integra Partners, Asian Development Bank, Trihill Capital, Blauwpark Partners, 1982 Ventures were among the investors providing the seed funding.
"In our country, blue-collar workers, especially in the RMG sector, are very prone to falling prey to financial constraints for various reasons," says Rameez Hoque, Managing Director of Wagely in Bangladesh. "They live paycheck to paycheck, are forced to spend the salary all at once and always stay on the edge.
And this often eventually leads them to lend money from their peers. At times, they are even forced to take loans at high interest rates, putting them in a debt trap."
Wagely's core products is the Earned Wage Access, also known as EWA, that provide employees the earned but unpaid portion of their wage/salary before the payday.
Although some companies do have a system for employees to take an advance, many companies are actually not cash liquid enough to support a large number of employees seeking an advance in the middle or towards the end of a month.
Although Wagely has started with a focus on RMG sector workers, they want to reach out to pharma industry workers in the future, and are even looking to provide this service to fellow startups.
In the near future, Wagely plans to promote financial literacy through SMSs to teach workers how to manage money and develop financial resilience.
Right now, the team is operating with 10 members from diverse backgrounds, including finance and technology.
Wagely was founded in Indonesia in 2020 on the back of the pandemic.
Tobais Fischer, one of the founders of Wagely, soon realised that this was a service that would be popular in developing countries with similar socio-economic conditions and manufacturing base.
"There is a massive opportunity for financial technology in Bangladesh that is characterised by similar attractive fundamentals like Indonesia in terms of demographics, market, limited access to credit, growing demand for tailored financial services, and the ability to expand product and segments," said Tobais.
But why would employers sign up for a service that on the face of it mostly benefits employees?
Rameez explained, "Because of the benefits provided by the employer - which ensure financial, mental and social wellbeing of the employees - the workers decide to stay back longer. We have already found this data in Indonesia, so eventually there is more turnover for the company. And happier employees lead to more productivity, which is beneficial for the growth of the company.
It also helps the company to stand out as responsible employers to their investors and employers as well."
"Wagely came into being with the idea that allowed low and middle-income workers to manage their finances, in a way that immediately benefited employees and the employers too," said Tobais.
If employees are suffering financial stress, that will not benefit the employer either. The goal is to change how people are paid, all the while making an impact that will benefit the workforce and the companies hiring the workforce."
To halt the vicious and costly debt cycle that employees are prone to fall prey to, which eventually leads to a negative impact on their individual financial wellbeing, Wagely wants to establish an ecosystem that ensures financial wellness of the workers.
Tobais continued, "We have observed that across Asia, more than 600 million employees from the lower and middle-income groups suffer financial stress on a large scale due to the lack of financial literacy and tools to support them."
Wagely is already working with 100,000 workers within their ecosystem.
From both Android and Apple, Wagely app can be used in smartphones.