PNC Earnedit Powered by DailyPay

Transcription:

Rob Nardelli (00:08):

Good morning.



Sarah Billings (00:08):

Good morning.



Rob Nardelli (00:10):

All right. My name is Rob Nardelli, and as you heard, I'm the Director of Commercial Banking at Daily Pay, the country leader in earned wage access. Last year we processed in total transfers over $19 billion, clearly demonstrating that earned wage access has arrived as an essential benefit to the American worker. In fact, we become the number two use case for the Clearinghouses network for RTP. But this has been an evolution, not a revolution. So we're going to go a year back. The year was 2022 Daily pay reached out to its long standing real-time payments processor and preeminent financial institution in PNC Bank and collaboratively we created PNC earned it powered by Daily Pay, the first of its kind bank earned wage access app, something that PNC could market brand and sell as a benefit to its commercial banking clients and thus giving their employees this must need benefit to help folks on their financial wellness journey, allowing them to pay for emergency one-time expenses, pay their bills on time and save money With that. With me today, I'm delighted to say is Sarah Billings, the head of Global Payments and Platforms. With that, Sarah, take a moment to introduce yourself to the good people of Hollywood.



Sarah Billings (01:53):

I'm exactly as advertised. Sarah Billings, head of Global Payments and Platforms at PNC Payments geek and happy to be here to speak with you about how we're pushing the payments industry forward.



Rob Nardelli (02:06):

Yes, payment geeks, you all know who you are. Alright Sarah, the instant payment space has evolved at such a rapid pace over the last few years. What is driving innovation and high growth?



Sarah Billings (02:22):

Really it's not what's driving payments innovation, it's what's driving innovation in the marketplace as a whole. Rob and earned it and earned wage access being just one of those use cases. So I see this and I've been in payments a long time. I have never seen this nice of a marriage between the technology of payments and the actual need in the marketplace. So it's really this marriage between the actual business need and the capability to enable it. I think as we heard in the last session, I would actually differ with some of the colleagues on the stage saying that never could we do this until no in the area of financial wellness there are many companies who've stepped up with the suboptimal tools that existed before and filled that gap for lower wage workers who needed access to their pay. But with the technology now in the payments world, the real time rails, we can step up and offer it in I'd say more standard banking services that put our consumer in a much better financial position.



Rob Nardelli (03:46):

Agreed. And I like the word you use marriage, all this talk respectfully of fintechs and banks and this seeming pairing that has to happen and yet out in the marketplace there are so few that do fewer still those that actually work and come to fruition.



Sarah Billings (04:06):

I agree. And one of the things about what we're talking today, earned wage access and we could talk about many other use cases that are riding on the back of immediate payments now that this is real has critical mass and is ready for you is more than ready for youth. I'd say maturing is that we at banks or fintechs, there's a lot of experimenting that goes out there. You can do A-P-O-C-A proof of concept with a new technology pretty easily. You can prove that it works. You can get one or two real world clients to use it. But I think what we're seeing now, what is so exciting is this investment that we've made in the payments industry and immediate payments has need. It has true market need out there. It's not a technology looking for a business case. It's actually a business case and a technology really meeting in the middle of the road at or near the same time.



(05:10):

And I will say in terms of the acceleration and adoption that we've seen, there are a number of reasons for that. You can talk about the demand itself, like you said, there's true need out there and we talked about financial wellness and with this particular use case, but Covid did not hurt the adoption of all of these new real time digital technologies either. So I think it would've happened and accelerated very quickly and we were on our path there. But I think we got a kickstart from covid, which is probably one of the only good things we can say about covid.



Rob Nardelli (05:56):

There were silver linings if you looked hard enough a little bit. I don't think people hate the hybrid work schedule compared to five Days week.



Sarah Billings (06:01):

There you go. Depending On who you talk to. Correct,



Rob Nardelli (06:05):

Correct. Alright, Sarah, why has earned wage access become such a high volume business to consumer use case for instant payments? Let's dig a little deeper.



Sarah Billings (06:16):

Okay. So we talked about the need and I know that PNC does our own research and our last year study, which covers a broad number of industries and demographics, showed that seven out of 10 workers are concerned about their financial wellness. It showed that 63% of consumers or those surveyed lived paycheck to paycheck and it also showed that only 5% have an emergency savings account. So as I mentioned before, this need has always been there. It's not like all of a sudden people are getting poor or living paycheck to paycheck more. Unfortunately this has been here, but the choices available to these folks have been rather onerous, payday lending, a lot of incurrence of late fees on their bills and overdraft fees and things that really penalize the poor. And so we're very excited to be able to use these new technologies, new payment types and partner with Daily Pay and many of our other clients who are able to alleviate these negative consequences and bring better solutions than existed before.



Rob Nardelli (07:54):

Agreed. And I have to say it for continuity. I was on a panel here with American Banker last year and I did say we plan on taking Larry Loan Shark out of business and it's still the mantra, it's still what we're doing. I see earned wage access as the final backstop before people get into debt, especially folks who don't have those other options, people that can't afford a credit card. It is the last stand if you will, or last defense before debt becomes an actual issue for them.



Sarah Billings (08:29):

It's an important tool. Yes.



Rob Nardelli (08:33):

Alright, Sarah, how has the speed of instant payments and pay positively impacted the American workforce and consumer?



Sarah Billings (08:42):

I think in ways that we really just talked about, so alleviating those fees. So the last panel talked about many examples of gig workers being enabled to keep on driving to make more money because they have money for gas, et cetera. By the same token, people can pay their bills on time and they can have money. It may just be a matter if they didn't have earned wage access. It may be a matter of hours or days between incurring that late fee, paying that mortgage payment on time, making your credit score stay higher and the traditional pace cycle. So again, it's not that pay advances didn't exist before. It's not that payday loans did not exist. It's not that all manner of solving these problems didn't exist, but I think the solutions generally created bigger problems for the consumer users. And this is something that just makes it, it just really turns payroll on its head.



(09:58):

Like to talk about the payments business, yes, we've had very good payment systems in the US, they continue to be alive and well and we use them every day and they're growing just as fast or almost as fast because it's bigger base, but they're growing significantly double digit. I think in the last 10 years, ACH has grown by 70% and Wires has grown by 40%, almost 50%, although I think I juxtaposed those figures, but double digit growth, these payment types continue to be very relevant to all of our clients and to the financial world. But with real-time payments, it's something that if you were to create a new payment system, which by the way one hadn't been created in 45 years when real-time payments was introduced, you would of course make it real time. You'd of course make it 24 by seven. That's just the way society works and those are the expectations of the day.



(11:11):

So I think by the same token, when if you were to look to just solve the issue of lower wage workers needing access to pay today, you would never have invented a monthly payroll or a biweekly payroll, right? You would understandably have something that allows them to get paid on demand or paid as they earn it. So I think it just makes good sense. We're just sometimes so locked in the old way of thinking that it takes a new technology, new companies, new business models to egg us on and get us to change the paradigm.



Rob Nardelli (11:56):

Agreed a hundred percent. Some of the objections we get from employers and yours truly as a lifelong banker before I dreamed of jumping ship was who's going to fund these payments? How are you going to mess up my payroll process or have the payroll manager come in screaming in my office if I'm the treasurer or CFO? And that's the benefit of this solution. Daily pay will fund the payments. You saw that the 19 billion in total transfers, I think you guys have the scorecards in front of you of the six plus billion in getting that liquidity to those who need it. For those in the room who heard Dan Gonzalez's story in the previous session, there was an actual daily pay customer who was able to get to work by utilizing that and their employer didn't have to fund the payment. Think about that cost. They don't have to change anything to their normal payroll process.



(12:49):

We do that, we take care of the reconciliation and at the end of the cycle we send one file that explains exactly what was taken. And the third part that we get is, well, what's it going to cost me, Rob? And that's the benefit. There is no cost to the employer other than the four to six weeks on average that it takes to implement. There is zero cost to the employer if you want to subsidize it, we're happy to help you with that. If the employee can wait until next day, there's no cost next day.



Sarah Billings (13:21):

Well, the employer could fund it for real time as well.



Rob Nardelli (13:24):

We offered a hundred percent.



Sarah Billings (13:26):

So really, and even if there's a small fee paid, it's in a different universe than what these earners were possibly paying before. So that's what I love. Again, talking about marriages, we should have made that the theme and the title because marriage is that kind of,



Rob Nardelli (13:47):

We might start suspecting.



Sarah Billings (13:49):

Yeah, right. I know you just got married. I've heard all about it as a great ceremony. But I think what's so exciting for the partnership between PNC and Daily Pay is that we bring the payments expertise and hopefully the creativity and know how to make these conceptual needs to execute on them in real life. And daily pay brings the chops and the know-how to integrate and not obstruct normal payroll processing because we know we have to reduce the barriers to entry as we forge ahead in payments. Really if I brought in it out from earned wage access from real-time payments, everything we're doing in payments today at PNC is about breaking down those barriers. There is so much inertia out there and with good reason. Our clients don't just have piles of money and tech resources who want to whiteboard like a daily pay does.



(15:02):

There's some clients who come to you, we want to workshop, we want to whiteboard, we want to innovate together. We love that. But the rank and file of all these companies out there, they do not have that luxury. They are running their business, they're doing it usually on a shoestring with the finance department. And therefore we recognize that if we PNC are going to invest and make new rails, new payment technology successful, we are simply going to have to make sure that all of those hurdles that exist before a client could take advantage of them no matter how good they look on paper, we're going to have to bulldoze those two. So that's what we've done. And I think that in this case of earned wage access, that's exactly what we've been able to do with the partnership of daily pay because if we had gone to all of those employers and say there's this better way to make your employees more satisfied, retain your employees better, which is by the way, I might be stealing thunder from another slide, but what is shown if employees use earned wage access, there's less turnover, there's less absenteeism, there's more satisfaction and there's greater retention, and we are really giving those employees the peace of mind.



(16:27):

But if we had said you could do all that, but you need to do a project for some hundreds of thousands of dollars over some time to rework your payroll system, not all of them would be able to do that.



Rob Nardelli (16:40):

That that is a hundred percent accurate. And that leads perfectly into the next question, which is what has been the reception for PNC earned it from your business clients?



Sarah Billings (16:52):

Well, it's been good. PNC has earned it is a strong competitor in their earned wage access space. And we are seeing, as you might imagine, the most interest in the industries that have a large contingent of shift workers. So medical hospitals, manufacturing and others such as that. We're also seeing an uptick in industries such as education where the pay cycle is not every two weeks. It may be even monthly. So anywhere where you see a preponderance of shift workers earning lower wages as well as obviously a longer pay cycle, it's a real need. And we have, I won't quote the exact number of clients, but I think across the implemented base we have over 30,000 employees with access to this product now.



Rob Nardelli (18:04):

And it's interesting you say the monthly, I guess my American bias growing up, I didn't know until I visited with my cousins in Europe said they got paid monthly. And we hear it a lot about gig economy workers, low income workers, about middle income workers, the analysts and associates working at all your companies that haven't been provided housing, they too will be living paycheck to paycheck. That's right. And when it's monthly, I mean you've doubled the use case, so we're working on it.



Sarah Billings (18:32):

Yeah, I mean I say low wage workers a lot. You're absolutely right. It does not have to be low wage. Things come up, emergencies happen, people have all sorts of things that they're struggling with. So the need is obviously there across a great swath of individuals and I'm sure that if we dug into our data, we could, except for maybe some privacy concerns, understand better who's using it.



Rob Nardelli (18:59):

Certainly. Maybe we've got a slide for next year. There you go. Okay. So some of the questions I get also from employers around, so no cost, no change, you're not going to mess with my working capital. What do I need to give you in order to get things started? And it is this simple payroll system, time and attendance system. Oh by the way, we have connections to 180 plus shameless plug, hence why PNC chose us. And then the third piece is we just need their gross pay file. So the roster, what the gross pay is, and then we using AI, we'll be able to determine what their end pay is or their net pay. And that is the available balance that we will show to your employees that they can choose whether or not they want to enroll freedom and control. And then they can see that available balance if and when they need it. And when you talked about it and you hit it earlier in terms of financial wellness, but also financial stress, mental health awareness is becoming a big movement in the United States and across the globe. And one of the top two bullet points is financial stress. That's right. We find that our users will check the app. A couple of years ago it was five times a week, which I thought was



Sarah Billings (20:20):

A lot.



Rob Nardelli (20:21):

I'm not going to say yes a lot. We'll go with that. And now it's over eight times a week. So knowing that that's there, this is not meaning they're using it eight times a week. It means they're checking the balance to know, okay, if I need this money to pay my rent to pay my credit card bill, I have it available by the click of a button.



Sarah Billings (20:41):

And I think you're hitting on the secondary component and maybe not the one that we are focused on when building earned it, but just simple wage transparency, that ability to look and see that ticker, especially for gig workers or shift workers, like ticking up. That's a peace of mind. I we're used to that in the rest of our life. Why is the payroll system something that's the lifeblood of keeping our families and ourselves alive and well? It's so back office, right? It's so back office. And that hits on another trend actually that I think this use case brings to bear, but so many others do as well, which is this technology real-time payments and other surrounding technologies like APIs and all the ways that we embed payments into the digital journey. It's taken payments from this back office function of moving money from here to there and someone in accounting does that. Someone in treasury does that to right front and center with your user. And that is really exciting. I've been in payments for my whole career actually, and I feel that I've always been challenged in payments. It's always been exciting, but I'm not much fun at a cocktail party talking about what I do. Right.



Rob Nardelli (22:13):

Brilliantly boring. I saw last week on PNC,



Sarah Billings (22:20):

We are, I'll lean into that. I love that we are brilliantly bringing these solutions to market and the boring means that we make it work. We're here every day, 24 by seven. That's table stakes for a bank. So I think it really fits. But now this has come mainstream. People do talk about it at a cocktail party even if they don't know that they're talking to someone who works in it. And I think it's the most exciting time I've ever seen to be in payments.



Rob Nardelli (22:51):

Agreed. Okay. We've got a few minutes here. Are there any questions out in the audience? Alright, we have one brave soul. If you could wait one moment. Our lovely assistant is coming with her microphone.



Audience Member 1 (23:14):

How does PNC make money from this product?



Rob Nardelli (23:17):

Oh, I'm sorry, I couldn't hear that. Does PNC make money? Oh, okay. Yeah, no, fair, fair, fair. So you kind of heard me allude to it before. We have two basic flavors for earned it next day ACH absolutely free if you want the instant to take advantage of the RTP or the OCT rail. It is an ATM like charge of 3 49 for instant. Yes, of course we do. I'm so sorry. Correct, correct. Yes.



Sarah Billings (23:55):

We sell this product as part of a suite of organizational financial wellness services that we offer to our clients. So this isn't like a one trick pony. We have been in this business for a long time offering our clients a suite of services that help with their own employee satisfaction and financial health. So yeah, there is some sharing of that revenue. But yeah,



Audience Member 2 (24:31):

Thanks for the very clear overview and explanation. I'll stand up. Sorry. Sarah, PNC is known for excellent customer service and serving your corporate enterprise small business customers. As you take this product to market earned income access, have you seen any synergies between this product and this is a product about when employees are getting paid, it's also a product about how they're getting paid. Have you seen synergies between that and other ways that you're helping your enterprise or business customers with ways that they pay individuals, consumers, small businesses and so on?



Sarah Billings (25:23):

It's a little hard to hear the discreet words. There's a hum in the microphone. But I think what you're asking is, is this synergistic with other payroll type solutions that PNC offers to corporate clients?



Audience Member 2 (25:41):

Yes. Or other payment B2C payment solutions that you're offering?



Sarah Billings (25:47):

Oh yes, absolutely. So I'm here talking with Rob. So we're focused on earned wage access, but if I brought it out to what PNC is doing with payments, this all started because we're the processor of daily pays, huge volume of real-time payments. So they needed a provider, they offered the service, forget about earned it, they offered it through their own Salesforce and distribution channels. And we were processing their real-time payments on the backend just like we would do for so many other customers, whether it's ACH, whether it's Wire, whether it's direct to debit card, whether it's any number of payments that we offer and then earned. It came out of this marriage of both of that. And then PNC can be a channel. We can offer it as value to our employer clients and it's another channel for daily pay to get the product out there.



(26:44):

But overall, as I said, I believe in coexistence of all payment types, horses for courses, as the Brits say, and the earlier panels said, we're not going to take all ACH are all Wire and put them over the RTP. Not all payments need that. Some are scheduled, some are routine and those can stay where they are. But what we're finding is it's not about shifting payments from one rail to the other. It's actually that the payments pot has just grown enormously. And we know this from any study that you look at, there are simply more payments and the payments are individualized, right? So where you might've aggregated payments and be paying one big bill at the end of the month, now you're paying as you go, right? And you are ordering that toothpaste from Amazon just where you would've gone to the grocery store or the drug store and bought all of your products for the month.



(27:51):

So because we believe so strongly in the coexistence of payment types and the different tools for different jobs, what we've done is, I like to call them, we've created bridge solutions. So the bridge solutions, again, knocking down those hurdles for our corporate clients, we don't want a corporate client to have to say, oh no, educate me about this real time payment system. Tell me like, oh, it's irrevocable. Oh, it goes in 15 seconds. Oh, it's credit push, not debit pull. We don't want them to have to invest their time. They don't have that time to invest in knowing the NIS and NAS of everything. So we do have a lot of services that offer, as you said, consumer choice. I won't go into the details of our products, but basically we can facilitate our clients giving their clients secure choice of how they want to get their payment, which includes a variety of immediate payment options.



(28:56):

Zelle, real-time payments, ACH is an option. Even check is an option. Direct to debit card is an option even through some of these third party account to account providers. So we do believe that these new payment technologies open this whole new world that we're at the forefront of these products that we have are rather unique in the marketplace and award-winning. So we're very proud of them to enable our clients to offer payment choice to their customer base. And it's not just for earned wage access, it could be for anything. And that's another way that we're really moving payments from the back office to the front office. It's part of if you're an insurance company and you're paying a claim that insurance company is doing everything digitally with the person that got into the accident on the app, are you really going to say, well, okay, we've adjusted your claim and you're going to get $531 and 21 cents and the check will be in the mail. Well, if you do that, the client will call you every couple of days saying, oh, where's my check? I need to get paid. If you send that payment, if you give them the ability to get that money immediately that you've just completed the digital journey, you have a customer for life, you took care of them, and the client satisfaction just goes through the roof. So that's what's really exciting. It's not payments in the back office anymore, it's payments in the front office right up close with their clients.



Rob Nardelli (30:40):

Perfect. Thank you Sarah. I see we've run out of time, but thank you all, really appreciate it and we'll tune in for next time.



Sarah Billings (30:49):

Thank you.