Embedded Finance and Earned Wage Access: How Payroll Is Redefining Financial Wellness

Speaker A: The emerging markets behavior and the middle class is also bigger and it's growing instead of getting smaller. Especially also in Asia. That includes GCC and Southeast Asia. There is these corridors of foreign workers that come from countries like India, Philippines. When we started the business, I have two co founders, a Filipino co founder and an Indian co founder. And we have also this vision actually let's build something we will use because for me living in GCC from Mexico, 14,000 kilometers away, you cannot use some other remittance fintech applications. You have to go through the bank or Western Union, you pay more fees. We have lived the problem and still no one has fixed it. So we said we have to do something.

Speaker B: Welcome back to the Issua Academy. Today we're exploring a shift that's quietly been transforming embedded finance. For years, embedded finance has focused on convenience, adding payments, cards or credit into apps. But now we're seeing something deeper. Platforms aren't just processing transactions, but actually supporting livelihoods, helping people access wages, manage bills, send money home, save and build financial stability. And that's what we'll unpack today. I'm joined by Dr. Alan Villegas, founder and CEO of Libify and our very own CTO, Tim Josten from Paymentology. Welcome to the Isho Academy.

Speaker C: Thank you, thank you.

Speaker B: Let's dive right in, Alan. Liberfy is often associated with salary advance, but your platform now includes remittances, savings bill payments and secured lending. Can you please tell us more about Liberfy and what problem you were really trying to solve for when you built it?

Speaker A: Yeah, sure, it's a great question. So when we started, um, we started with the problem that I actually have a PhD, so I was a well paid professional for the last five years in the region and the same as my partners and now co founders, we realized that a lot of people in the middle income class and upper class do not have uh, easy access to some financial services that we just give for granted in many places like getting a credit card, secure lending to buy a car or something. So we decided to solve the issue by enabling the middle class to generate financial wealth and financial wellness by allowing them with our own credit scoring to access creation of a card account, salary advances and we are adding salary loans, BICU loans. As you said, the app Leah Pay is uh, going to allow the remittances, paying the bills and all of it. So it's technically a way to solve the problem with a different angle. Right, by generating our own alternative credit scoring and segmentation powered by AI tools nowadays.

Speaker B: And that's really interesting because it's not actually salary advance. Right. It really is creating financial wellness and a way for customers to manage their finances in a better way.

Speaker C: Yeah.

Speaker A: I mean in the financial sector the real business is not. I'm sorry, because you're a CTO is not the tech itself. You use tech to generate business. Right. So in fintech and because I come from doing buy now, pay later, my partners were doing a payment ah, service provider, uh regulated in Qatar is that uh, it's about how you manage your risk, the loan book and if you have the ability to scale, making it bigger. The lending portfolio. Right. So when you do that uh, we realize, okay, our business is how do we. Why banks or financial institutions are rejecting these people that is making good money.

Speaker C: Why?

Speaker A: Because it doesn't make sense if you thought about it. And we realized no, it's a matter of how they are onboarding them, the risks they want to take on them. So we went a step back and we said what's the source of income? The employment. So if we know to get the salary advance is the uh, entry point to our own ecosystem, our Leah pay wallet, you know, because from there you start building a scoring in our ecosystem and we can start borrowing more money, giving you more tools to build the financial wellness that is really our, our core.

Speaker B: I love that. It's a new version of inclusion.

Speaker A: Exactly.

Speaker B: Which is, you know it's like an, it's, it's the evolution of inclusion. Actually looking at how customers now get access to credit, which is absolutely fascinating. You talk about making money human and Liberfi's mission is to empower more than just 10 million middle class customers. What does that actually mean in product terms? Going to the technical now and how does that show up in how people use Liberfi every day?

Speaker A: Yeah, I mean the middle class is, it's one of the most highly growing segments. Right. And just in the region that we are building from GCC, 80% of the population are expats. Only 15% average is localized. So this is actually the segment that is being uh, left behind by the banking sector. So we have a big chunk of people with good money already sending money in remittances. So we jump into these corridors of the remittance and middle class people to help them, to somehow teach them or recommend them what to do with their money. And this is something that I face, my partners face and it's like uh, it doesn't make sense. You know, sometimes I just want to buy a nice car, but it's something as easy as that, that uh, uh, we really want to solve at the end of the day.

Speaker B: I love that. I think finding a problem and working on the solution is always the starting point to a really successful platform. I want to zoom out for a moment. What Librify represents isn't just a product story. It reflects a much broader shift. We're seeing embedded finance move from single features into full scale financial ecosystems. Tim, from your vantage point, why is this transition happening now and what's changed in the market?

Speaker C: I think it's the evolution of what we mean by embedded finance. So I think embedded finance has become this catch all term, um, that was used for everything. So it's not just now about adding a financial feature to a non financial app, which I think is, you know, what people meant when they, when it started. I think now we've sort of moved through a period of where it's about integrating kind of financial capability directly into existing workflows so that you don't have to think about finance as a separate activity. And I think what's changing now is user expectations. So single feature kind of embedded finance, just like payments or lending, doesn't now create enough value for anybody. So platforms now need to think about in terms of outcomes rather than just transactions. So if you already understand things like income and timing of that income and behaviors based around that income, it becomes really logical to support, as you've said, savings, smoothing expense flows or accessing kind of additional funds kind of responsibly. So it's not just now about sort of moving money. So I think embedded finance is moving from embedding transactions to embedding financial intelligence into everyday products.

Speaker B: Yeah, 100%. And we were talking that, talking about that at our masterclass in the UAE where it's really about, it's a more holistic customer experience and understanding customers needs and then working backwards to say, okay, how do I now embed not just the transaction but an entire flow of how money should work and how customers actually want to spend. Right.

Speaker A: I think you hit the pot. It's actually how we embed not only from a technology perspective, how we embed in the customer journey. So we actually did the mapping of what really happens on this process because if you are not in the right time at the right moment, you also will lose the client even if you have the best app, the best uh, technology behind it because they don't know you in the moment. So that's actually something very important when you do embedded finance models also it's like it's not, it's embedding in the tech infrastructure, but also in the journey of your customer.

Speaker B: Those are the right tech. Like you just said, the right tech at the right time.

Speaker A: Yes, exactly.

Speaker B: So let's now look at payroll. Because payroll used to be a back office function, now it's becoming a front door into financial services. Dr. Allen, why has payroll become such a powerful distribution channel for financial tools?

Speaker A: Yep. It has to do, as I said before, is your source of income. Right. So and especially in gcc there's something called the wps, the wage protection system. In the uae if you are a mainline company registered, you have to process through WPS the payroll. So it means that it's ensuring that everyone gets paid always on time, every month. And if you are free, some companies you have also some uh, limitations and sometimes even exclusions of, of doing. But they are trying to ensure that payroll it's always warranted. So it doesn't matter if the company is going bankruptcy or bad things. Payroll is the number one thing that they always have to pay. That's why we also step into this area because it gives us the type of data that we need for scoring and segmentation of clients. And also it's a thing that help us manage the risk perfectly. So actually we are a B2B2C solution. We partner with an employer in the books, we record it as a payroll financing to the company. But the beneficiary of the salary advance are the employees. So if the employee leaves the company, it's fire or anything. We always get paid back because it's with employer is uh, the lending product which is actually zero interest because it's something called Sharia compliant in the Arab Muslims.

Speaker C: How does that out of interest, how does that scale beyond the uae? So do you rely on that central kind of payment bureau to be able to do this or can you also do that without that centralized service?

Speaker A: There is credit bureau M. There is also now implementation of open banking in the uae. But to check credit bureau you need to be a uh, regulated financial institution or partner with one. We actually partner with a financial institution regulated by central bank. But what we learn is that first it has a cost doing consultation of credit bureau which in operations of any fintech it can be a huge cost. And second the data that is there is not 100% reliable because it only purely relies on credits that you get through formal institutions. So you go back to the problem that actually we are solving. If it's not there, it's not our client anyway. What we are doing is yes, it's important to do cross checks of credit bureau open banking, but we create our own alternative credit scoring because what we provide as a salary advanced solution, it's deposit in our own card LeahPay. We are planning to link this to make it a salary card so that they also receive the payroll in the same card. So that way you can see the spending behavior as well and use that

Speaker B: to add additional time.

Speaker A: You will know, okay, this person is paying this much of rent, it's sending to someone 1000 every month. So you start knowing the behavior after a time. And that is exactly what we want to really achieve because, because it's more trustable or reliable. It still is connected with open data of the government, but it's more powerful at the end of the day.

Speaker B: That's why we talk about data being so, so powerful because it really gives you insight into customers everyday lives. How are they actually spending? Because it's, you know, I remember when you applied for a credit card back in the day and you had to like fill out your expenses and it was like, oh, what's your total? And you may have left something off, no one knows. Now you're getting real time data from customers as they spend, which is absolutely fantastic. Tim, I want to come to you now from an infrastructure perspective, what makes payroll linked finance technically attractive but also very complex? Right. Where do teams tend to underestimate the challenges?

Speaker C: I think from proposition wise I understand why payroll's sort of attractive because obviously it's this kind of recurring, you know, that kind of payment's coming. But I guess there's a lot of complexity that's associated with that because it's not clean and it's not static data either. It's kind of, it's full of exceptions, it's full of corrections. There can be humor and intervention around what's happened with that person's salary that month or what they do get or what they don't get, or when they worked or when they didn't work. Which means I guess there's embedded risk in it as well. So you have to be certain somebody is owed what you think they're owed before you advance or kind of make those funds available in advance. So I think it's the underestimating. If you treat it like a static API and treat it like static data, then you'll break trust, you'll introduce risk, it'll become an issue. So I think that's probably from my experience that's what I would kind of see some of the challenges.

Speaker B: Yeah, definitely.

Speaker A: Actually it's a very valid point and this is the reason when we did the mapping of the journey. The the data of employment usually is managed by payroll or HR management systems or uh, someone in an Excel sheet, but it's somewhere, right. Ideally the Excel sheet ones, it's because they are still micro or small businesses. Our focus is in medium and big sized companies that are already implemented ERPs, HRMs or payrolls. So we started developing integrations on these systems so that we actually can embed the service and in the data that is there. So it's a bit more trustable, uh, in terms of the quality of the data. Because even though someone says, yeah, I work for this company that is listed, we still need to do a verification. So we actually still do kyc. We still do all the checks before giving this. The difference is that to approve or disapprove or salary request or any type of lending is that it goes in the back through deductions in your pay slip. So we in our criteria of scoring, it's things like this. Like it can be, yes, an employee, but it has to be an employee out of probation period. It has to be an employee at least 2, 3 years of work in the same company. Maybe sometimes the companies can tell us no, I only want to uh, allow for managers, not for old employees. And some others actually stay the other way around. Yeah, I want for every employee to have this benefit, you know, but I think that's fantastic.

Speaker B: Right? So it's really verifying the data but then having the flexibility to get real time data. And it's about how you put the two together that really gives you this score that is trustworthy and can be used to actually further the customer's financial wellness. It's very interesting. I want to now look at when platforms promise instant access to wages or money, movement speed often becomes the headline. But risk is actually the reality. Right, Tim? What has to happen behind the scenes to make this work in a safe way?

Speaker C: I think you already touched on it. It's that real time data, but more importantly it's that real time decisioning. So you know, it's not just fast payments or being able to give somebody funds. It's actually the systems and decisioning and the risk controls you have behind those funds to start with. So you're kind of exposed with fraud. There's credit exposure, uh, there's compliance and then there's kind of reconciliation. And you, you have to have all of these things working together in unison, you know, making the payment and as we've talked about, putting money onto cards or anything like that is, is very, very simple. But being able to explain it, audit it, reverse decisions when something goes wrong, I think that's the, you know, that's the real kind of challenge.

Speaker A: Yeah.

Speaker B: And how all of like, like you just said, all of those things need to work perfectly together every single time for every single transaction, you know, that's really key when we look Dr. Allen, how do you balance speed with responsibility on the product side? Because as much as Tim is saying all of these things have to work. How do you guys manage it?

Speaker A: Well first you cannot start doing everything. We have to pick and uh, I think this is something common you need to do building blocks in terms of your tech stack. And this is why we started exactly with salary advances. This is for us, I will say the hook to get the customer. Because even though the data is in Systems payroll, ah HRMs. Uh there are also data protection regulations. You cannot just uh, download it especially sensible data like employment. So you need to get consent of the end user. So that consent for us was okay, let's give them a product that is zero interest, that it solves a need for an emergency payment, vacations, whatever comes in a month. And from there we get the consent and then we can start really getting access to the data after that moment. So of course there's always risk in everything. In all financial services, even insurance has its own risk. But it's a matter of how we calculate or how we manage the risk. Right. That's one of the reasons we will not do direct to consumer salary advances. It has to always go through the employer because of course especially I said before is 85% of the population are expats in GCC. So there's also the risk that they take money and don't come back after a vacation. Right. But it's normal, it's normal in buying operator industry in credit cards from the banks they also have to take these measurements. Right. Uh, our approach is just a bit different. The angle, how we manage it, the

Speaker B: angle is different but you've safeguarded yourself and created a buffer by partnering with, with the businesses rather than going straight to consumer. That's a very smart way of actually managing it because you have the why down and now the actual model to create the solution. And the partners are key.

Speaker A: So actually there is, it's now a digital bank in the US called Chime. Maybe you know it, they are going back to salary advance because now they don't trust the credit bureau data but they started with as a full digital bank solution nowadays and they are going back one step back. And we are actually doing, since the beginning, from salary, grow it to a full suite of products.

Speaker B: Well, it's always good to know that this model works.

Speaker A: Exactly, yeah.

Speaker B: Much of this innovation, you know, we're here in the gcc, much of this innovation is happening fastest in emerging markets. I know that Tim touched on it a bit earlier, but Dr. Allen, what unique challenges do you face scaling financial services and wellness platforms across the region and not just the uae.

Speaker A: Yeah, so you touched on a good point. The emerging markets, it's the behavior. And the middle class is also bigger and it's growing instead of, uh, getting smaller. Especially also in Asia, that includes GCC and Southeast Asia. There is these corridors of foreign workers that come from countries like India, Philippines that are the biggest populations in the gcc. So actually when we started the business, the first idea was doing something they called send now, pay later. So we were just thinking about borrowing money in a wallet to send money home to the family abroad. And I have two co founders, I'm from Mexico, which is also one of the biggest remittances, and the second is Filipino co founder and Indian co founder.

Speaker B: Oh, wow. So all the top three, the top

Speaker A: three nationalities in the world are actually also represented by the co founders. And we all have also this vision, actually, let's build something we will use. Because for me living in GCC from Mexico, that it's in the other side of the world, 14,000 kilometers away, you cannot use some other remittance fintech applications. You have to go through the bank or Western union, you pay more fees. So I thought, why is this? Of course, because there's not enough Mexicans here. But it has to be simpler. So we have lived the problem. That is exactly one of the reasons. So my Indian partner was actually born in the uae. Uh, he's the cto. He has work in Bahrain, in Qatar, in fintechs, from open banking to payments to wallets. So he's very knowledgeable of this. And my Filipino founder, he has been 20 years also in GCC. So it's like the bread and butter on this. We lived it, we experienced it, and still no one has fixed it. So we said we have to do something.

Speaker B: I love that. Living the problem is always the easiest way to figure out that somebody needs to fix it. I'm very glad that you've taken up the challenge, Tim. Um, from a platform perspective, what does it take to support localization at scale across currencies? Regulations and markets.

Speaker C: Yeah, that's a good question, I think. Um, and we know this from the paymentology journey kind of with the markets that we operate in. So emerging markets are kind of where the opportunity is. I think it's because you're taking that leapfrog of like what didn't exist before. And then not only are you providing those products, but you're providing them in a way that is kind of seamless and transparent. And in a lot of ways kind of, you know, you're providing them in a better way than Western markets. But it's not just kind of language and currency. When you go into different countries as you know, it's kind of, it's different payment trails, it's different regulations, different settlements timings, there's different user expectations and cultures. So it becomes, you know, very much you have to like work out how you build your platform so that it's globally consistent but flexible enough to be able to adapt to those local kind of conditions and regulations.

Speaker B: Absolutely. And you're so right, we see it all the time. And I'm so glad that you brought up Mexico. With Mexico, like different interest rate calculations here in gcc, it's Sharia Corporation compliant credit, not just normal credit. And so making sure that your platform is flexible but can also deal with those local nuances in a way that is very, very localized is absolutely critical and key.

Speaker A: Yeah, yeah, I think so. For example, our leapay wallet is going to have the remittance but we don't have a remittance license so we have to partner through different providers. But we are making sure that at least the main top uh, nationalities that live in GCC are there because otherwise it's not going to work. And the second thing is the multi language availability. So we have currently going to release seven languages this year that of course includes Tagalog, Hindi and uh, some of these main languages and English of course, and Arabic because it's also the user experience. Uh, they probably know English if they are middle income class. But it's nicer to have your own language there.

Speaker B: Yeah. And honestly I feel your pain. I was an expat for so many years living in Thailand and just being able to see the language that you identify with is so important. It really makes the consumer feel like this is an app that I can trust, I understand everything. It's the little things that actually make customers feel comfortable now. And I always get so sad when we get to the like final part of the podcast. But I want to now look ahead. How do you both see embedded finance evolving beyond today's use cases?

Speaker C: So I think as we, as we finish how we started, I think embedded finance needs to become less visible. The best platforms, it won't feel like you're making financial products or making kind of financial decisions. They'll just be improving your financial outcomes without you making any conscious decisions or actually kind of carrying out any, carrying out any specific financial activities. So yeah, I think it's about the visibility and becoming invisible.

Speaker B: Yeah, absolutely.

Speaker A: Yeah, I mean I totally agree on that. Nowadays the user also, even in some uh, fintech services have already four or five applications or maybe two different, three different wallets. So changing the customer from one to another is not the difficult part. It's the engagement, the loyalty. So when you are embedded in places they trust with the uh, brands they trust in journeys that they already use, it gives some sense of trustiness to this new brand, what is their offering and at least they will also try. Now if you provide good service with everything, then you will keep it for longer. So that's why I believe the uh, embedded finance, it's also very important because people is exposed every day to social media, to a lot of competition. So it's okay. But if it's, for example in our case if it's your employer or your HR manager recommending Leah pay or liabify, it's okay. At least you will open and read and maybe request at uh, one time to try it and we just need that one try to keep you forever. We will make sure to keep you happy and grow your financial wellness at the end.

Speaker B: Yeah, it's basically a transference of trust. Right. Because your company is telling you to try it and so you have that added benefit of their backing to get the customer to actually try it out.

Speaker A: Exactly, exactly.

Speaker B: Fantastic.

Speaker A: It's like a word of mouth recommendation.

Speaker B: Exactly.

Speaker A: But it's the best because it's your employer.

Speaker B: Yeah. It's people who pay you. So you want to, you want to try it out, right?

Speaker A: Yes.

Speaker B: Now to both of you in one sentence, what's the single most important thing fintechs must get right when building financial wellness platforms?

Speaker A: For me, I have four P's Okay. It's uh, people passion, what you do, the product and the private jet.

Speaker B: I'll take four.

Speaker A: Joke aside, the four is the place has to be also the right place at the right time. So people passion, products and place love it.

Speaker B: And actually that's something that is very easy to remember as well. We're going to highlight that when we post the podcast.

Speaker A: You can quote me.

Speaker B: Alan and Tim, what do you think?

Speaker C: I think design for real human behavior, not idealize user flows and build the platforms that can handle the messiness that come with it.

Speaker B: Absolutely. Making sure that like you said before, the platform needs to be flexible. We need to be able to cater for anything that may come our way. Because the reality in payments, we never know what we're going to get right. So always plan for, um, the unimaginable, which will then become reality. Today's conversation shows that the future of embedded finance isn't just technical, it's human. It's about building systems that don't just move money, but improve financial lives. If you're building in payroll, earned wage, access, lending, remittances or financial wellness, the takeaway is simple. Human centered products need resilient infrastructure underneath. Thank you to Dr. Alan Villegas from Libify and our very own CTO Tim Josten from Paymentology.

Speaker A: Thank you for hosting us.

Speaker B: Catch you next time on, um, the Ishua Academy that wraps up today's episode of the Ishua Academy, Pavementology's podcast to innovate, scale and provide impact. I hope you're leaving with fresh insights and actionable strategies to help you revolutionize your card programs and drive true impact in the world. If you've enjoyed today's conversation, please leave a review to help us reach more pioneers like you. Also, be sure to subscribe and follow us for more inspiring episodes and, uh, behind the scenes content from Pavementology. Until next time, I'm, um, Merusha Naidu. Keep innovating, keep scaling and keep striving to make an impact.

Speaker C: La.