On today’s episode of the RecruitingDaily Podcast, William Tincup talks to Einat from Kashable about financial education and how by helping employees with their credit can be used as a retention strategy.
Some Conversation Highlights:
Listening time: 26 minutes
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Einat Steklov is founder of Kashable, a financial wellness company that brings an innovative approach to consumer lending. Einat founded Kashable with the vision of transforming the way working America accesses credit by providing financing solutions that empower employees to take charge of their health, wealth and financial wellness.Follow
William Tincup: Ladies and gentlemen, this is William Tincup and you’re listening to The RecruitingDaily Podcast. Today we have Einat on from Kashable and that’s with a K by the way, and our topic today is ” Helping employees with their credit scores as a retention strategy”. I’ve been looking forward to this all day long as I told Einat before the call. So we’re just going to jump right into it. Einat, would you do us a favor and introduce both yourself and Kashable?
Einat Steklov: Of course, so Einat Steklov, I’m co-founder and CEO of Kashable and Kashable is a financial wellness company with a mission to transform the way people access financial services, especially access to credit. And we focus on improving both the experience and the outcomes, and we are different from other financial institutions that might come to mind. We collaborate with employers to deliver financial wellness benefits to their employees, as a voluntary benefit. Access to credit happens through our loan program, which was the first product that we rolled out. It allows employees of participating employers to receive installment loans, and we pay them automatically through payroll, like all other voluntary benefits so that’s who we are in a nutshell.
William Tincup: I love it. I’ve been following you all forever. So thank you for the overview and thank you for the wonderful topic. So why don’t we unpack just credit scores to start with and what people need to…we’re not taught personal finance at pretty much any stage in our life unless our parents, family members kind of help us out with things like that. So I feel like the literacy of just financial wellness in general is pretty low in our country. So, I’ll just start there what’s your observation of folks as they think about their credit and their credit scores?
Einat Steklov: So, first of all, I agree with you. People have education in many areas from history to algebra, sciences, et cetera, but unless they chose a career in banking, most people don’t learn finance or how to manage, how to save, how to budget. And now it is on the employer to help and they’re doing their best. They are trying to help. And we at Kashable, we believe that financial wellness benefit program like Kashable should be comprehensive and well-rounded. And we know that many of our borrowers see improvement in their credit profiles. So we added education and credit monitoring tool to the Kashable program. The credit monitoring tool allows employees to monitor their credit, free of charge, to see the changes, to review a summary of trade lines, basically be in the know. And we believe that in this day and age, it’s a necessity and everyone should be aware of the credit score and how it trends.
And again you can guesstimate, what’s your credit profile on many other apps, but at Kashable we offer, and again it’s in partnership with employers, we offer actual credit monitoring directly for major credit bureau and it allows employees to be much in the know, to be the first one to know if there is something that is going, it is trending in the wrong direction on the credit profile, they can act. And it’s something that we feel it’s necessary today.
William Tincup: Well and again, we’re thinking about retention. So what I love about financial wellness as a category is it’s an extension of what we did 20 years ago in health wellness, right? Programmatically, we thought, “You know what, we actually should invest in the health of our employees”. Shocking, not shocking. And this is a natural normal extension of that role. We should also care about the financial wellness, which I love. On the monitoring side, I would assume I love the alerts side. It’s like, “okay, this is trending well”. And you were 715 now you’re 730, whatever. And it’s tracking in the right direction. And if it’s not tracking in the right direction, I’m assuming there’s kind of a recommendation engine on what to do or how to triage and fix whatever’s going wrong.
Einat Steklov: So obviously the first step is to know, and figure out that it’s yours, that nobody else took over your credit file and there’s no identity theft going on so that’s the first step. And we help employees realize that it’s happening but I think it’s from the employer’s side. There’s so much that is going on today, where employees are looking for more from their employers, they’re looking for quality of life at the workspace, and it is here to stay. This is not a pandemic trend. This is here to stay in financial wellness. Just like you said, it used to be healthcare and financial wellness ties well into the wellbeing concerns and financial wellness is going beyond the basic comp it’s part of the expectations today. So for employers, it is hard to recruit your employees, employers respond and define their value proposition to the candidates, but actually employers are working hard on retaining their existing talent and looking to add more value to all employees in order to retain them. Right?
So while the HR and benefit teams have many initiatives to address a more holistic value proposition, we look at the financial wellness side and they are addressing it through diversity and inclusion. They are looking to support retirement plans and education and credit monitoring is another initiative that employers have. And at Kashable we build that comprehensive financial wellness platform that helps employers to accomplish and move forward and advance each and every line item on their initiatives in the area of financial wellness.
William Tincup: You know what, I’m glad that you brought attraction in, in terms of, it’s hard enough to retain talent, but if we think of credit scores and we think of credit, basically financial wellness as a recruitment strategy, we also think of recruiters being able to say, ” listen, we care about the whole, there’s many different ways we can explore that, we also care about the financial part of you”, because it’s not just the outcome of the job, et cetera. And I think you’re right. I think candidates are looking for more. Quite frankly, they’re expecting more, I’ll just use more active language. They are expecting…
Einat Steklov: It’s your show.
William Tincup: Yeah. They’re expecting more and I think those that don’t provide those things, do it at their peril. So I love that you brought in the attraction. I think it also touches internal mobility in a really interesting way is, you’re up for the job in London but you’re moving from Topeka to the job in London. The cost of living is going to be crazy different and your credit scores impact a whole host of things in your life. I think when people think of credit scores, they think of buying a car or buying a house and that’s about it, they’ve limited the box to something that simple. And so I think the educational piece that y’all provide is super important to then can demystify or debunk some of the things that are out there or emphasize like, “Okay, credit score of 850, this is what that gets you”. You know the difference between 850 and 650 or whatever. 800 and 600, your APR for the same credit card is going to be from here to here.
Einat Steklov: It’s a yes or no, right, but it’s interesting the way you look at that. For most American household, equity is built in their homes. The house is the primary component of their net worth. And the primary driver of their wealth as home prices are typically appreciate over time.
William Tincup: Right?
Einat Steklov: You add to that government subsidies for home ownership here in America, in the form of the mortgage tax deduction, all of that together making home equity, one of the most lucrative financial assets for a person, but the reality is that home ownership of minorities, especially blacks is significantly behind home ownership among whites.
William Tincup: That’s right.
Einat Steklov: And there are historical reasons and there’s tightening of underwriting post the 2008 real estate meltdown but the outcome of inequality is what we at Kashable what we are here to change. And we can do that together with the HR and Benefit teams that employ us. It starts with improving or building the credit file and employment based lending does it. Employment based lending improves access to credit. It provides an opportunity to build that credit file, which is so critical, exactly how you described it, so critical for building wealth through home ownership. So it’s always starts with baby steps, right? Adding an employee benefits in the form of a lending platform, like Kashable, creates a pathway to improving people’s credit. And it’s simply the first step in accessing mainstream financial services and eventually building wealth and keeping investments in employee retirement plan. So we can talk on what are the baby steps monitoring your credit is nice, but you also, as an individual, you have to take actions. You have to do something for that credit to move up and employment based lending allows you that with…
William Tincup: You triggered something for me. It’s interesting that again the literacy, we could all share on financial literacy. Sometimes when people think about increasing their credit score they think, “Well, I’ll go get some credit cards and I’ll put them on automatic payments, right? And do something like Netflix or something like that and just put it on automatic payments”. But that credit card might have a $5,000, not balance but… And the things that you think you’re doing are positive for you are sometimes looked at negatively from the credit bureaus. And so it’s like, you might be thinking, again to the education point, because I want to unpack the lending platform next but again, dealing with kind of the literacy of just every normal average American employees, they might think they’re doing something positive and they could be doing something negative or they might be doing something negative like where they’re not paying their bills in a timely fashion and it’s [inaudible 00:13:03] them every month because they don’t have things on automatic bill pay or whatever.
Einat Steklov: Or they don’t have the money in the bank to make the payment.
William Tincup: That’s right, creates NSF fees and all of a sudden, all this…
Einat Steklov: Overdrafts.
William Tincup: Overdrafts. So let’s get back to the lending platform real quick. Because I really think that’s astounding for employers to think of themselves, not as necessarily as a bank, but as a way of helping their employees again, we develop our employees in a lot of different ways skills development, training, all kinds of different things, but this is an area we don’t really spend a lot of time, money and energy in. It could probably impact them far more than some of the other things we do. So take us into the lending platform.
Einat Steklov: Sure. So when we started Kashable, we literally said there’s so many lenders in the consumer lending space and the results is very similar to many borrowers. 50% of American adult population is not prime credit, don’t have this prime credit score, which means the door is closed for them to have access to low cost credit, literally closed. Lenders that are focusing on the prime population will not lend to them. So when we looked at that, we said, there must be a better way to underwrite people. If you look at the workforce here, there’s a lot of stability. People are staying on their job, there are definitely different industries, but people are staying on the job, they’re bringing that paycheck every week, every other week, and still don’t have a good credit score that allow them access to mainstream financial services.
So here we are. And we said, instead of going to the consumer market for lending, let’s go to the labor market. So we know from the get go that we are talking with people that have a job. If you go back to your own experience with applying for a mortgage or for an auto loan, you would recall that the lender asked you how much money you want, or how much money you need, asked you to consent to a credit check and then came back to you with a yes or no. And if it’s a yes, gave you all the terms at the end of the process, it could be weeks later, the lender said, “Oh, by the way William, can you send me the last three pay stubs of your job? I want to make sure that you work, that you are employed, that you have income”.
And that’s the process that is still happening in so many lenders. We actually do it the way around. We partner with employers. So we have that income, we are talking when a consumer knock on Kashable app or website, we already know this is a consumer that does have a steady job that does have the income. And we are not asking the consumer, how much do you want today? We want to tell you the consumer, the employee, what is the maximum that is available for you? And that maximum amount that is available for consumer is carefully calculated to make sure that it is affordable, that it’s relevant to that consumer. So a person that makes $150,000 will see a different amount than a person that makes $30,000 or $40,000. We calculate to make sure that the person, the employee that we paid back doesn’t fill the pinch of repayment. That they bring home the majority, then 90 plus percent of their paycheck, they bring home after Kashable deduction was already taken to repay the Kashable loan.
And most importantly, we put a method of the payment that turns people to successful borrowers. So not only that they’re getting access to credit because Kashable approved nine out of 10 employees, nine out of 10 people will see a Kashable loan when they apply for a loan and they will get a loan that they can afford to pay back without stress. And they paid back out of their wages, directly from the payroll, which make them successful borrowers because they paid it on time every time. And we report that to credit bureaus. And the reality is that two third of the people that took a Kashable loan saw an improvement in their credit score. And that’s significant.
William Tincup: I love it because again, it’s democratized. It’s could be for anybody in the organization at any level, at any stage in their career. And again, I think, I want to get your take on this, but I think the reason that companies haven’t been down this path is the fear of overstepping their whatever bounds, whatever that invisible line that was there. First of all, I think the pandemic is some silver lining and one of which is there is no line.
So there’s that. But I think companies might have feared something like this a decade ago, but now I think if you don’t do something like this to help your employees, you do it literally at your peril because candidates are just looking for more help. They want help on internal promotions. They want help training and skills development, et cetera. And they want help here. They might not know that they want this help, but this would be so helpful to so many people.
Einat Steklov: Absolutely. And sometimes people ask us, “So what’s the benefit for the employer?”, “Why would employers actually partner with Kashable kind of initiative voluntary benefit?” And I say, employers have their own initiatives. They want to move things to the benefit of their employees. They want to work on this diversity and inclusion. They want to support these retirement plans and Kashable achieving all of that for them. Helping them in putting a real action plan behind the motivation of doing things. So on the diversity and inclusion alone, as I mentioned, we provide access to [inaudible 00:20:14] to all employees. This is not obvious at all as we just talked about it, certain lenders looking for certain credit profile. They don’t care that this is a loyal employee, 10 years on the job with that employer, that the employer wants to support this person.
All they see is the credit score that’s right. Either that credit score match or doesn’t match the books. But for us, we underwrite the population. We underwrite the whole workforce for that employer. So the likelihood of us being able to support all of their employees is much higher. It actually drives the inclusion that they cannot achieve elsewhere.
William Tincup: What I love about this is, sorry to interrupt, is you could see this being pushed through into HR and finance as a DNI initiative. And what’s great about that is now the board, especially with publicly-traded companies, they have to report on people data. And so it’s becoming more transparent. It will become even more transparent around people data. And what I love about this is you can now talk to finance and HR can talk to finance about, ” Hey, if we do it for no other reason, this is just great from a diversity and inclusion perspective”, it’s going to actually help people and it’s going to help everybody.
Einat Steklov: And it’s part of the value proposition of employer to drive this diversity and inclusion initiative and now they’re doing something. There’s some other motivation here for employers. Many employers are focused on the retirement initiative and we recently had an opportunity to sit with the HR and Benefit team at Huntington Ingalls, which is a Kashable client. And it was interesting to see the way they’re thinking about it, and the question that they posed for themselves that they were answering was, ” Will my employee be able to retire at the age that they were planning on retiring and support their basic lifestyle that they were looking for?” And for most employers if they ask the question, the answer would be no.
William Tincup: No, absolutely no.
Einat Steklov: Right. And it’s because at times of emergency, at times of hardship, people tend to draw funds from their 401k plans and it’s almost impossible to pay the loans back. It becomes a permanent withdrawal with additional fees and penalties and the results is the same, not enough funds to support the basic lifestyle that people expected in retirement.
William Tincup: And you end up again, with an employee population that gets to that place and it’s shock and all, whereas so much of that could have been mitigated if earlier steps of interventions would’ve happened earlier, which again, to your point of you got to know, you have to have that insight. So you have to monitor, you have to be educated and then creating that path of having great credit, and also being able to save the way that you want to save. Then you don’t put yourself in that situation of getting to an age where you are going to retire and in shock and all. I want you to be successful, if for no reason, I know that’s an odd way to start a question, for no other reason and I want you to put payday loans as a predatory service. I want you to put them out of business. So I want you to be successful.
Einat Steklov: It’s a great target to have and I truly believe that the only way to put these guys, payday lenders, out of business is by creating a better alternative. People will do the right thing if you provide the alternatives for them and if I go back to the retirement plans for a second, some employers actually put a Kashable tile at the employer portal as a gatekeeper before employees can apply for a loan from their retirement plan. So they literally say to their employees, “check it out, before you take a loan from your retirement plan, check out if Kashable is going to lend to you because that’s a better alternative”. And that’s one very proactive way to actually help people to help themselves. And on your wish to put, payday lenders out of business. If the employers in this country come and adopt Kashable platform, together we can do it.
William Tincup: Drop mic, walks off stage. Einat thank you so much. This has been wonderful.
Einat Steklov: Thank you. Thanks for the opportunity. I truly enjoyed it. And I love your program.
William Tincup: Thank you so much. And thanks for everyone listening to The RecruitingDaily Podcast until next time.
William is the President & Editor-at-Large of RecruitingDaily. At the intersection of HR and technology, he’s a writer, speaker, advisor, consultant, investor, storyteller & teacher. He's been writing about HR and Recruiting related issues for longer than he cares to disclose. William serves on the Board of Advisors / Board of Directors for 20+ HR technology startups. William is a graduate of the University of Alabama at Birmingham with a BA in Art History. He also earned an MA in American Indian Studies from the University of Arizona and an MBA from Case Western Reserve University.