Global Fintech Interview with Marco Margiotta, CEO at Payfare

Marco Margiotta, CEO and Founding Partner at Payfare discusses his biggest fintech observations on how innovators are enabling better end user capabilities for gig workers and smaller businesses in this conversation with GlobalFintechSeries:

____

Marco, we’d love to hear about your journey through the years in fintech and tech and also, what are some of the biggest trends and evolutions you’ve followed over the years?

I am the CEO and Founding Partner at Payfare, a leading global fintech company offering instant payout, mobile banking and loyalty solutions for today’s workforce. At Payfare, we’re laser-focused on the Earned Wage Access space, particularly when it comes to the gig economy. The rise of instant payments for earned income is quickly gaining traction. Over the last couple of years, there have also been a significant number of new entrants into the earned wage space, which has provided a great deal of validation that the need for these services is growing exponentially, especially as the traditional workforce has evolved with the rise of the gig economy. At the heart of it, gig workers are truly independent business owners who are driving our economy. They should have flexibility and control over their earnings.

Read More: GlobalFintechSeries Interview with Sandra Blair, Chief Product Officer at MerchantE

We respond to all these needs with a proprietary technology platform designed specifically to support and integrate with on-demand platforms, and provide gig workers a full-service mobile bank account and debit card with instant access to their earnings, along with relevant cash-back rewards. This platform is driving financial inclusion and empowerment for millions of next generation workers around the globe, including gig economy workers at Uber, Lyft and, most recently, DoorDash.

I’ve been in the fintech and broader financial services space for almost two decades now, having started my career at a large financial institution. It’s been incredible to see the innovation in the space over this time, with much of it being homegrown. The vast majority of this work has been based out of Toronto, Canada; though Payfare is a global company, we are headquartered in Toronto. This has been fascinating, because the tech scene in Toronto has completed transformed during this time, as the city has become a true global tech hub.

Can you talk about some leading ways in which today’s fintech innovators have helped serve the needs of the underbanked or SMBs in 2020?

There has been a significant amount of innovation in the fintech space within the past few years, and, in large part, this innovation has stemmed from new open banking, artificial intelligence and open API infrastructure. Notably, this year the traditional path of underwriting credit has been transformed by utilizing user data to determine patterns of behavior, including income and spending behaviors. This innovation has led to several challenger banks providing banking and credit services that aren’t typically available from traditional banks.

My hope is that this development will prevent many un- and under- banked individuals from turning to predatory lenders to fill their credit needs, which is a key goal of ours at Payfare, as well.

What are some of the biggest challenges you’ve noticed in banking as a service or in banking technologies today; when it comes to aspects users or businesses (or the general workforce in terms of access to payments!) still struggle with?

The rise of the gig economy has driven a lot of innovation, given that a large portion of the traditional workforce has shifted toward this new age workforce that is here to stay. Unfortunately, gig workers aren’t necessarily provided with the tools they need to operate in their new work environments; for example, most gig workers are paid weekly, while they continue to incur daily expenses. Think of an Uber, Lyft or DoorDash driver who has to fill up their gas tank daily. This “cash gap” wherein they’re incurring steep operating expenses while awaiting their next paychecks creates a need — they need their funds to be available so they can continue to work and generate more income. Thankfully, there are a lot of large gig platforms, including our gig partners, that have seen this need and have addressed it by implementing instant payout features and tailored bank accounts for their workforces.

In what ways have you seen emerging technologies influence the future of banking services over the last few years; how do you see this trend shape up in the next decade?

I really think both instant payments and the Earned Wage Access space will continue to grow exponentially, giving more and more workers options to receive their earned wages instantly. The challenger bank scene will continue to grow, and will disrupt traditional banks and predatory lenders. These challenger banks will also disrupt payday lending practices, by attracting users with the lure of instant access to their earnings, along with a full suite of financial services that meet their changing needs in a much more cost-effective manner.

It also would not surprise me if a lot of challenger banks disintermediate traditional banks by stepping in as the account of choice for taking consumers’ income deposits. The one thing necessary to really throttle this is for challenger banks to build trust with consumers that their bank accounts are just as safe and secure as traditional ones.

We’d love to hear your thoughts on the global fintech startup marketplace- can you talk about some global startups that you feel are set to turn into fintech unicorns in the new future?

I really like what I am seeing from XTM Inc., another Toronto-based fintech. They have taken the archaic process of cash distribution in the hospitality space, and digitized it. As we all know, moving away from the handling and processing of cash a is very tough change of habit to crack within this space. Their services have gained a significant amount of attention, thanks in part  to the unfortunate circumstances of the COVID-19 pandemic. As the lockdowns ease, XTM Inc. is very well positioned. While there are number of other fintechs I am a huge fan of, many are well beyond unicorn status already.

Read More: North Lane Expands Its Corporate Sustainability Commitment Through Its Carbon Reduction Initiative

In general, I really like some of the fintech startups that are focusing on new credit adjudication models that leverage a combination of artificial intelligence and user data to determine credit worthiness. These methods should ultimately lead to greater access to credit for the un- and under- banked, and help these individuals to with avoid predatory lending services.

 As global fintech trends change and the market shifts due to business environments (and also Covid-19), what are your comments on the state of fintech in 2021 and beyond?

The future of fintech is extremely bright, and 2021 is shaping up to be a significant growth year for many of the players in the space. The pandemic will certainly play a role in the proliferation of digital, contactless payments. There should be a general lift for the entire payments space, as more digital transactions occur and more unbanked consumers who historically relied heavily on cash shift to various challenger banks that meet the needs of their new normal and join the path to become banked.

Displaced workers are also turning to the gig economy in the fallout of the COVID-19 pandemic and will likely continue to do so. The need to make up lost income and the opportunity for the gig economy to fill that void will have several beneficial impacts to challenger banks and neobanks. Companies like ours will benefit from more workers joining the gig economy and taking on new digital bank accounts that better suit their needs while they operate as independent contractors.

Can you share a little about Payfare’s upcoming plans / innovations?

Payfare is currently investing in several new verticals that will see us expanding our platform’s capabilities to service the needs of other independent contractors, beyond just the gig economy where we have already become synonymous with digital banking and instant payouts. Through this expansion, we will assist long-haul truckers, social media influencers and small business retailers on various ecommerce platforms who are looking to enjoy the benefits of our digital banking services. We also plan to launch a tremendous amount of new features, beginning in early 2021.

Before we wrap up, a few biggest learnings and tips you’d like to share with fintech innovators and leaders?

It’s extremely encouraging to see a number of challenger banks are stepping up with creative innovations to ensure that the un- and under- banked are brought into the fold of mainstream banking services. As these challenger banks do this, they’re also helping these consumers to avoid unnecessary costs and other challenges that have traditionally discouraged them or made it impossible for them to be accepted into the banking mainstream. The push for financial inclusion has been fueled by fintechs, and it’s something that many fintech’s should hold as a point of pride.

Read More: GlobalFintechSeries Interview with Dr. Vincent Pignon, CEO at Wecan Group