Ứng lương linh hoạt: Lợi ích kép cho doanh nghiệp & người lao động - Mads Werner, CEO, Ekko

Key Concepts

• Earned Wage Access (EWA) / Salary on Demand: Allowing employees to access their earned wages before the regular payday.
• Financial Literacy: Education and skills to manage money effectively.
• B2B2C: Business model where the company sells to other businesses who then offer the service to their consumers.
• Debt Bondage: A situation where a person's labor is demanded as security for the repayment of a debt.
• Turnover Rate: The rate at which employees leave a company and are replaced.
• Financial Well-being: The state of being comfortable and secure with one's finances.
• Payday Lenders: Companies that offer small, short-term loans at high interest rates.
• Black Credit Loans: Unofficial loans with extremely high interest rates, often involving intimidation and harassment.
• SAS Model: Software as a service model.

Echko: Earned Wage Access in Vietnam

Overview

Mads Wernern, co-founder and CEO of Echko, discusses the company's mission to provide earned wage access (EWA) to workers in Vietnam. Echko enables employees to withdraw their earned salary in real-time, addressing the issue of financial instability and reliance on high-interest payday lenders. The company partners with employers (B2B2C model) to offer this service as a financial well-being benefit to their employees.

Origin Story and Proof of Concept

• Mads previously worked at Ecotech, a digital transformation arm of Eco Park Group, where he explored ways to optimize worker efficiency and benefits.
• Inspired by a friend's EWA company in the UK, he tested the concept with 1,000 Eco Park workers, building a minimum viable product (MVP).
• 20% of the workers used the service monthly, demonstrating the need for early wage access.
• A worker named Ling shared that he appreciated the service because it alleviated his anxiety about paying bills, even though he didn't always use it.

Current Scale and Target Market

• Echko currently provides EWA access to around 75,000 workers in Vietnam.
• The company focuses on B2B partnerships, working with employers to offer the service to their employees.
• Target clients include companies with large blue-collar workforces in factories, property management, F&B, and retail.
• The average wage of workers on the Echko platform is around 6-7 million VND.

Problem Solved and Mission

• Echko aims to solve the problem of financial mismanagement and lack of access to safe financial liquidity for workers.
• The company's mission is twofold:
  • Provide access to earned wages without credit or interest.
  • Educate workers on financial literacy, including budgeting, saving, and managing expenses.
• Echko offers online and offline workshops based on a localized version of an International Labour Organization (ILO) financial literacy course.

Employer Benefits and Value Proposition

• Addressing Payday Lender Issues: Echko provides a better alternative to payday lenders with exorbitant interest rates (up to 500-1000% annually).
• Reducing Employee Turnover: EWA is a valuable benefit that can help companies retain employees, especially in industries with high turnover rates (20-40% annually).
• Reducing HR Workload: By improving employee retention, HR departments can reduce recruitment efforts.

The Problem of Unlicensed Lending

• Easy access to unsecured loans from unlicensed lenders through mobile apps.
• A personal story of a friend's family driver who took out a loan of 8 million VND that spiraled into 2.5 billion VND due to predatory lending practices.
• Police arrested a group of 50 people involved in black credit loans with a loan book of 1.9 trillion VND and 150,000 victims.

Market Prevalence of Lending

• Surveys conducted with the International Labour Organization (ILO) revealed that around 25% of workers have outstanding loans.
• The exact breakdown between official and unofficial loans is unknown, but the prevalence of black credit loans is significant.

Business Model and Revenue Streams

• Echo Base: Employers pay a fixed monthly fee, and employees can access their earned wages for free.
• Echo Plus: Employees pay a transaction fee (e.g., 20,000 VND for a 1 million VND withdrawal), and the company reimburses Echko.
• Echko aims to shift towards a more employer-backed model as the market becomes more educated about the benefits of EWA.

Cost Structure for Employers

• For a company with 100 employees and an average salary of 6-8 million VND, the cost is approximately $150 per month (around $1.5 per employee).

Usage Patterns

• In the northern region of Vietnam, around 15% of employees use the service monthly.
• In the southern region, the usage rate is higher, with 25-30% of employees using the service monthly.
• The average transaction amount is around 1 million VND, and the average monthly usage per user is around 2 million VND.
• The maximum advance amount is capped at 20 million VND.

Building Trust and Market Education

• Echko focuses on building trust by partnering with reputable organizations like the ILO, UNICEF, and brands with supply chains in Vietnam.
• The company emphasizes transparency in its fee structure and ensures that users understand that it is a company benefit, not a payday lender.
• An ILO impact study revealed that 87% of users only use Echko when their financing needs are within their salary range, indicating trust in the employer-backed product.
• The study also found that 7.8 out of 10 employees consider access to EWA important when considering a new job.

Challenges of Scaling

• Educating the market about EWA and differentiating it from payday lending.
• Addressing concerns from organizations like the National Federation of Labor Union, who initially viewed EWA as a form of debt bondage.

Future Growth and Market Opportunity

• The total addressable market in Vietnam is 37 million lower-skilled workers.
• Echko aims to reach 150,000 users by the end of the year and triple that number annually.
• The company plans to expand to other markets like Thailand and Bangladesh by integrating with local payment gateways and HR systems.

Competition

• Other venture-backed EWA companies exist in Vietnam, which Mads views as a positive sign for market development.
• Echko differentiates itself through its focus on financial education and partnerships with international organizations.

Tech Startup Landscape in Vietnam

• Being a tech startup founder in Vietnam is challenging but rewarding.
• There is a growing community of founders and VCs, but success stories are still relatively limited.
• VCs often look for startups with a regional approach from the beginning.

Endgame for Startups in Vietnam

• The primary goal for most founders is to build a sustainable and impactful company, rather than solely focusing on acquisition.

Question for the Next Guest

• What is the best approach for B2B sales in Vietnam, and can you share an interesting success story?

Al's Insight

• Taku Tanaka from Kamereo, a tech-enabled food distribution business, found success by adopting a mobile-first approach for their software, catering to the needs of purchasers who are often on the go.

Conclusion

Echko is addressing a critical need in Vietnam by providing earned wage access and financial literacy education to workers. The company's B2B2C model, focus on building trust, and partnerships with reputable organizations position it for continued growth and impact in the region.