Why Fintech firms are watching payroll

October 7, 2021 | David Daly 5 Mins read

Financial technology or fintech organizations have grown rapidly in the last decade and all market indications point only to increased activity in this financial services space in the coming years. Mastercard and Paypal cornered the early-stage financial technology market, but incumbents and new startups are appearing all the time- particularly now that things like cryptocurrencies, blockchain and artificial intelligence are starting to enter the mainstream.

There are numerous reasons behind the fintech explosion-chief among these is the desire among people to manage their finances in a digital manner-with speed, convenience and efficiency.

Fintech companies and providers operate largely from digital platforms and tend to offer their business or consumer base, expertly designed applications that enable them to process their financial transactions quickly and easily.

In this article, we’re going to take a look at the reasons why some major operators in the fintech market are beginning to pay attention to global payroll as they tried to understand how they can leverage this business-critical service in the fintech space

Digital connections

Digital connections are a fintech specialty- they look to create applications that can connect to other platforms in the digital space and provide a smooth & intuitive customer experience.

They operate in the financial services space and are fully aware that peoples spending habits are directly connected to their periodic wages and salaries. This side of the process is handled by the global payroll department or in some cases the human resources or finance department.

Naturally, fintech firms can see an opportunity here to create digital connections between their applications and these business departments. It is not yet clear what these connections might look like, but it is a safe estimate to say that they will enable employees who have just received payments to quickly move or spend that money. The potential is enormous, and it is not hard to see why fintech firms with ambitions are watching closely.

The Payments Space

Another reason for fintechs to be interested in global payroll is the important area of payments and bank transfers. Fintechs pride themselves on being faster, more agile and responsive than traditional financial institution and money transfer methods-they believe that banks are the past and rapid digital payments are the future.

They believe they have a lot to offer in this space and that global employers should be interested in their services and powerful financial technology. Some global employers out there are looking at alternative ways to pay their own globally dispersed workforce-this could be in the form of an earned wage process which enables global employees to access their salary at an earlier stage than the traditional end of month bank transfer. Should an employer want to pursue this strategy, then they will need to partner with an organization who can process rapid payments-their longstanding bank partnerships may not be fit for purpose when it comes to these kinds of rapid or real-time transactions.

Fintech startups have a lot to offer here with the rapid processing of financial bank transfers in minutes and hours instead of days, assuming the right platforms and ecosystem integrations are in place. They also allow for a much more personalized customer experience, and this may also be something of interest to global employers who are currently looking at ways to differentiate themselves in the market in the war for talent by creating personalized compensation packages. The ability to pay their employees quicker and on non-standard dates, via an innovative and responsive financial application or interface will certainly get their attention. Fintech innovation has some interesting use cases, and we can expect more startups and entrepreneurs to explore ways to leverage payroll systems for the payments space.

FX And cross border transactions

This again, is an area that fintechs will feel confident that they are much better equipped to handle than traditional banking services. They have the financial technology to make digital applications for management platforms and plug directly into currency exchange rates and apply them in seconds.

This may be of interest to global employers, especially now that we have entered the hybrid working model and location is no longer a major determining factor when it comes to candidate recruitment. It is an opportunity for global employers to differentiate themselves and achieve instant credibility in the eyes of potential candidates who may be considering joining them.

If a global employer can offer wage and salary payments in multiple different currencies and be connected to an international network of bank accounts, then many of the traditional barriers to paying people internationally will quickly be removed. This can also help to create a picture of an innovative, digital employer who has moved with the times and is in a position to adopt a ‘pay anybody anywhere’ internal process.

The international money transfer market has exploded in recent years and there is huge competition in this space as fintech organizations look to out-perform competitors by offering digital bank transaction services with better exchange rates and faster processing times.

The companies that offer these services are following global payroll closely as they can sense an opportunity to offer services to global employers which will result and then being in the position to offer payments to geo-dispersed employees in their global workforce.

The digital transformation project

Digital transformation projects at multinational companies are gathering pace again now that we have emerged from the pandemic-some projects that were put on hold are now being reinvigorated.

Fintech companies are aware at global payroll and HR services are being considered for digital transformation projects and that they are receiving significant business case investment and funding to modernize and innovate their technology. Understandably, these fintechs would like to get in on the ground floor when these digital transformation projects begin to ensure that their software and applications and general business services are included in any discussions or roadmap.

They will make the business case that any digital upgrade of global payroll or HR technology should also include fintech integrations, that will enable, at a future date, faster and smoother payment processing as well as a more enhanced employee experience.

New technologies make it easy to disrupt a process and fintech startups pride themselves on forecasting what will happen next. They also tend to be hugely ambitious and believe that financial technology has a valuable role to play across all walks of life-so why not payroll and why not target multinational organizations with their technology innovations?

They will also have a clear idea of who they want to target, and you can expect digitally native organizations to be top of their list. Startups too, as young companies tend to not be restricted by legacy systems or approaches. So, there may be opportunities for fintech to enter the global payroll space and use their responsive and innovative digital technology to good effect.

They will soon consider payroll to be a logical area that they can add to their service catalogue- it makes sense as they already dominate the ‘instant access to my money’ space and for most people, the first source of this money is their wages and salaries. So, there is a clear link between what fintech organizations have to offer and why employees might be interested. And, in a competitive environment, global employers need to be constantly aware of what employees are interested in.

 

For information on the Payslip Platform contact us today.

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Using Payslip, we can manage all our payrolls across nine in-country vendors on one platform. When the global Covid-19 pandemic arose, it was not an issue from a payroll perspective, and critically getting everyone paid. The Payslip platform enabled continuity for our international payroll service including the fast and seamless implementation of the Payslip Employment Self Service during this time.

Colin Smith

Payroll Manager, LogMeIn

Payslip as a technology platform has added a missing piece in our payroll set-up. As an international company with offices in 16 countries, it’s important to us that every employee at GetYourGuide has the same great experience when accessing their pay data.

At the same time, we work well with smaller local payroll providers, supporting us with direct local expertise in their countries. We were able to combine those two elements by placing the Payslip platform in the middle, to simplify reporting and communication with local providers, and to have one simple employee-facing solution across all locations.

Julian Fichter

Head of HR, GetYourGuide

With business and employee growth rates of above 50%, we rely on our vendors to deliver on time, every time. Payslip’s workflow automation, enables Phorest to manage our payroll provider process – data driven, real time and transparent. Payslip saves us time so we can focus on our business growth.

Ana Kelly

International Payroll Manager, Phorest

Payslip positions your team for success, and allows you to onboard hundreds of people when you need them very quickly and efficiently, in the same way for each country. The uniformed approach empowered our payroll teams to keep pace with our business.

Payslip also made our payroll process entirely transparent, which is invaluable to our payroll teams as we continue to grow and scale at such a rapid pace.

Travis Saville

HR Systems Lead, Wave