Payroll is considered a backroom operation by employers but consumer finance industry revolves around it. Being on a payroll of a reputed organization gives consumers instant access at best possible rates to financial services. Consumer finance industries determine your ability to repay almost completely through the payroll information. Bureau score which is used mainly to determine the intention to repay is then added to the payroll information and a credit decision is made.
The closer a financial institution can get to the payroll data and the flow of payroll the more successful it could be in consumer finance.
Payment companies who have access to a lot of transactional data of their users have realized that transaction and credit are two different animals.
Not surprisingly the fintech action is now shifting to payroll.
HR leaders around the world need to educate themselves thoroughly about this trend as they will in a position to decide who gets access to their employees as consumers of financial services.
Modern APIs enable data access at all three stages -
1) When payroll data is stored in the payroll system
2) When payroll moves from employer account to the employee account
3) When salary is sitting in employees account
Account aggregator framework from the regulator gives access to employees bank account and in itself is a major disruption but it is still a downstream access.
The main area of disruption are going to be payroll databases as well as the flow of money from the employer account to the employee account.
HR managers will be approached by hundred’s of Fintechs in the coming years. They can’t be ignored because employee will push for access. However not all can be trusted and HR anyway needs to prioritize because you can work with only a few. HR will have to balance between the best value for employees, privacy and data concerns and operational workload for HR department.
We recognized this challenge and therefore have started webinars exclusively for HR professional where they can gain expertise in the area of payroll fintech.
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