Banking as a service

Non intuitive use case for Banking as a Service: Payroll Management

  • Payroll Management might not be a field that springs to mind when discussing Banking as a Service.
  • There's a strong use case payroll firms can adopt by using modern fintech.
close

Email a Friend

Non intuitive use case for Banking as a Service: Payroll Management

The following is an excerpt from our recently published report on non intuitive and interesting use cases for BaaS. Our Outlier members have access to the full report.

Banking as a Service helps HR and payroll companies to become more customer friendly, and in doing so, create deeper relationships with their end users.

The typical process for a payroll processor is the following: The employer sends the funds to a payroll processor, the processor sees the funds in their ecosystem, and they then send the funds over to an employee’s bank account. Funds are received on a Friday and the employee can do whatever he wants with those funds.

Challenges

  • Lack of engagement: One problem payroll companies have is that they have good engagement from the employers, the people who pay them, but most of the time they lack engagement from employees. Finding ways to improve the end user’s experience is lost due to the focus being on finding ways to offer more benefits. BaaS allows payroll companies and the employers that use them to offer user friendly features without much work.

How BaaS helps

  • Increase payroll’s role: BaaS allows payroll processing companies to play a deeper role in their ecosystems. Many times, employees do not have bank accounts, making it harder to pay them. Even employees that do have their own accounts are open to offers of customer-friendly savings accounts. 
  • Everyday is payday: Early payday is another way for employees to benefit when payroll companies use BaaS. This can work in two ways: Funds can be deposited in the employee’s bank account earlier a couple days earlier than the traditional payday, since the bank account is internal and there is no lag time between when the funds are sent and when they hit the account. In more advanced systems, employees can withdraw their salaries daily. For freelancers or workers in the gig economy, this model’s benefits are obvious. Uber, which uses Green Dot as its BaaS provider, is just one example: Drivers can get paid up to 5 times a day instead of waiting for a longer pay cycle.
  • Workers need their money: But even traditional salaried employees can partake of salary advance by utilizing companies like Earnin, SalaryFinance, and PayActiv. Some large companies use these firms, like Walmart and Uber. Salary advance can be a help to employees living from paycheck to paycheck, where a small expense can be catastrophic, like their car they use to get to work breaking down.
  • Benefits all around: Since users, employees in this example, are generating money by using their debit cards, employers can decide to keep these as additional revenues or give them back as an employee benefit. Even a hybrid is possible. Employers can take in part as revenue and offer the employee the ability to choose his own additional benefit. For example, an employer can offer a percent cash back on debit card spend or to get access to various benefits, like free vision and unemployment insurance.
  • Engagement goes up: By using BaaS, payroll companies can easily increase engagement in products they already have. For example, many payroll companies already offer personal finance managers, but since most people send paychecks to accounts held outside their employers, they don’t typically utilize PFMs offered by their payroll companies. By offering an internal bank account, users have much more of a reason to engage and interact with these already-available features offered by the payroll company.

Download Tearsheet’s report on Non Intuitive and Interesting Use Cases for BaaS

0 comments on “Non intuitive use case for Banking as a Service: Payroll Management”

Banking as a service

Ahon Sarkar, GM Helix by Q2, on how banks find their place in embedded finance

  • Helix is the Banking-as-a-Service platform of Q2 Holdings, a provider of digital solutions for the banking and lending sector.
  • Ahon Sarkar, GM at Helix, discusses the strategies banks can adopt to become better partners in the embedded finance ecosystem.
Sara Khairi | August 22, 2022
Banking as a service, Sponsored

Any company can embed banking products — but that doesn’t mean they should

  • While every company can embed banking into their business, not every business should — those that deeply integrate banking into their product ecosystem instead of tacking on a feature are more likely to differentiate themselves and succeed in the long run.
  • To optimize your odds for success, define your strategy, product hooks and business models early; pick the right partners; and play to your strengths so you have a competitive advantage going in.
Q2 | August 09, 2022
Banking as a service, Podcasts, Sponsored

‘Just because you can build a bank account doesn’t mean you should’: Helix’s Ahon Sarkar

  • Helix’s GM Ahon Sarkar joins us on the Tearsheet Podcast to break down what it takes for companies to win in embedded finance (and whether they should even try doing it at all).
  • What’s common among the winners? Established client relationship with trust, in a unique context, with a focus on differentiation, history of building user-centric products, and the right business model.
Q2 | July 21, 2022
Banking as a service, Finance Everywhere

For retailers, embedded finance solutions are still confusing

  • Embedded finance is growing in popularity, aiming to attract companies in any industry that are looking to implement financing solutions to their business.
  • However, adding financial products is easier said than done - in retail, one of the biggest markets for embedded finance solutions, many decision makers are still trying to understand what this would mean for their business.
Iulia Ciutina | June 16, 2022
Banking as a service, Podcasts, Sponsored

‘We don’t care about being the first, we care about being the best’: Helix’s Ahon Sarkar

  • Q2 rebranded its platform business earlier this year as part of revisioning embedded finance.
  • Helix’s GM Ahon Sarkar joins us on the Tearsheet Podcast to discuss what he’s learned servicing big brand clients and millions of users.
Q2 | April 20, 2022
More Articles