payroll provider open banking

On a daily basis, payroll providers solve many of the pain points faced by HR teams. For example, payroll solutions save employers time and resources and deliver valuable services that enhance the employee experience. 

However, by leveraging their valuable data in new ways, payroll providers have the ability to deliver income and employment verification solutions that even better meet the needs of HR teams. Payroll providers can benefit from their data by connecting with an open banking platform—a consumer-permissioned means of accessing financial data via APIs. By leveraging data to enable empowering and innovative services open banking benefits both the service provider and the consumer.

Ultimately, payroll providers also hone their competitive edge and bolster their security when they connect to open banking platforms. Once connected to the platforms via API, payroll providers empower employers and consumers to benefit from their payroll data on request. The API connection is a partnership between a payroll provider and an open banking platform. A mutually-beneficial partnership that’s dedicated to delivering the best, most secure experience to businesses and their employees. 

Providers can use the open banking connections to add new services and apps to their offerings. Additionally, the data doesn’t have to be sent in batches to be stored in a database to be used by third parties. These real-time data connections benefit consumers, payroll companies, and employees by minimizing when and how data is used and providing it more securely and transparently. 

Let’s look at how these partnership-driven connections help payroll providers unlock new opportunities.

How Does Connecting to Payroll Data Work?

Payroll data can streamline the verification of income and employment for various use cases, such as:

  • Mortgage lending
  • Auto lending
  • Personal lending
  • Tenant screening
  • Background checks
  • Government verification
  • Personal financial management

Payroll providers can connect to open banking platforms and data aggregators in a variety of ways. Many aggregators offer only credentialed access to payroll data, which means that the data access provider uses a consumer’s credentials to access a payroll platform and get the necessary data. While this method may deliver the data necessary for employment and income verifications, credentialed access is less secure for payroll providers and a less consumer-friendly experience since employees may not know their payroll provider or login credentials. 

Ideally, connecting consumers to their valuable payroll data happens via direct API connections. API connections are far more secure than credentialed access and don’t require employees to know their payroll portal credentials to access the content. The user doesn’t even have to know their provider. An open banking platform, or data access provider, is a better method to connect employees to their data with a direct API connection. It provides the highest standard of control and transparency over who is accessing their data and how it is being used to benefit them.

Payroll data clearly helps consumers benefit from their financial data to access important financial services. But what’s in it for payroll providers? Why should they connect to open banking platforms?

How Payroll Providers Benefit from Connecting to Open Banking Platforms

Payroll providers can leverage open banking platforms to enable better experiences for their customers, effectively improving their competitive position and ensuring secure data sharing. A competitive advantage of payroll providers would then be the security and privacy standards baked into the API direct connection. In the end, everyone benefits, from payroll providers, to data access providers, to verifiers, to employers and employees.

How Connecting to Open Banking Platforms Makes Payroll Providers More Competitive

Connecting to an open banking platform empowers payroll providers to better serve their core target: HR executives. 

What do HR executives need? They need a reliable payroll solution, one that may also deliver other ancillary services, such as benefits, expense reporting, applicant tracking. Like almost any other executive, HR executives need more time and resources for their team, which means that time-consuming, manual employment and income verifications can become a burden.

Many HR executives are already choosing to outsource their payroll and ancillary HR services in order to cut costs and save time. But to whom they outsource matters. The payroll and HR experience is an important element of a positive employee experience with a company. Payroll providers who already offer successful payroll and HR experiences have the opportunity to further enhance those experiences with an additional service: streamlined, simple, and empowering income and employment verification.

By connecting to an open banking platform, payroll providers enable employees to self-permission their employment and income data when trying to access a financial service or engage with the other use cases described above. In this way, the employee benefits from their financial data by delivering a more reliable, comprehensive view of their financial story for greater access to financial services. In turn, verifiers get more accurate, real-time data for better decisioning. Both get a streamlined, faster experience that saves everyone time and resources. And employers (HR executives specifically) never had to waste the resources performing the verifications.

A ready connection for third parties through an open banking connection also makes it easier to add or provide services through third parties like fintechs. These connections can provide financial guidance, simplify complex purchases like insurance or mortgages, or just provide a clearer view for tax preparation.

All of those benefits come from the payroll provider who, through partnership with an open banking platform, offers a better experience and empowers both employer and employee. That payroll provider distinguishes itself among its competitors and better positions itself to onboard more clients and scale.

How Connecting to Open Banking Platforms Maintains Payroll Providers’ Security

In contrast to the model described above, payroll providers and employers open themselves up to risk when they send data used for verifications in batches and are stored with a third party. These methods leave them open to breaches because they house the data. This method potentially compromises employees’ private information by duplicating data and storing it in multiple places. However, connecting to an open banking platform through an API removes the necessity of sending data in batches. Instead, verifiers only need to access the data at the moment of verification. Thanks to real-time connections to accurate, data,no parties have to pass through the protection of an employer’s or payroll provider’s firewall. 

And when those APIs use secure authentication, such as OAuth, employees keep their credentials secret and secure. By partnering with an open banking platform, payroll providers protect themselves, employers, and consumers. Offering a secure experience also empowers employers and employees, and further sharpens the competitive edge already honed by connecting to an open banking platform.

Connecting to open banking platforms enables payroll providers to scale by delivering secure, streamlined, empowering experiences for HR teams and employees. 

Read this post to learn more about the connections that power payroll provider data. Or reach out and we can answer your questions about using an open banking platform for payroll provider data.