Catalyzing Global Growth: Integration of FinTech Innovations in HRTech

Employing your skills as a FinTech Product Manager at a prominent HRTech industry leader such as G-P offers numerous advantages. In my role, I gained a clear understanding of the fundamental prerequisites for businesses to grow globally from an HRTech perspective.

My annual visit to Money20/20 provided fresh perspectives around Global Money Movement, RegTech, and Embedded Finance categories. Following my visit, I am unequivocally convinced that leaders in the HRTech sector will increasingly integrate FinTech innovations into their standard offerings, mirroring the approach adopted by EOR leader G-P

Let me elaborate.

Global Money Movement

Money Movement covers broad areas: cross-border payments, domestic real-time transactions, and innovative use of alternative rails such as Card Networks (specifically Visa Direct) and even newer ideas like Lightning Network (offering solutions to reduce congestion and lower mining fees in the blockchain network). At Money20/20 this year, Real-time payments (RTP), with a notable focus on discussions revolving around Federal Reserve Board (FedNow), were a prevalent theme throughout various sessions. Learning more about FedNow felt akin to witnessing "an elephant learning to dance," a significant moment in the US financial landscape.

Another compelling topic that caught my attention was cross border money movement (disbursements and collections) to/from Africa. Mention of Africa a few times in the Agenda resonated with me, drawing parallels to the developmental stages that Latin America underwent a decade ago. It evoked memories of Shakira's iconic "This Time for Africa" song :-) Looking forward for Wise Tazapay NALA Nium Flutterwave to help customers accelerate doing their business in Africa.

What do these innovations in Money Movement mean for HR Tech?

HRTech places a significant emphasis on facilitating smooth financial transactions for various purposes, including payroll, expense reimbursements, emergency payments, and global fund transfers, all at a cost-effective rate. HR Tech leaders such as G-P have a broad vision to streamline hiring talent (in 180 markets globally, including Africa and Latin America) in a compliant manner, and process payments according to individual preferences.

Picture a scenario where employees and contractors receive their salaries, expense reimbursements, and invoice payments 24/7, unrestricted by the traditional ACH processing times and cut off times! Innovations in Real-Time Payments prove particularly advantageous during extended weekends or urgent situations, such as late-night payment. In instances of emergencies, services like EWA (Earned Wage) and Salary Advance (Early Wage) are becoming indispensable, requiring near-instantaneous money movement.

The ongoing innovations in FinTech, particularly in the realm of global money movement including the efforts by FedNow and TCH RTP for Real Time Payments, hold great importance for HRTech. This is evident as both consumers and businesses increasingly favor alternative payment rails in the absence of a truly scalable RTP, making it crucial for HR Tech to stay at the forefront of these developments.

The norm in HRTech will soon include scenarios such as channeling payroll payments into a USD wallet account in Latin America, transferring funds into a crypto wallet account in Africa, or facilitating real-time payments to a UPI address in India - same SLAs (service level agreements). Service providers like Wise Nium Airwallex TabaPay TerraPay Stripe are in the forefront of offering global scalable money movement services, and HRTech should consider long term partnerships.

REG TECH: Identity, Fraud Risk, Compliance Risk

The prevalent discussion at Money20/20 this year revolved around leveraging Generative AI to combat fraud risks through improved identity and compliance tools. While I was pleased to hear about some Generative AI applications in compliance and underwriting/vetting, the actualization of the promise remains somewhat distant. Challenges persist, including obtaining appropriately trained data, addressing hallucinations, incorporating regulatory considerations, and scaling the technology to real-time applications. These hurdles signify that Generative AI is not yet fully primed for widespread adoption.

Companies like Sardine Veriff Alloy Trulioo are stretching the boundaries in this area. Soups Ranjan hosted a great "Ask me Anything" session at Money20/20 talked about common scam patterns and how/why leveraging "behavioral" data will be the norm.

In payments industry, being compliant to Regulations is the key ! Also, one wise professional recently mentioned: Faster money movement, faster fraud !!

How are these relevant for HR Tech?

A key workflow that HRTech constantly innovates is Onboarding. Whether it is onboarding a new business entity or a contingent worker or a remote employee, getting the basics right in Onboarding is extremely critical.

Having robust identity verification, robust back ground checks, making sure the payment credentials entered belong to the Customer or Employee or Contractor (Contingent staff) is essential. HR Tech platform like G-P have to deal with global customers in multiple markets, having robust KYB (Know Your Business) and KYC (Know Your Customer) becomes super important.

RegTech is already helping FinTech players and other Tech industry leaders in fighting Fraud Risk and Compliance Risk. Innovations like behavior infused fraud, compliance platforms like Sardine are demonstrating that HR Tech to start considering these innovations to rapidly fight fraud & compliance both during Onboarding & monitoring.

I hold a strong positive outlook on the widespread adoption of RegTech innovations by HR Tech. In fact, for RegTech vendors, the HR Tech sector likely represents the most significant market for their products and services, offering a substantial global market to address.

EMBEDDED FINANCE

First and foremost: Section 1033.

The CFPB's groundbreaking proposal under Section 1033 of Dodd Frank Act is poised to usher in a new era for Open Banking in the US. Evidently, around 100 million users in the US have granted third-party access to their data, with approximately 100 billion authorizations in play, according to the CFPB. The objective is to establish safeguards for participating institutions, allowing data-owning institutions to provide standardized APIs (eliminating screen scraping), ensuring reliability and uptime, and prohibiting fees. The regulation also recommends presenting all information in a tokenized form, such as utilizing tokens for Bank Account and Routing rules. Ashwin Vasan from CFPB talked crisply about the approach and the intent for the section 1033.

Europe is well advanced in open banking with their PSD2 framework. In economies like India, the centralized Identity concept (Aadhar) provides control for consumers like a Web3 construct where citizens can grant permission on whom they could grant permission for specific tasks related to payments.

Why are these regulations important for HR Tech?

The impact of these regulatory adjustments is significant. Major payroll entities such as ADP , Workday , UKG , Ceridian and Paychex will be compelled to incorporate specific user-centric elements, like the sharing of monthly payroll or benefits data, into their product offerings. This adaptation enables employers (and their HRTech partners) to provide integrated financial service experiences akin to traditional banks.

In instances where an employer opts for Earned Wage Access (EWA) through a third party like ZayZoon , possessing a clear understanding of GDPR, CCPA, and the newly introduced "Section 1033," along with their implications on benefits and costs, becomes crucial. Ensuring a seamless user experience within the interfaces for both employees and employers is of utmost importance.

Human Resources Technology (HRTech) leaders like G-P , offering global growth solutions to employers, are increasingly offering a unified "tech stack" to meet the diverse needs of their Customers worldwide. This is especially relevant as regulations governing concepts like Earned Wage Access vary between countries, such as India and the United States for eg. A scalable platform apporoach would be essential.

Overall, better conference than last year.

I am optimistic about a future in which we'll witness an increased presence of Human Resources Technology (HRTech) workstreams at Financial Technology (FinTech) and Payments events, such as Money20/20

Congratulations Sanjib Kalita Tracey Davies (Byers) Scarlett Sieber Zach Anderson Pettet and the @Money20/20 team