We’re excited to announce new platform features focused on the Retirement sector, including a robust sponsor onboarding experience, universal compatibility for TPA and recordkeeping systems, and expanded data fields. These features will enable TPAs and recordkeepers to adopt Finch out of the box with their current workflow and systems without any engineering effort, allowing them to work more efficiently, eliminate administrative bottlenecks, and reduce overhead costs while focusing on delivering best-in-class service to plan sponsors.

‍

Recordkeepers and TPAs need reliable access to timely, accurate, and standardized employer data, but for decades, the primary means of collecting this information has been through SFTP connections or manual processes. Both methods are time-consuming, costly, and impossible to scale, and retirement providers feel the strain. A 2024 survey conducted by the SPARK Institute found that 93% of recordkeepers view payroll integrations as important, a view that’s supported by their survey data for the last 3 years.

Our platform offers an alternative. By bridging the gap between plan management platforms and sponsors’ payroll systems, recordkeepers and TPAs are able to securely, easily, and automatically access census and payroll data directly from the employer’s source of truth. 

Finch is the industry leader with the most extensive payroll provider network, covering 80% of U.S. employers. Our automated data refresh and 360° payroll integration capabilities streamline deduction management, while our secure, scalable API infrastructure meets SOC2 and HIPAA compliance standards — enabling recordkeepers and TPAs to confidently manage payroll data and expand effortlessly.

Our years of experience in the Retirement sector have shaped the features we built specifically for this industry. Finch is already used by more than 40 leading recordkeepers and TPAs, including Nova 401(k) Associates, Ameritas, ePlan (Paychex), Human Interest, and Betterment. Our platform serves 45,000+ employers and more than 5 million employees, establishing Finch as the trusted choice for seamless payroll connectivity.

Today, we’re excited to share that we’re taking the product a step further, introducing new features, including a more robust sponsor onboarding experience, direct support for TPA and recordkeeping systems, and expanded data fields that are critical to retirement plan management.

Enhanced sponsor onboarding experience

We’ve implemented new capabilities to our embedded employer onboarding experience, Finch Connect. Recordkeepers and TPAs can embed the Finch Connect workflow into their system or invite sponsors using a secure link. In minutes, plan sponsors can connect their payroll provider to send census and pay data to their retirement provider. 

Now, sponsors will also be able to use Finch Connect to map data like source codes and pay statement classifications to meet the specific needs of their retirement plans. Through our recently improved Dashboard, plan administrators can easily track the status of each connected sponsor and ensure data is flowing seamlessly.

Universal recordkeeping and TPA system support

With expanded support for leading recordkeeping and TPA systems, Finch is now compatible with PensionPro, ASC Retirement Plan Software, FIS Relius, and SS&C Technologies. Retirement providers using these systems can use Finch to automatically pull sponsor data directly into the platform.

We’ve also expanded our product offering to include custom Flat File support for any system, no development work required. Recordkeepers and TPAs can create a custom file format and have their sponsors’ data delivered by Finch in a CSV file to their SFTP location. Through Finch’s unified API, the data is standardized, meaning it is always delivered in the same format, regardless of the payroll system it came from. These files are automatically delivered with each pay run, ensuring recordkeepers and TPAs always have the most up-to-date data — even without building an API integration. 

Expanded field support

Finch now supports fields for Rehire Date and Pay Group or Division across payroll systems. This information, essential to retirement plan administration, is often difficult to access, leaving a critical data gap across most connectivity solutions. 

Rehire Date data allows recordkeepers and TPAs to accurately track employee tenure, ensuring plan participants are eligible and accurately vested, even with service breaks. With Pay Group data, contributions align seamlessly with each payroll cycle, supporting compliance and enhancing service quality. This empowers recordkeepers and TPAs to deliver more precise, compliant retirement management across diverse payroll platforms.

The future of connectivity in retirement

Our vision is to deliver complete data connectivity across all retirement systems and payroll providers so recordkeepers and TPAs are empowered to automate routine tasks and provide better service to their customers. To achieve this vision, we’ll focus on three core tenets as we continue to evolve our retirement product:

• Continued network expansion: We’ll continue to expand our integrations across HRIS and payroll providers and retirement software systems, including new direct integrations with major recordkeeping systems. Our goal is to power 100% of the connectivity any recordkeepers or TPA needs.
• Expanded 360° capabilities: We’re advancing support for custom flat files, allowing deductions to be written back across payroll providers without the need for engineering resources.
• Increased Dashboard observability: As the product evolves, the Finch Dashboard will provide deeper visualization of sponsor data and a clear view of the health of all sponsor connections. 

We look forward to working hand-in-hand with our existing retirement customers to inform our product roadmap.

“Collecting census and pay data from sponsors used to be a challenge because we had to spend so much time sifting through the data, making sure it was accurate, and transforming it into our standard format. Now that we’ve automated the process, we’ve eliminated administrative bottlenecks, reduced our overhead costs, and improved service quality for our clients,” said Chandler Julian, Director of Recordkeeping at NestEggs. “Thanks to Finch democratizing access to critical employment data, we're now able to deliver the kind of seamless integration experience that our clients expect from their service providers."

“Thanks to Finch democratizing access to critical employment data, we're now able to deliver the kind of seamless integration experience that our clients expect from their service providers."

Get connected through Finch

Finch makes it easy for recordkeepers and TPAs to securely, easily, and automatically access sponsor census and pay data directly from the payroll system and make deferral changes for the sponsor. Designed with the retirement industry in mind, Finch can be customized to meet the unique needs of your business and sponsors.

If you already are a customer, please reach out to your Account Manager to get access to these new features. To learn more about what Finch can do for your organization, contact our Sales team.

At Finch, our mission is to make accessing employment data simple. In 2020, we released Finch Connect, an easy way for employers to connect their HRIS and payroll system to other apps. 

Over the past few months, we’ve been revamping our connection experience with a focus on increasing visibility for our customers and driving higher conversion rates among employers.

Today, we’re excited to announce this all-new connection experience, which includes secure sessions, authentication progress tracking, smart re-authentication, and a more intuitive connection management experience for all.

Secure sessions and authentication tracking

We're excited to introduce Finch Connect sessions, a powerful new feature designed to increase security and visibility in the authentication process. 

What’s new: You can now generate a unique and unchangeable Finch Connect URL for each employer, making the connection process more secure and allowing you to track authentication progress in the Dashboard.

Here’s how it works: Employers are invited to authenticate via a secure URL created just for them. Because these URLs are defined on the backend, they cannot be manipulated. Any Finch user within your organization can generate these secure links through our Dashboard.

Once the employer clicks the link and begins their session in Finch Connect, you’re able to track their progress through each of the four stages in the Dashboard.

Use the Authentication Progress tab for an overview of the employers’ progress. If there are any errors, Finch will provide more information so you can quickly resolve them. 

For a detailed timeline of events related to each session, you can navigate to the Session History tab.

Clear, actionable connection management

We’ve made changes to the Dashboard that make it easy to keep track of all of your connections across employers and their statuses.

What’s new: You can now easily view all your live, staged, and disconnected connections at a glance in the Dashboard under the Connections page.

Here’s how it works: Each connection will be labeled as Staged, Live, or Disconnected.

• Staged: The session is active, but a connection has not yet been established.
• Live: The employer has completed the Finch Connect workflow. If there are any errors or if re-auth is needed, it will be flagged under Connection Status in this view.  

• Disconnected: The connection is no longer live and the session is not active.

By clicking into any connection, you can also find more details about status, job history, access tokens, and more. You can learn more about Connection Status in this post.

You can now also download all your connections as a CSV file for deeper analysis or to share with other members of your team who don’t have Dashboard access.

‍

Smart re-authentication for employers

Over 40,000 employers have successfully shared access to their HRIS or payroll data through Finch. And while the need for re-authentication isn’t frequent, it is sometimes necessary to keep a connection active. 

We’re excited to introduce a simplified flow for these users that reduces the number of steps required to re-authenticate.

What’s new: There are now fewer steps required of employers who need to re-authenticate their connection.

Here’s how it works: When a connection requires re-authentication, it will be flagged in our API and Dashboard. Any Finch user can then generate a new link for the employer to re-authenticate. Rather than starting from the beginning of the Finch Connect process, the employer will be sent directly to the sign-in page for their provider, skipping any prior steps they’d already completed. All they need to do is sign in with their credentials, API key, or other authentication method to re-establish their connection. 

Just like the initial connection experience, you can monitor the stages of re-authentication in the Dashboard.

How to get started

We know how important changes like these are to your operations. As a unified integrations platform, it’s our job to take on the heavy lifting of offering the best connection experience for your customers so that you can focus on building the apps and services that empower employers and individuals.

These changes are now fully available through the Finch platform.  If you’re already a Finch customer, you will need to adopt connection and session IDs into your workflow to enable these new features. Instructions to adopt these fields are available in our Help Center. If you have any questions, reach out to us at developers@tryfinch.com.

Companies today use dozens of employment applications to manage their workforce. They have their systems of record, like HRIS and payroll systems, and then everything else — applications to administer benefits, keep employees engaged, run financial analyses, and so on. Keeping the data in these applications up to date poses a challenge — and that’s where integrated HRIS and payroll systems come into play. 

When an employer’s applications integrate with their HRIS and payroll systems, information can easily and automatically flow between the central database and the applications that need it. For employers, that means less administrative work and higher ROI from their technology. For the applications, that means easier, more efficient access to critical census and pay data. 

What are integrated HRIS and payroll systems?

When two systems are integrated, they’re connected in the background and able to “talk” to each other. Applications that are integrated with HRIS and payroll systems are able to seamlessly share data, so the information is always matching and up to date. For example, if an employee’s salary is updated in the payroll system, their salary will automatically be updated in the other integrated systems, like a 401(k) platform or compensation management tool. 

HRIS and payroll integrations let employers automate time-consuming tasks and reduce the risk of error. Because HR administrators don’t have to manually input data or make changes to multiple systems, they can focus on more strategic tasks. 

Related: The Ultimate Guide to Payroll Integrations (Updated for 2024)

Benefits of integrated HRIS and payroll systems

For employers, there are a lot of benefits to integrated HRIS and payroll systems. They’ll save time and have more streamlined operations when they don’t have to maintain employee information in multiple products. They also eliminate the potential for human errors that can happen when data is manually entered.

HR technology providers also benefit from integrations. First and foremost, they’re able to provide a far easier onboarding process and better user experience to their customers — one where employers realize the full value of the product because they’re not bogged down by data maintenance.

But integrations also make it much easier for these providers to collect the data they need to provide services to the employer—like census and pay data for 401(k) providers, for example. HRIS and payroll integrations let these providers securely access their customers’ data straight from the source, reducing the risk of inaccuracies and noncompliance with state and federal regulations.

In short, HRIS and payroll integrations allow data to flow seamlessly between platforms so employers and applications can focus on the value of the product, rather than moving data around between systems.

Related: The Ultimate Guide to HRIS Integrations (Updated for 2024)

5 use cases for integrated HRIS and payroll systems

Integrations sync relevant data from the employer’s system of record. Employee information like the employee’s legal name, employment status, social security number, address, and birth date provide workforce insights to external apps. Payroll data such as pay period, taxes, and gross and net pay ensure that benefits and deductions are calculated correctly and written back to the payroll system. Data from both HRIS and payroll systems can keep employers and providers compliant with laws and streamline reporting.

Here are a few specific ways HR technology products can benefit from integrated HRIS and payroll systems. 

1) 401(k) plans

401(k) administration is still laden with manual processes and SFTP connections, which can take weeks to set up and don’t scale well. The employer has to shoulder the burden of routinely sending data to their recordkeeper with each pay cycle or to their TPA at year’s end. The recordkeeper to TPA then has to painstakingly check that the data is accurate and reformat it to match their system’s conventions. 

Related: Common SFTP Errors When Sending HRIS Data (And How to Fix Them)

With payroll integrations, plan administrators can connect directly to each sponsor’s payroll system and receive the census and pay data they need automatically — and in a standardized format. They can manage contributions and deferrals for each employee, ensuring that payroll deductions for participants are accurate for each pay period. 360° payroll integrations also automate enrollment for eligible employees and can manage employee contribution changes, seamlessly writing data back to the payroll system. 

401(k) management can be a burden for overworked HR teams and may feel overwhelming for SMBs — even those that may want to offer 401(k) benefits to their employees. Recordkeepers and TPAs who demonstrate a streamlined user experience and straightforward plan management will draw in more clients in a competitive retirement market. 

Related: Challenges of Small Business Retirement Plans: A Plan Administrator's Guide

2) Employee benefits

Employee benefits can be tricky to manage between pre- and post-tax deductions, new benefits enrollment, election changes, and other events that impact an employee’s net pay. Applications managing employee benefits need to write the changes back to the employer’s payroll system so they’re reflected on the employee’s paycheck. 

Payroll integrations are critical so that the payroll data is accurate and timely. By allowing benefits providers to connect to their customers’ payroll systems, integrations allow benefits providers to pull in relevant data and write changes back. They can also automate eligibility checks for benefits with specific enrollment periods. 

3) Employee engagement

While employee engagement applications can automate perks like welcome swag, birthday gifts, and performance-based rewards, managing such systems shouldn’t add additional work to HR teams. If employers feel like an external application is “one more thing” to manage, they may simply opt not to do anything extra for their employees. Or, alternatively, they may opt for applications that can integrate with their HRIS platform. 

Employee engagement applications, rewards programs, and gift-giving rely on employee data, such as start date, location, and manager. Such programs are less effective with out-of-date information, which can quickly become problematic for companies with a large number of employees. The value of these applications is significantly decreased if employers have to upload employee data manually.

With HRIS integrations, the data connection is continuous and syncs employee information to the application. With access to reliable employee data, applications can let employers focus on the employee experience, rather than employee data management. 

“If employee data isn’t being updated in real-time, then you're going to miss the low-hanging fruit of recognition moments that are really going to make the employee experience a lot better and a lot more meaningful within an organization.” — Spencer Linsley, Executive Director of Partnerships at Awardco

4) Employee onboarding and offboarding

Some applications provide critical new employee management functions, such as background checks or company training. The same is true in reverse for offboarding and ensuring that all offboarding tasks are completed. Without access to HR systems, these applications lose some of their value proposition, since employers might miss steps when an employee joins or leaves.

HRIS integrations provide access to census data, allowing these applications to add new employees and contractors automatically. Employee onboarding also impacts benefits providers and employee engagement applications that need to rely on timely access to new employee data. Applications can pre-fill forms with company data, creating a more streamlined experience for their customers’ employees. 

Similarly, when an employee is terminated, HRIS integrations can help to ensure that the employee’s access to important systems is revoked and that they’re offboarded from benefits.

5) Financial modeling

For many companies, employees are the largest expense. They may struggle to build projections or forecast future resources on their own and instead turn to external applications for financial modeling. 

However, such models rely heavily on employee data. Budgets, hiring plans, and scenario planning need to know the total costs in order to provide strategic insights. Without HRIS and payroll integrations, these applications may rely on uploading files or manual data entry — making them not much better than a fancy spreadsheet. 

Integrations pull in employee data and the associated payroll costs, allowing companies to examine metrics like department costs, revenue per employee, and more. Synchronized data gives companies an accurate picture to help them with financial planning. 

Robust HRIS and payroll integrations with Finch’s Unified API

Integrations are more than a nice-to-have for employment technology: they’re essential for maintaining accurate employee data and providing the most value to employers. When exploring potential solutions, most companies would consider such integrations critical.

Yet, for applications, building integrated HRIS and payroll systems is resource-intensive. With hundreds of products on the market, it feels like a tradeoff. Providers need to either devote development resources to creating integrations to a significant number of products, or pick and choose which product integrations they’ll support. Beyond the initial development, providers have to maintain the integration and make updates as systems change.

Alternatively, employment technology applications can use Finch’s Unified API. Rather than build integrations to individual HRIS and payroll systems, providers need to build only one integration to Finch. Our API connects with hundreds of HRIS and payroll systems, covering nearly 90% of U.S. employers. 

Any application relying on employee data needs to put accuracy and efficiency at the forefront. Employers expect integrations, and providers need to deliver. To learn more about Finch, you can try it for free or schedule a call with our sales team.

We’re excited to announce that Finch has partnered with Justworks, a leading payroll, benefits, global HR, and compliance platform for small businesses. Our teams collaborated on a new API that will make it easier for HR and fintech applications to offer secure, pre-built integrations for customers they share with Justworks.

‍

We’re delighted to announce that Justworks has partnered with Finch, the #1 unified API for Employment. This partnership will make it easier for HR and fintech applications like Trainual to integrate with the Justworks platform and securely access organization data directly from their mutual customers’ source of truth. 

Finch is building the Open Employment Ecosystem to make it easier for systems of record and HR, benefits, and fintech applications to securely share data. Today’s infrastructure is deeply fragmented and non-standardized, making it difficult to keep disparate systems up to date and to securely share sensitive data across platforms. 

A core part of the Finch strategy lies in standardizing the data held across the hundreds of different systems of record across the country. The programmatic nature of APIs makes it possible to automate the transfer of data from these employment systems to other B2B applications in a standard format, allowing for greater efficiency and innovation across HR tech and fintech. This partnership and new API built with Justworks, which serves over 11,000 small businesses, is a big step in the direction of greater interoperability for employers. 

“Finch’s understanding of the market and technical support were instrumental in building an API that will serve developers well,” said Jeremy Beltzer-Williams, Head of Partnerships at Justworks. “We’re excited to support API-based integrations via Finch because it furthers our company mission: to help entrepreneurs and businesses grow with confidence.”

“Finch’s understanding of the market and technical support were instrumental in building an API that will serve developers well." — Jeremy Beltzer-Williams, Head of Partnerships at Justworks

The growing need for employment APIs

Employers today use more than 16 HR systems on average, and administrators report spending 4+ hours moving data between employment systems every day. 

Payroll systems often act as the source of truth for this employment data—which makes payroll providers’ ability to integrate with other applications a core factor in employers’ purchasing decisions. Through integrations, admins can spend less time manually updating various platforms, because the information is shared between the payroll system and other applications automatically. 

“Employers demand integrated experiences. They don’t have the time or the resources to build integrations themselves or to move data across systems manually,” said Taylor Sell, VP of Product at Trainual. “Finch’s API integration with Justworks is a huge win for our customers, who will now be able to automatically import standardized company and employee data to the Trainual platform.”

“Finch’s API integration with Justworks is a huge win for our customers, who will now be able to automatically import standardized company and employee data to the Trainual platform.” — Taylor Sell, VP of Product at Trainual

APIs offer a way for third-party applications to plug in to payroll systems to securely retrieve company and employee data. However, building, maintaining, and supporting these APIs is a big undertaking. 

Unified APIs like Finch aim to streamline these efforts by eliminating the repetitive work that would otherwise be required of application developers. Finch takes on the responsibility of integrating with HRIS and payroll providers — the systems of record. Developers that use Finch can then build a single integration to unlock connections to all of the systems of record Finch supports. Once an employer has authorized the application to access their data, the information is seamlessly and securely transferred from the HRIS or payroll system to their application.

The result is a better customer experience for employers: they’re able to seamlessly and automatically sync data between their source of truth and the other applications they’ve authorized to access that data, like benefits platforms, financial analysis tools, and employee engagement solutions. 

Integrate through Finch

Finch is laser-focused on HRIS and payroll systems, which allows us to deliver broad coverage across hundreds of providers—4x more than any other unified API. It also allows us to provide deeper, more granular data access for specialized use cases, like retirement and benefits management, and to address unique edge cases in employment. 

To integrate with Justworks through Finch, schedule a call with us—or try it out yourself for free.

It’s no secret that the employee experience is critical to an organization’s ability to attract and retain talent—according to a 2023 SHRM survey, employee experience influences about 49% of all job satisfaction. To reduce employee turnover, organizations are increasingly investing in employee recognition and engagement software; but these tools are only effective if they’re frequently used. 

If you sell an employee engagement application that requires too much manual intervention, you run the risk of low employer adoption and customer churn. To maximize your product’s ROI, you need to make it as easy to use as possible—and the best way to do that is by automating employee recognition and rewards through HRIS integrations.

Benefits of automating employee recognition and rewards

Typically, employee recognition involves rewarding employees based on milestones (work anniversaries, birthdays), performance (meeting goals, promotions), and peer recognition. Employee engagement tools typically include basic automation tools that will send rewards to employees based on the data in the application (like automatically sending a digital gift card to an employee on their birthday or work anniversary). 

But this only works if the data in your application is up to date, which means the employer has to manually update the system constantly as employees are hired or terminated, promoted, reach quarterly or annual goals, and so on. At small companies where the HR team may be a single person, they likely don’t have the bandwidth for such work. And at enterprise companies, there are far too many employees to keep up with.

By integrating your application with your customers’ HRIS, you can enable the seamless flow of data from their source of truth to your application. Whenever the data in the HRIS is updated, it’s automatically updated in your application, creating a hands-off experience for employers and greatly increasing the value of your product.

Step-by-step: Automating employee recognition and rewards in your product

When you rely on data directly from a customer’s HRIS platform (their source of truth), you can ensure that your product contains accurate, up-to-date employee information and eliminate the need for manual updates.

1. Identify the required HR data

Depending on your application, you’ll need specific data from the HRIS. At a minimum, you’ll probably need the employee’s name, start date, birthday, and employment status.

You may also need the employee’s address (if sending gifts) and manager (if your rewards require manager approval). If your platform supports sending rewards or gifts for employee promotions, you’ll also need the employee’s current job title or level.

2. Access the HRIS data

One way for employers to get employee data into your product without an integration is through a bulk upload. They could extract data from their HRIS into a file (like a .csv), and you can build an upload tool that maps the fields in the file to the fields in your app. The uploader will need to recognize any changes, such as an employee status change from active to inactive or an employee promotion.

While a bulk upload is certainly faster than manual data entry, it’s still a multi-step process that needs to be repeated on a routine basis. Employers would need to create the extract from their HRIS and initiate an upload. Depending on the size of the company, this might be necessary quarterly, monthly, or even weekly.

Integrations between your product and the employer’s HRIS are the alternative. Integrations are mostly “hands-off” for the employer and automatically transfer data between two systems. 

3. Build HRIS integrations

Integrations between products can happen in several ways, but the most common are a Secure File Transfer Protocol (SFTP), an integration platform as a service provider (iPaas), or APIs. 

SFTP

SFTP is a secure file transfer that automatically moves your customer’s extracted HRIS file to a specific location and ingests it into your product. However, SFTP integrations are often a source of friction for customers as they are very finicky and can cause errors. APIs are a more direct connection to send/receive data between two products. 

Either way, you need to build an integration. If you do this internally, it can require significant development resources. Ideally, your product supports multiple HRIS systems, and each integration will be unique. More than likely, you’d have to form relationships with the HRIS vendors to ensure your integration can “talk” to vendors.

iPaaS

Another option is an iPaaS provider, or Integration Platform as a Service. iPaaS solutions are low-code options that allow companies to build workflows to connect different products. iPaaS relies heavily on APIs.

While they’re designed to be low-code, iPaaS solutions still require development efforts to initiate connections to new HRIS providers, map data fields, and manage workflows and triggers, putting a strain on internal resources. iPaaS connections act like middlemen that require your team to instruct the tool on which data fields to pull from the HRIS and where to map them in your product, so you’ll need to take care to ensure that all the fields are accessible and mapped correctly. And you’ll need to maintain those integrations and workflows every time there’s a change in the underlying HRIS or when you want to partner with a new HRIS platform. 

PerkUp, an employee engagement platform to send gifts and swag to employees globally, considered using an iPaaS provider. However, PerkUp realized that creating and managing workflows would still burden internal resources, so they opted for a unified API instead.

APIs

APIs connect two systems using a set of standardized protocols. They offer users a seamless data exchange, refreshing your application with the employee data from the HRIS on a daily or weekly basis.

If you build API integrations internally, you’ll need to dedicate technical resources and plenty of monetary investment to the project. The work would be ongoing as you support additional HRIS platforms. For many companies, building and supporting APIs takes focus away from their core product—and by our estimates, a single integration can cost upwards of $187,000.

Alternatively, you could opt for a unified API. Unified APIs like Finch act as integration aggregators. By building one integration between your application and Finch, you can access seamless API integrations to hundreds of HRIS providers, ensuring you can offer a fully automated experience to any customer, regardless of the HRIS system they use.

You can also use Finch Flatfile, a solution for organizations with limited technical resources. Flatfile relies on existing integrations with HRIS providers to pull data from their systems in a standardized file. That file can then be delivered to an SFTP server, rather than building to the Finch Unified API. 

Let employers focus on retention, not data management

Much as employers may want to offer employee engagement tools, data might be a sticking point. They need a seamless integration that simply runs in the background, without any manual processes or difficult setup.

Finch is the way to scale—both for you and for your customers. With Finch’s Unified API or Finch Flatfile, your customers don’t need to put in any additional work to use your platform, even as they add more employees. And since Finch connects to more than 200 HRIS and payroll providers covering nearly 90% of U.S. employers, you’ll be able to offer your product to more customers and expand your market potential. 

By leveraging HRIS integration through Finch, your employee recognition platform becomes more efficient and valuable to your customers. It will allow them to truly take advantage of automated employee recognition.

To learn more about Finch, you can try it for free or schedule a call with our sales team.

We’re thrilled to announce that Finch has partnered with PensionPro, a leading provider of retirement plan administration technology used by hundreds of third-party administrators (TPAs). Through this collaboration, Finch and PensionPro will revolutionize the administrator–sponsor relationship across more than 200,000 plans by making it easier for TPAs to securely access the data they need while providing a superior sponsor experience.

‍

Finch is proud to announce that we've partnered with PensionPro, a leading retirement plan administration platform used by more than 1,000 third-party administrators (TPAs). Through this collaboration, TPAs will be able to seamlessly access sponsor data directly from their payroll systems, eliminating manual work, significantly reducing data errors, and streamlining plan administration. 

The challenges associated with accessing timely, accurate, and standardized employer data have long plagued TPAs and recordkeepers alike. For decades, the norm has relied on manual data entry or bulk file transfers via SFTP, both of which are time-consuming, costly, and impossible to scale. As the industry sees an influx of new plans in the wake of SECURE Act 2.0, TPAs need a fast, reliable, secure way to collect sponsor data.

“Accurate payroll data is critical to TPAs and this partnership gives them an automated solution for acquiring that data for their administrative workflows. Finch has a great product and relationships with a large number of payroll providers that will power efficiency for PensionPro customers,” said Darren Conner, PensionPro’s Chief Operating Officer.  “We are excited to partner with Finch to broaden the connected solutions available to TPAs and help evolve the way they work.”

“This partnership is a major win for the retirement industry. For too long, TPAs and recordkeepers have been bogged down by manual, inefficient processes because they had no alternative,” said Jeremy Zhang, Co-Founder and Chief Executive Officer of Finch. “We’re excited to work with leaders like PensionPro to modernize this industry so TPAs can focus on providing the best possible service to plan sponsors.”

The Finch and PensionPro partnership

Finch and PensionPro’s partnership will automate the collection of critical sponsor information, including payroll and census data, through Finch Connect. Once the sponsor has authorized the connection, the TPA can automatically pull data directly from their payroll system and into PensionPro’s platform. 

TPAs can onboard sponsors by embedding Finch Connect within their client portal or by simply inviting them to use Finch Connect with a link. The sponsor only needs to log in to their payroll system through Finch Connect, select the data they wish to share, and authorize—a process that can take as little as 30 seconds. Unlike SFTP connections, the sponsor doesn’t need to track down company IDs, configure unique divisions of data, or map corresponding data fields.

Finch supports integrations with leading payroll providers like Gusto, Quickbooks, ADP, and Paychex through a direct API connection, which allows us to facilitate fast data delivery and to standardize the data from each provider to match the format used by the PensionPro platform, eliminating the need to manually format incoming sponsor data. 

For TPAs that use PensionPro, this partnership offers a secure, reliable, accurate way to pull sponsor data directly from their source of truth, eliminating manual workflows and reducing the risk of human error. The data is refreshed with each pay cycle, ensuring administrators have all of the data they need when they need it, reducing the risk of missed deadlines and noncompliance. 

In turn, sponsors benefit from far less administrative responsibility: once they’ve authorized their connection, they don’t need to routinely send files to their TPA, creating a better, more streamlined service experience.

Modernizing the retirement industry

At Finch, we’re building the Open Employment Ecosystem—a future state of employment technology in which the various systems employers use to manage their workforce are connected through shared infrastructure. For the retirement industry, that means democratizing TPAs’ and recordkeepers’ access to payroll and census data without manual efforts or complex file sharing protocols. 

Together through our partnership, Finch and PensionPro are extending that access to more than 1,000 TPAs.

Modernizing the retirement industry has a far-reaching impact that will benefit administrators and sponsors alike. Plan administrators can work more effectively and efficiently, freeing their time to focus on more strategic initiatives and client services. At the same time, removing the administrative burden on sponsors makes retirement plans more affordable and accessible, especially for the small businesses without robust HR departments. 

Get started with Finch 

Finch makes it easy to automatically import sponsors’ pay and census data directly from their payroll platform. To learn more about how we can support your business, talk to our Sales team. 

In the world of employment technology, partnerships are paramount. Systems of record can keep their customers happy with connections to the products they already know and love, and third-party applications benefit from direct integrations that deliver data straight from their customers’ source of truth. 

From the start, leading employee rewards and recognition platform Awardco knew they’d need to integrate and partner with all of the HRIS and payroll systems their employers use—and UKG was at the top of the list. 

By leveraging Finch’s integrations, Awardco and UKG were able to validate their integrations and launch a partnership in about 2 months—over 80% faster than average. The partnership has opened up a ton of growth opportunities for Awardco, while allowing UKG to retain more customers and ARR.

Awardco: Real-time data is ‘table stakes’

Awardco’s technology aims to improve employee retention and save employers time and money by automating employee recognition, rewards, and incentives. In their eyes, the biggest challenge these employers face is time and resource constraints.

“HR professionals are bogged down with a lot of administrative tasks, so we want to take some of those off their plate and allow them to focus on more strategic things,” said Spencer Linsley, Executive Director of Partnerships at Awardco. “How can we empower HR folks to have a seat at the table and be viewed as not just a cost center within the organization, but a profit center?”

“How can we empower HR folks to have a seat at the table and be viewed as not just a cost center within the organization, but a profit center?”

Keeping employees happy and engaged requires keeping track of a lot of data, from birthdays to hire dates to title changes. But it’s critical for retention that employees feel valued—turnover is a huge and costly issue for organizations big and small. 

Garret Brent, Strategic Partnerships Manager at Awardco, explained that companies without a “true integration” between their HRIS and employee engagement solutions struggle to scale their rewards programs due to a lack of time and resources.

“If employee data isn’t being updated in real-time, then you're going to miss the low-hanging fruit of recognition moments that are really going to make the employee experience a lot better and a lot more meaningful within an organization,” Spencer said. “And if we aren't able to do those table-stakes actions for a customer, then it's going to again create an administrative burden and quite frankly, they're probably going to look at other providers outside of Awardco.”

Building integrations at scale

After spending more than a year building their first HRIS integration in-house, Awardco recognized how time- and resource-intensive the process truly was. So they started looking for a provider that could unlock the hundreds of connections they needed through a single integration. 

Spencer said Awardco viewed a unified API provider like Finch as a “force multiplier” for their Partnerships teams, and a necessary tool to onboard new customers with various HRIS systems quickly. But they also wanted a solution that would help unlock key partnerships that would allow the Sales team to grow Awardco’s customer base. 

“At the end of the day, being able to build a single integration, maintain a single integration, was something that was really, really important to us, Spencer said. “And having a high level of confidence that through Finch we’d be able to expedite the whole process of becoming a certified and validated UKG partner, that was and continues to be really important to us.”

"Having a high level of confidence that through Finch we’d be able to expedite the whole process of becoming a certified and validated UKG partner, that was and continues to be really important to us.”

UKG: Partnerships are a ‘competitive advantage’

UKG, a leading provider of HR, payroll, and workforce management solutions, partnered with Finch in 2023 to expand their partnership network and grow the UKG Marketplace. As the system of record for tens of thousands of employers, UKG leverages Finch to allow their partners to integrate to their suite of products quickly.

“For us that means more happy customers. It means higher retention, and it means that we get to keep ARR in the long run. And it gives us something to showcase when we’re selling to an organization that is really happy with Awardco—we can show them that implementing UKG won’t mess up the workflows they already have in place. In that sense, it’s extremely helpful,” said Miguel Tavera, Senior Technology Strategic Alliance Manager at UKG. 

“We're lowering the barrier to entry and making the process smoother, and I don't know how that would ever be a bad thing,” added Adam Derus, Senior Marketing Manager at UKG. “It’s just absolutely amazing to have that in our back pocket. It definitely feels like a competitive advantage.”

“We're lowering the barrier to entry and making the process smoother. ... It definitely feels like a competitive advantage.”

Finch expedites time to launch by over 80%

To become a partner on the UKG Marketplace, applications like Awardco need to undergo a thorough integration validation with UKG—a process that must be repeated for each of UKG’s products. Validating any one integration typically takes 3-6 months.

But Awardco had an ace up their sleeve: they use Finch to integrate with two UKG products — UKG Ready and UKG Pro — which meant the connections were already in place. Both integrations between Awardco and UKG were validated in 2 months — 10 months faster than the typical process. 

“The faster we can get you up and running the better, and to have two UKG products available right out of the gate in less than 2 months—it's got to be some kind of a record,” Adam said. 

Both Awardco and UKG view the speedy partnership as a win–win: 

• Awardco can onboard customers more quickly, access timely, accurate data that is used to automate employee recognition, and build upon the trust that UKG has earned with the employers they serve. 

• Meanwhile, UKG can “meet customers where they are and keep them happy with options for best-of-breed vendors,” as Miguel put it. 

“As UKG changes as an organization and we put more focus behind one product or another, having these strong partnerships with validated integrations is a huge help,” Miguel said. “And it allows our partners to get ahead of the curve and ahead of some of their competition in the marketplace, too.”

In 2018, 401GO set out to build a platform that would make 401(k) plans accessible to all businesses. Their proprietary system lets employers set up a plan in as little as 15 minutes and outsource all of the administrative work, from enrollment to end-of-year reporting.

From the beginning, the 401GO team knew payroll integrations would be pivotal to their success. And while the company has an impressive engineering team, leadership wanted to ensure they were pursuing every avenue of expanding their integration network. So they turned to Finch.

Today, 401GO uses a combination of internal development resources and Finch-powered 401(k) payroll integrations to pull sponsor data and automate payroll processing to provide the ultimate employer experience. 

Empowering 401(k) sponsors through data

Without HR professionals dedicated to the complexities of plan administration, retirement plans have long been out of reach for many small businesses. 401GO launched in 2019 with a mission to change that narrative by taking on all of the administrative burden for their customers. 

“The idea that you can automate a process for a business owner is amazing,” said Jared Porter, co-founder and COO. “Our platform allows them to do all the things that you’d normally have an HR professional do. They’re meeting all the criteria for a 401(k) plan, but they’re not having to hire another employee to do it.”

That automation is why Jared and the rest of the team at 401GO knew they’d need payroll integrations. To take the administrative responsibility off their customers’ plates, they’d need reliable, automatic access to employment data. 

“The data that we're getting is so important to 401(k) administration,” Jared said. “It’s what allows us to send out notifications, enroll employees as they become eligible, and complete end-of-year reporting so the company, without even realizing it, is the best fiduciary. We’re leveraging payroll integrations to do that.”

Custom API payroll integrations > SFTP

From the beginning, API-powered payroll integrations were at the forefront of 401GO’s strategy. The team views other integration methods like SFTP as functional but far from ideal.

“The problem with SFTP is that it’s like you’re using half a car,” Jared explained. “Business owners don't understand that we’re going to have to accommodate for the other side of the car that’s missing.

“But with an API, you’re removing so much of the overhead and complexity, and it’s consistent. The updates are immediate. Everything is happening in a way that no human could do. And SFTP, as a file exchange of data, is really hard to scale.”

"With an API, you’re removing so much of the overhead and complexity, and it’s consistent. The updates are immediate. ... And SFTP, as a file exchange of data, is really hard to scale.”

In some cases, 401GO’s operations team performs the work on the employer’s behalf as part of their True360™ service; but API integrations can automate much of that process, freeing up internal resources to focus on supporting customers and taking on new accounts.

“The most straightforward thing is the data transfer, the idea that what's in the payroll system is now reflected in the 401(k) system. It’s not mind blowing, but the fact that data from payroll is being moved in real time into our platform so the plan is in compliance — that’s really valuable,” Jared said. 

Leveraging Finch to expand 401GO’s provider network

401GO has already built plenty of integrations in-house through its talented development team. But the payroll market is infamous for being fragmented, with nearly 6,000 systems in the US alone — and not all of them will allow retirement providers like 401GO to access their APIs. 

Gusto proved to be one such provider. With such a large volume of integration requests, Gusto couldn’t accommodate a direct partnership with 401GO, but they suggested an alternative: Finch. 

Related: Finch partners with Gusto to unlock the next wave of innovation in HR Tech

Once 401GO built to the Finch API, the company was able to access a pre-built integration with Gusto that allows its customers to authorize access to their payroll data in as little as 30 seconds. And since the Finch integration only needs to be configured once, 401GO can now expand their access to any of Finch’s 200+ supported HRIS and payroll providers without negotiating individual partnerships or building new integrations from scratch.

“A lot of our integrations with payroll companies are customized, so there's not one thing on our side that can connect them all. But having an aggregator like Finch is amazing, because we can connect into any one system that Finch is connected to. Then as Finch expands those relationships and its network of providers, that makes it a lot easier for us and a little more affordable to connect with more payroll providers,” Jared said. 

"Having an aggregator like Finch is amazing, because we can connect into any one system that Finch is connected to. Then as Finch expands those relationships and its network of providers, that makes it a lot easier for us and a little more affordable to connect with more payroll providers.”

Finch integrations can also be launched faster. The 401GO development team can build an integration in about 3 months, but that’s followed by a year-long monitoring and testing period. Finch allows the team to skip this step because their connection to the Finch API has already been proven, and because there’s a support team available to resolve issues that may arise on the payroll provider’s end. 

Since launching its Gusto integration, 401GO has also used Finch to integrate with Intuit Quickbooks — empowering automatic data collection and processing for 3x more customers. 

401GO still builds its own 1:1 integrations with payroll providers, but views Finch as a powerful tool in its arsenal as the company continues to grow and bring on customers with other payroll platforms. 

“It’s like retirement — you don’t put all your eggs in one basket,” Jared said. “Finch gives you options, and it allows you to go in different directions as needed.”

So, let me say this upfront — HR Tech is my favorite event of the year. It feels a bit like the annual family reunion and an HR Super Bowl all in one. I meet up with partners and industry friends and we share insights, progress, and lessons learned. It’s the ultimate meeting of the minds and it’s amazing to have those conversations in person over a drink, a meal, or on the show floor as we visit each other’s booths and learn about what’s next. Now that I’ve had a few days to collect my thoughts, I wanted to share a few insights from the show: 

1. The Evolution of AI in HR Tech

It’s been a few years since ChatGPT really exploded onto the HR Tech scene. Back then, it felt like every booth touted its AI capabilities while being a bit more vague on what that meant for the customer. While the hype surrounding AI has slowed down, we’re starting to see more interesting products being launched that go beyond the AI-chatbots of yore. Notable examples include ADP Lyric and Rippling Talent Signal, both of which create new ways to solve everlasting HR problems like performance management. I wouldn’t blame you if you’ve fallen off the AI-hype train, but we’re going to see more and more game-changing launches in the years to come.

2. ATS + Sourcing = Future of Talent Acquisition Tech?

Another growing trend is the bundling of applicant tracking systems (ATS) and sourcing tools. This is usually combined with an AI layer into a single (and really compelling) offering for talent acquisition teams. This is now possible due to better connectivity between ATS and sourcing systems, both of which operated in silos until recently. Talent teams can now review more people (both applicants and non-applicants) and better identify the ones that represent the best “fit” for the roles they are trying to fill. 

For employers, this means they can buy more services from a single vendor, saving money in the process. Talent teams not only have one less tool to deal with, but can also leverage new AI tools that simplify and automate tasks such as creating job descriptions (JDs) or parsing through resumes.

For ATS, this move up the candidate funnel helps them better serve their customers by giving them full visibility into their recruitment funnel. This also helps with retention, as existing HRIS/payroll providers are building their own ATS and continue to push into the recruitment space.

3. Engagement and Retention: How to do more with less (or the same) as before

Many, if not most, companies are trying to drive growth with existing teams without hiring too many net-new workers. We all want to work smarter and be more effective. This creates a few challenges for People teams who are tasked with driving high engagement and productivity: 

• Dissatisfied employees are staying longer in their current roles to avoid a tough job market, decreasing voluntary turnover. This means fewer openings for new workers, promotions, or internal transfers.
• With fewer openings, strong performers are not seeing the promotions or raises they are used to. There is rebounding demand for top talent, and other companies may successfully lure top talent away. If high performers leave, it adversely affects morale and makes it harder to maintain an internal high bar of excellence.
• Employee engagement is positively correlated with productivity — a highly engaged team is 18% more productive than one that is not engaged. This combination of both low engagement and low turnover makes it more likely that a team will be performing well below its potential.

Many people engagement/analytics platforms are trying to boost engagement and retention in the following ways:

• Internal mobility and talent development: Better analytics and reporting are helping companies identify and promote top talent from within their existing workforce. Companies with higher rates of internal mobility have an easier time retaining top talent, and have an easier time attracting and signing promising candidates they can develop into star performers when positions do open up.
• Employee experience: A growing number of employers are treating employees more like customers by offering self-serve, tech-driven experiences at work. Employees often share their employment experiences online (e.g. Glassdoor), and positive reviews make it easier to win over new workers as well.
• Smarter employee recognition and rewards: Technologies that help businesses recognize and celebrate their star performers are key, especially in this macroeconomic environment when salary increases and promotions are harder to achieve. Many companies I spoke to are using tech to dial in personalized rewards to keep employees motivated and engaged.

This focus is a clear signal that companies are rethinking their strategies for maximizing workforce potential in this shifting macroeconomic environment.

4. Connectivity Still a Challenge, but Progress is Being Made

One recurring theme across my conversations at the show was the ongoing struggle with connectivity — particularly the lack of integration from the HRIS/payroll system to third-party applications. This is where Finch shines: we’re enabling better connectivity between systems of record like HRIS/payroll and the core platforms used to manage everyday employment workflows. This impacts both the employee and the employer experience, as well as the companies that serve them. As the paradigm shifts toward more open marketplaces and interoperability, platforms are discovering ways to provide better experiences for their customers and new revenue opportunities by creating innovative workflows, products, and features that are powered by Finch's underlying API. They are also empowering customers to choose which applications they want to use, an important requirement for companies as they grow in size and complexity.

Final Thoughts

HR Tech 2024 made it clear that the future of HR is rooted in practical AI applications, enhanced integrations, and a renewed focus on internal engagement and mobility. For Finch, it’s exciting to be at the forefront of solving connectivity issues and providing solutions that help HR teams adapt to these growing trends.

With the right tools, HR leaders can look forward to a future where AI, connectivity, and employee experience converge to create a more productive, happy, and dynamic workforce.

Inflation and rising costs have made tax advantaged savings accounts more attractive for employees, since contributions reduce their taxable income. Whether it’s a doctor’s visit, paying for mass transit, or saving for a kid’s future college expenses, these accounts make it easy to set aside money for expenses they would incur anyway. 

Inflation and rising costs have made tax advantaged savings accounts more attractive for employees, since contributions reduce their taxable income. Whether it’s paying for a doctor’s visit, saving for an emergency fund, or commuting expenses, these accounts make it easy to set aside money for expenses they would incur anyway. 

For employers, tax advantaged accounts make their benefits packages more attractive, plus it saves money on the employer’s share of payroll taxes. However, such accounts come with administrative overhead and strict requirements to meet IRS guidelines. 

Employers might be more inclined to offer such benefits if technology makes the benefits easy to manage. Payroll integrations are critical for benefits providers since they enable a seamless experience without additional strain on HR teams. 

What is a tax advantaged savings account?

Most employers are familiar with tax advantaged savings accounts like health spending accounts (HSAs), flex spending accounts (FSAs), and retirement plans like 401(k)s. Employees can take advantage of setting aside pre-tax dollars in these accounts to pay for qualified expenses, such as out-of-pocket medical costs and dependent care, or to save for retirement.

However, other types of tax advantaged savings accounts have become popular in recent years — commuter benefits, Individual Coverage Health Reimbursement Arrangements (ICHRAs), and student loan assistance. Each of these can come with tax advantages, saving money for both the employer and employee. 

For example:

• Employers can offer a commuter benefits account, which allows employees to make pre-tax paycheck contributions to pay for commuter expenses.
• ICHRAs are employer-funded health benefits that provide tax-exempt funds for employees to pay for their own health insurance plan. 
• Employers may contribute to their employees’ student loan balance to help them get out of debt faster, either through the employee’s paycheck or by making direct payments to the lender. The first $5,250 in annual student loan assistance per employee is tax-free for both the employer and employee through at least 2025.

Related: Read more about how technology has enabled a rise in employer-sponsored benefit programs in our white paper: Unlocking Scale: The Revolution in Employer-Sponsored Benefits. 

Key steps to administer tax advantaged savings accounts

In addition to offering tax advantaged savings accounts, employers have to be prepared to administer such accounts. 

For employers, these steps can create additional administrative burden. Technology has substantially changed the game with products that make it easy for benefits providers to manage most of these steps on the employers’ behalf. In order for this to work, however, you as the benefits provider need to be able to access data from the employer’s HRIS or payroll system and make changes to those systems.

Step 1: Enrolling eligible employees

HSAs, FSAs, and ICHRAs have specific enrollment windows: when an employee joins a company or during the annual open enrollment period. 

Some commuter benefits accounts have very specific criteria, requiring employees to work at least 120 days before they are eligible. After the waiting period, employees can enroll at any time. 

It’s critical that employees are invited to participate in these benefits as soon as they become eligible. 

Step 2: Managing account contributions

The complexity of managing contributions to a tax advantaged savings account varies depending on the benefit. Since HSA and FSA enrollments are limited to new employees or the open enrollment period, the contributions are easier to manage — the contribution is determined once during open enrollment, and can only be changed with a qualifying life event (such as the birth of a child). 

But other benefits, like ICHRAs, are more complicated. The amount the employee receives with each paycheck will vary based on the insurance plan they’ve chosen, and in some cases, the employee can pay for costs that exceed their reimbursement limit through payroll deductions — an amount that can vary from month to month, meaning the deduction amount needs to be adjusted frequently. 

Then there’s the added complexity of employer contributions: HSAs and commuter benefits allow employers to contribute to the account. In this case, employers need to factor that into the contributions, as well as determine when the contributions will occur. Contributions might occur with each paycheck, or be offered as a lump sum one or more times per year. Additionally, since HSAs and commuter benefits have legal maximums, an employer contribution may change depending on how much the employee contributes to the account. 

With commuter benefits, employees can opt to change their contribution amount at any time, resulting in more updates to the payroll system. 

You have to capture any changes that employees make to their contributions and ensure the changes are reflected in both your product and the employer’s payroll system. 

Step 3: Managing payroll deductions

Employee contributions to most tax advantaged savings accounts are deducted from the employee’s gross pay. The employer needs to know how much to deduct (pre-tax) so both the employee’s and the employer’s payroll taxes are calculated appropriately.

If the employee’s contributions change, the employer needs to make timely updates to the payroll system to ensure the changes are reflected in the employee’s paycheck. If you don’t get the changes written to the employer’s payroll system, the employee’s deductions, payroll taxes, and net pay may be incorrect, leading to a poor customer experience and potentially fines or penalties.

Note: Some other types of accounts have tax advantages, but aren’t included in this article because the contributions are made post-tax. For example, Emergency Savings Accounts (ESAs) can be tied to a retirement plan, but aren’t subject to the same withdrawal penalties because the contributions are made on a Roth (after-tax) basis.

Step 4: Creating year-end reports for tax reporting and auditing

Since tax advantaged savings accounts have implications for an employee’s taxable income, some contributions have to be reported on the employee’s W-2. HSA and FSA benefits are reported, since employees can claim medical and dependent care expenses as deductions.

For all benefits, employers need to maintain accurate year-end reports for compliance and potential audits; but the actual filing is typically outsourced, meaning the employer needs to send a year’s worth of granular data to a third party, which can be difficult if they don’t fully understand what data is necessary.

How payroll integrations benefit tax advantaged savings accounts

Benefits providers need timely, accurate payroll data in order to administer the accounts properly. HR departments need to know how much to withhold from each employee’s paycheck, as this impacts the employee’s net pay. Since contributions are pre-tax, they also impact the amount of the employer’s share of taxes.

Without payroll integrations, HR departments and benefits providers would be making a lot of manual changes — particularly if the company has a lot of employees or if the contribution amount changes. Payroll integrations automate this process with a seamless connection between the payroll system and the benefits provider. 

1. Better, more reliable data access

Without payroll integrations, employers are manually moving data between systems. Data can quickly fall out of sync, and human intervention makes the data prone to errors. Changes such as employee hires, terminations, or changes to monthly contributions are constantly in need of updates when offering benefits such as tax advantaged savings accounts.

For smaller companies, the administration of such benefits can be prohibitive. For larger companies, the burden is overwhelming. 

With Finch’s unified API, your benefits solution can securely connect to an employer’s HRIS and payroll system, allowing you to access the most accurate and timely employee data. Because the connection refreshes the data every day or week, you can automatically identify employees whose eligibility or contributions have changed and invite them to enroll, rather than relying on the employer or your Operations team to flag these changes.

2. Automated payroll contributions

Since contributions to tax advantaged savings accounts impact the amount of taxes paid by both the employer and the employee, it’s critical that contributions are accurate within every pay period. Whether it’s new employees enrolling in benefits for the first time or contribution changes to a commuter benefits account, changes to contributions have to be timely. 

With payroll integrations, contributions and deductions are updated automatically between your product and the employer’s payroll system. A bi-directional integration captures any changes and writes the appropriate amount back to the employer’s payroll system for the proper deduction, all without involving the employer. 

That way, payroll taxes are calculated automatically based on the after-tax wages or salary. This greatly reduces the risk that payroll isn’t calculated correctly due to a delay or human error, and reduces the administrative burden on the employer.

3. Greater efficiency

Payroll and HRIS integration makes it easy to enroll new employees into tax advantaged savings accounts, a process that can otherwise be cumbersome, especially for companies with a lot of employees. 

Lane Health uses Finch to enroll employees into HSAs and additional benefits like Health Payment Accounts (HPAs). Before Finch, administrators within Lane Health’s customers would spend 8-12 hours keeping information in sync. Employers would manually update employee information in Lane Health or export and import flat files between the two systems. Now, Lane Health uses Finch to provide secure access to employee data and track contributions to HSAs and payroll deductions for other benefits. 

If it’s easy for HR teams to enroll employees in HSAs and manage their HSA deductions, more employees will be likely to participate — a benefit to any employer looking to offer HSAs and similar accounts. 

4. Compliance and tax management

Tax advantaged savings accounts are regulated by the IRS, including when employees are eligible for enrollment and how much they can contribute with pre-tax dollars. You have to monitor and enforce annual contribution limits outlined by the IRS and ensure employer contributions don’t exceed these limits. 

Payroll integrations make it easy for you to maintain compliance because you can verify when employees are eligible to participate and maintain compliance without a lot of back-and-forth with the employer. 

Integrations also allow you to easily pull year-to-date data at any time, ensuring the information you have for year-end reporting is complete, accurate, and delivered on time. Without integrations, employers may struggle to pull the data for year-end reporting — they may not understand all of the information that is needed, putting a burden on your team to help them.

Seamlessly integrate with hundreds of HR and payroll systems with Finch

Even if you build your own payroll integrations, they can be costly and difficult to maintain. You’re forced to integrate with multiple HRIS platforms and payroll systems to have the biggest market reach, which can be a drain on your internal resources.

Finch’s Unified API for HRIS and payroll has done the heavy lifting for you. With Finch, you need to build only one integration to our API, which connects you with hundreds of HRIS and payroll systems. Our integrations cover the systems used by nearly 90% of U.S. employers. 

To learn more about Finch, you can try it for free or schedule a call with our sales team.

Many companies rely on a secure file transfer protocol (SFTP) integration to move data from one platform to another, yet the process is notoriously finicky. Setting up the initial connection can be tricky and time-consuming, but the headaches don’t end there — SFTP errors are common and confusing.

The integration between your customer’s HRIS and your application relies on timely data, so it’s important to identify and resolve SFTP errors quickly before the systems become out of sync. This might mean working directly with your customers to troubleshoot — even if the root cause is within the data from your customer’s HRIS and not your application. But from your customer’s perspective, your application “doesn’t work,” and they will often look to you for a resolution. 

Whether it’s a data issue or connection error, you’re left trying to troubleshoot — often without an obvious way to pinpoint the problems. You might have access to error logs, but they’re difficult, if not impossible, to understand. Meanwhile, your customer is frustrated, and you have to meet compliance and SLA requirements.

If you’re not sure where to start, we’ve listed some common SFTP errors and how to identify them. We’ve also provided some information about an alternative that eliminates the need for SFTPs with a more stable, streamlined approach. 

Related: SFTP vs. API: Which integration method is best for employment data?

SFTP file errors

With SFTP, you’re relying on the extraction of data from your customer’s HRIS into a file. That file is securely moved to a specific directory, which is then “picked up” and imported by your application.

First and foremost, the file has to exist in the specified directory at the time the other application looks for it — whether that’s with each payroll run or on a different cadence. If your customer’s data doesn’t import as expected, that’s the first thing to check. 

Assuming that the file was in the correct location at the right time, you should next look to make sure that the file is in the right format. While it was probably configured correctly when you first set it up, changes in your customer’s HRIS might unexpectedly modify the file, causing the data import to fail. 

File type and format

Files are usually in a delimited format. Delimiters are special characters that indicate the separation of different pieces of data, like commas or tabs. You should check to make sure that the file has the right delimiter and that the delimiter is the same as it was in previous formats. Applications are typically coded with a delimiter in mind, so a file can’t switch between comma- or tab-delimited.

You should also check the file type to ensure it’s as expected. A comma-delimited file, for example, could be a .csv file or a .txt file. If the extension changes, your SFTP integration could fail.

Fields included 

SFTP imports rely on an exact match of columns in your customer’s file to fields in your application. While some applications may be coded to ignore extra fields, others may not. You’d either need to have your customer remove the extra fields in your file, map those fields in your application, or tell your application to ignore those fields. 

If you’d previously mapped a field and the field is removed from your file, that can also cause SFTP errors since the application is now receiving fewer fields than expected.

If your customer has created a custom field in their HRIS and wants to send it through your SFTP integration, make sure you or the customer create a matching custom field in your application before you start sending the data in your file. SFTP integrations will not create new fields in your application. 

File name and field names

Your SFTP integration might be looking for a specific file name (such as “dailyintegration.txt”). If the file name has changed, the import might not work. Sometimes, extracts from your customer’s HRIS might include a date and timestamp at the end of the file (such as “dailyintegration20240831.text). If so, you’d need to determine if your application can handle the changing date and timestamp, or if you or your customer will need to remove it before the import can occur. 

Within the file, some SFTP integrations are looking for exact field name matches between your file and the destination system. For example, if the name in the application is “First Name,” the name in your file must also be “First Name.” In some cases, the field is even case-sensitive, so if the field name is “first name,” the transfer will fail. 

File corruption

If something interrupts file creation (such as an unstable network), your customer might end up with a corrupted file. This can also happen if there are problems during the transfer process itself, such as memory issues.

You can usually detect file corruption if you open the file and it is blank or contains odd characters. 

UTF-8 encoding protocol

Unicode transformation format - 8 bits (UTF-8) is a common encoding protocol used by SFTP servers. If files contain special characters, UTF-8 ensures that data is accurately transmitted and received without corruption. If a file doesn’t follow a UTF-8 format and your application requires that format, the transfer will fail. The reverse can also be true: your customers are sending the file in UTF-8 format and your application can’t handle it, so it corrupts the file. 

SFTP data errors 

While file errors are tied to how the files are created, data errors are contained within the file. Sometimes, issues within individual records are enough to cause your SFTP integration to fail. 

Unless you’re getting clear error messages, the only way to find data errors is to open the file and search for the data that could be causing the issue. Given the size of these files, this can require a massive amount of effort.

Field mapping

You have to establish field mapping before you can complete a successful transfer. For example, in your customer’s HRIS, you might have a field “Start Date” and you need to map it to “Hire Date” in your application. 

If not mapped correctly, the SFTP integration might not work. If your customer incorrectly maps a field “First Name” to a field “Hire Date,” the data types are a mismatch (one is text, and one is a date field). Some SFTP integrations will reject this type of mapping and cause error messages or an SFTP failure. 

Duplicate data 

Your file integration will rely on a unique identifier for each record from your customer’s HRIS (such as the employee’s social security number or email). This is how the application can tell one employee record from another employee record. 

Unique identifiers cannot be duplicated in files. Some SFTP integrations may skip the duplicate records, but in other cases, it may cause the sync to fail. 

Data format

Mapping fields often requires a very specific format. Dates might need to be in either YYYY/MM/DD or MM/DD/YYYY. If your customer is sending any fields with numbers, a field may accept or reject decimals. 

If the SFTP integration fails, check the formatting of each field to make sure it matches the application’s requirements. 

Special characters

Some applications may be unable to handle special characters (like & or $). If your fields contain these characters, they will cause SFTP errors. Special characters may not cause complete SFTP errors, but may cause the specific fields not to be populated within your application, so your sync would be incomplete. 

Your customer would need to remove these characters so your data can sync properly. 

Terminated or inactive employee data 

Many applications that sync from an HRIS want only active employee data. You’d need to ensure that your customer filters the HRIS files to remove terminated or inactive employee records before they’re sent via SFTP. 

If your customer sends a file containing terminated or inactive employees, it can cause a lot of issues. Your application may not be able to handle the records or it can create “junk” records in your application that you’d need to clean up. 

SFTP connection errors 

SFTP failure can also happen when there’s a connection issue between the source (your customer’s HRIS) and the destination (your application). You may need to involve someone from your customer’s technical support team to troubleshoot these issues. 

Destination folder

When your customer sends a file from their HRIS, it has to be placed in a destination folder for the application to ingest. If the destination folder doesn’t have the correct permissions (such as being read-only versus read-write), the file won’t transfer.

Your customer may also have issues within the folder itself. In some cases, the destination folder has to be left blank to ensure that data is ingested. Additionally, if your customer sends too many files at once — especially if they have the same file name — the sync may fail. 

Permissions

The file transfer itself may be set up as a scheduled job, which your customer needs to run with administrator access. If it’s run with a specific employee’s account, and that employee leaves without granting access, it can be difficult to transfer permission for the scheduled job to a new employee. 

Additionally, your customer’s firewall may prevent sensitive data from leaving any internal systems. Your IT department may need to disable the firewall to allow the SFTP sync to occur. 

SSH key pairing

SSH key pairing is an authentication method for SFTP that’s more secure than using a password. On your customer’s SFTP server, your customer will have a public key that acts like a “lock.” During the connection, a private key is used to authenticate and “unlock” the server. The combination of keys — the public key and private key — is the key pair. 

SSH keys can be tricky to manage, especially if your customer is doing this manually. Keys are stored in .ppk files, which may require downloading additional software to generate the files. Keys can be “orphaned” if they’re issued to employees who leave the organization and IT staff forgets to terminate the keys. Keys can also be blocked by firewalls, permissions, or server configuration. 

Erroneous actions

SFTP has many operations, such as “put” (upload), “get” (download), “rename” and more. Your customer’s SFTP needs to use the “put” action only. If you include something else (like “rename”), it may cause the sync to fail. 

Unsupported SFTP protocol

Unsupported SFTP protocol errors happen when there’s a mismatch or incompatibility between the source and the destination. Your customer’s server may only accept certain configurations. 

SFTP has multiple versions, and they’re not all compatible with each other. Additionally, SFTP runs over SSH which also has multiple versions (SSH1 versus SSH2), which can cause incompatibilities. Your customer’s security settings may also cause protocol issues. 

Related: Improving Business KPIs with SFTP Scalability and Automation

HRIS integrations: An alternative to SFTP

Even after you’ve set up your SFTP (which can be difficult by itself) and it’s running as expected, you can experience issues down the road. If there are changes in the underlying technology, such as your customer’s HRIS or in your own application, it can cause SFTP errors. You have control over your own app, but changes to your customers’ various HRIS systems are unpredictable, meaning maintaining a healthy SFTP connection is an ongoing, intensive effort.

To make matters more difficult, each HRIS has its own quirks and data schemas. Each customer will require the configuration of their own SFTP connection, but these connections can’t follow a routine protocol because each HRIS will have different data formats and connection requirements. 

By contrast, HRIS integrations powered by APIs offer an automated, standardized alternative to complex SFTP connections and a way to avoid common SFTP errors altogether. With Finch’s Unified Employment API, you can build a single API connection to access your customers’ data across hundreds of HRIS and payroll systems. 

Finch: The HRIS and Payroll Integration Solution

With Finch’s API integrations, your application can seamlessly connect to the various HRIS and payroll systems your customers use, without having to build individual SFTP connections for each customer. Better yet, the data is automatically standardized, meaning it is delivered to your application in the appropriate format, regardless of how it’s configured in the HRIS or payroll system. The data is also sent daily or weekly, as opposed to just once per pay cycle.

Finch’s integrations can be accessed in one of two ways — either through an API integration with Finch, or through Finch Flatfile, now in beta. Flatfile provides all the benefits of our API, but still delivers files via SFTP.

Finch has access to the largest network of HRIS and payroll systems, providing deep integrations without the headaches of SFTP. Companies using Finch can take advantage of Finch’s Unified Employment API and allow their customers to integrate their HRIS and payroll platforms seamlessly. 

Learn more about Finch by signing up for free or scheduling a call.

We are excited to share that Finch has been named to Will Reed’s Top 100, an annual list that recognizes early-stage companies that are shaping the future of workplace culture. This recognition comes just a few months after Finch was named to Built In’s Best Places to Work list for the second year in a row. 

Will Reed, an executive search firm built exclusively for emerging companies and founders, compiles its Top 100 list each year to celebrate Series A and B companies that are building world-changing and innovative products while prioritizing a strong, positive company culture. 

The list is curated by a panel of judges that hold senior leadership roles in HR and People Operations. This year’s panel included representatives from leading employment technology companies like Brex and WorkRamp.

“At its core, Finch’s mission is to make it easier for employers to support their employees—so embodying that mission through our own workplace culture has always been a top priority,” said Ansel Parikh, Finch co-founder and COO. “Our team is our greatest asset. We’re honored to be recognized for our efforts to support and empower our employees.”

“At its core, Finch’s mission is to make it easier for employers to support their employees—so embodying that mission through our own workplace culture has always been a top priority." — Ansel Parikh, Finch co-founder and COO

Finch’s company culture is built on four core values—curiosity, execution, humility, and empathy. We strive to cultivate an environment where employees are empowered to take risks, share ideas, communicate openly and honestly, and explore each other’s perspectives to ensure team alignment and progress. 

Supporting our team takes many forms at Finch:

• Generous benefits packages, including $1,000 work-from-home and $200/month flex benefits, plus 100% coverage for health insurance plans and unlimited PTO (with a mandatory 15-day minimum per year). 
• Regular celebration and recognition of one another’s accomplishments, and promotions from within. 
• A hybrid-flexible workplace designed to ensure our employees maintain a health work-life balance.
• Twice-annual on-site bonding activities to foster a connected, collaborative team.
• Tremendous opportunities for individual development and career growth through our fast-paced work environment. 

“More than ever, we’ve seen that strong culture is what keeps companies going and thriving in the face of extreme adversity and material unknowns. The last couple of years have thrown everything at these emerging founders and teams and yet, there’s so much to celebrate in their resilience.” – Paige Robinson, Founding Partner & CEO, Will Reed

Join our team and help to shape the future of employment! Apply to one of our open positions.

Addition Wealth is a financial wellness company that makes personalized financial expertise more inclusive and accessible. To do this, Addition partners with forward-thinking companies to support employees and individuals to work through personal finance decisions. 

As part of the offering, individuals get access to a digital platform that brings together information from their employer, including benefits information, alongside an individual’s own personal finance accounts to give a holistic overview of what is offered by their company and what an individual already has. In the platform, Addition Wealth also offers individuals a recommended set of actions, including courses on personal finance topics, digital tools, content, checklists, and webinars. Individuals also have the option to speak with fully vetted financial advisors by booking an online virtual meeting.

Because Addition Wealth tailors its offering based on the employer or client they are working with, they needed a way to efficiently manage select employee data—so they turned to Finch. Today, the company leverages Finch to integrate with several HRIS and payroll providers to enhance their customers’ experience by seamlessly bringing in relevant data into the platform.

Democratizing access to quality financial advice

Addition Wealth works with employers by delivering tailored programs that help decrease employee stress, drive higher candidate acceptance rates, and increase overall employee retention. With its personalized approach, Addition can help any employee understand their unique financial situations and navigate through tough decisions, whether they are buying their first home, paying down debt, or planning for retirement.

“Our mission is to enable people to make the most of their money and bring personalized financial expertise to the masses,” said Amy Chou, Chief Product Officer. “It's extremely hard, unless you're already wealthy, to get access to high-quality financial advice. We help the average person get high-quality answers to their financial questions so they can live a healthier financial life.”

As an employer-sponsored benefit, Addition Wealth’s financial wellness platform provides individuals with the tools, resources, and insights they need to be financially healthy based on their own personal circumstances. Each digital platform experience is tailored to the company and the benefits they offer, from equity to student loan assistance. 

“A lot of employees aren’t taking full advantage of their benefits. Employers want their employees to use the benefits they’re given, and to value them,” Amy explained. “When employees understand the true value of their benefits, they’re more likely to stay with the company and be happy in their role.”

Reliable, consistent, comprehensive data delivery

Addition Wealth needs access to specific data to provide tailored insights to employees receiving access to their platform– for example, employee directories and salary information. Traditional methods of accessing that data like manually sending files or leveraging SFTP connections work, but it means that Addition Wealth may not have access to the most up to date information.

Finch’s API integrations, on the other hand, provide daily or on-demand data syncs. That means that if an employee’s data changes—say, for example, they get a raise or change their retirement plan contribution—Addition Wealth is able to immediately reflect the updates on their dashboard.

“We love the idea of being able to get real-time feedback on these very important pieces of information, versus having to wait for the monthly update. That’s what motivated us to work with Finch,” Amy said. 

“We love the idea of being able to get real-time feedback on these very important pieces of information, versus having to wait for the monthly update. That’s what motivated us to work with Finch."

Saying goodbye to SFTP headaches and manual intervention

Addition Wealth works with companies of all sizes—from early-stage startups to enterprise businesses. Managing small file transfers is one thing, but sending enormous data sets typically requires an SFTP integration, which can be a cumbersome, complicated process that involves a lot of back-and-forth. 

“For some of our customers due to their size, it can be difficult to batch files. It may take a long time, so it’s just easier to plug into something that already exists,” Amy said. 

Even the smoothest SFTP integration process can present a big hurdle for large employers; but there’s also a lot that can go wrong along the way: failed sends, NIGO errors, and corrupted files, to name a few. 

Customers that onboard using a Finch integration can authorize Addition Wealth to access the data in their HRIS and payroll system through Finch Connect, which takes only a few minutes to complete. The connection is continuous, meaning Addition Wealth can simply pull the data they need, when they need it.

Simplified data mapping saves hours of manual work

To take things a step further, Finch saves Addition Wealth time by standardizing all of the data through a unified API. 

Regardless of the HRIS or payroll provider that the employer uses, data pulled through Finch is always in the same format. In other words, data is mapped across different providers’ various field names to a single, consistent field name.

“Because Finch’s API standardizes the data, it’s a pretty easy 1:1 mapping versus needing to figure out what each client calls the same field, where some may call it ‘Salary’ and another ‘Salary Field 1,’” Amy explained. “That’s something we’d otherwise need to write into the code for each client, but we don’t have those issues with Finch because it’s all the same field—it’s just called ‘Salary.’”

Finch and Addition Wealth: Growing together

Amy noted that HRIS and payroll integrations provide value before a customer has even signed on with Addition Wealth. 

“Finch is a benefit in the sales process,” she said. “When prospective customers ask if we can integrate with their HRIS, Finch enables us to very easily say yes. People like having that option.”

“Finch is a benefit in the sales process. When prospective customers ask if we can integrate with their HRIS, Finch enables us to very easily say yes."

As both Addition Wealth and Finch continue to grow and expand their product offerings, Amy said she looks forward to leveraging even deeper real-time insights for employees.

“We’re pretty excited, as Finch continues to expand its capabilities, to bring in more nuanced information about employee benefits and estimate their collective value for the individual employee,” she said. “Integrations make things easier for end users—the more integrations, the better. It's just about finding the integrations that work best for the use case.”

First impressions matter—which makes your user onboarding experience critical. A smooth onboarding process gets your customers up and running quickly and helps them realize value faster. Automated user onboarding is the fastest, most efficient way to create an unparalleled user experience.

With automation, you can free up resources both on the customer’s end and internally, onboarding customers with almost no manual effort. It also enhances the overall user experience since your customers can self-serve during onboarding. 

However, onboarding can be challenging in the employment sector, since your product needs to import the data held in the employer’s HRIS or payroll platform. Employee information like job titles, employment status, pay statements, or demographic data needs to be securely transferred before your customers can begin using your product. Without direct access to the employer’s system of record, moving this data to your platform requires costly SFTP setups or cumbersome manual work.

Rather than relying on a lot of back-and-forth with your customer, HRIS and payroll integrations enable you to automate onboarding by securely transferring information from their source of truth — without a lot of manual intervention. 

What is user onboarding automation?

Broadly, user onboarding automation streamlines the process of bringing customers onto a new platform with minimal manual effort. In the employment space, that means importing required employee data automatically from the employer’s source of truth.

Manual onboarding requires a lot of effort of both your team and your customers. All of the relevant employee data—whether that’s census data or individual pay statements—has to be manually imported to your platform. At best, that requires configuring a custom SFTP connection or downloading files from the HRIS or payroll system and uploading them to your platform; at worst, it requires your customer to manually add each of their employees one by one.

By contrast, automated user onboarding is much faster and easier. The use cases are broad, but the core functionality connects an application to the source of truth for employee data, whether it’s an HRIS or payroll database. Once connected, data seamlessly transfers between the two systems almost instantly. Plus, the systems are able to continually communicate, meaning data is updated in your system as it’s updated in the HRIS or payroll system.

5 Benefits of automated user onboarding

Whether your customers are SMBs or large companies, automated onboarding provides a better customer experience. 

1) Improves data quality 

Manual onboarding opens the door to human error. Your customers provide files that must be mapped and imported into your system. Customers may struggle to get files with the correct fields in the correct format. Additionally, manually exported and imported files are always point-in-time and may not reflect the current workforce in the system of record. 

Automated onboarding connects two systems using predefined rules and mapping. Customers can be assured that their data syncs are accurate. In regulated industries, this also ensures all steps for compliance are handled correctly.

Automated onboarding also sets the stage for ongoing integration between systems — which is what your customers need and expect. In fact, 84% of HR professionals say integration is “extremely important” for any tool added to their tech stack. 

2) Saves customers time

With automated onboarding, customers won’t spend time creating files or otherwise importing their employee data from one system to another. They won’t be forced to manually enter employee data if they don’t have the resources or technical expertise to create files.

This reduces the time spent onboarding and also saves time as customers continue using the product. The integration used during onboarding keeps HRIS or payroll data synced between the two systems, automatically adding new employees, de-provisioning employees as they leave, and updating information based on changes to salary, role, and other employee data. 

3) More secure

If your customers have to transfer files for manual onboarding, they risk exposing sensitive employee data. Someone internally may email the files rather than share them securely or download them to a directory that doesn’t meet internal protocols. To transfer files on an ongoing basis, they would need to set up an SFTP connection, which needs to be monitored and managed.

Automated user onboarding securely collects your customers’ credentials to connect their systems. Customer-permissioned access lets users stay in control of what data is shared through the integration. 

4) Delivers value faster

Whether manual onboarding takes days or weeks, it delays your customers’ use of your product. Some initial excitement can wear off, and it takes longer for customers to realize value — both as a company and for their employees. 

Human Interest sees integrations as a competitive differentiator. “We’re always looking for an opportunity to improve our value offering,” says Drew Obston, Manager of Product Operations. “With integrations, we’re able to go above and beyond and say, ‘You don’t have to upload payroll data. You don’t have to be provisioning someone on our team to log in to your payroll.’”

Automated onboarding takes minutes and allows your customers to focus their efforts on configuring and integrating your product into their processes. 

5) Scalable for your organization

If you’re relying on manually onboarding your customers, you need employees to work with them. Your employees may import files on behalf of customers, assist with data mapping, or make ongoing updates to keep data current. 

Manual processes will always be limited by employee bandwidth. Automated user onboarding, on the other hand, has no limits. You can onboard more customers without compromising the onboarding experience. You can focus your resources on relationship management or customer support rather than customer onboarding. 

Examples of automated user onboarding

HRIS and payroll integrations can serve a wide variety of industries, including 401(k) and retirement administrators, employee benefits solutions, insurance, HR technology, fintech, and more. 

Here are a few examples of how automation can streamline onboarding.

401(k) and retirement administrators 

With HRIS and payroll integrations, 401(k) administrators can pull employee information like employment status, start date, and date of birth directly from the employers’ system to automatically verify employees’ eligibility. The eligible employees can then be automatically enrolled in the plan, pursuant to SECURE Act 2.0, with the choice to opt out. Even better, these integrations provide evergreen access to the employer’s payroll system, so new employees can automatically be enrolled once they’ve met the sponsor’s eligibility requirements. 

Use Case: 401(k) provider Saveday uses automated user onboarding to let its customers set up plans in 15 minutes or less. Customers grant access to their payroll systems within minutes, eliminating the need for the Saveday team to manually download files and validate data. 

Employer-sponsored benefits providers

Integrations allow employers to import data for all existing employees so they can enroll in employer-sponsored benefits like ICHRAs, Earned Wage Access, and Health Payment Accounts. The provider can automatically import data for each employee, like individual pay statements, company contributions, pre- and post-tax deductions, and employment status to immediately identify eligible employees, enroll them in benefits, and manage payroll deductions on a recurring basis. 

Use Case: Exhale provides a suite of financial wellness benefits to hourly employees. By integrating with employers’ payroll systems, Exhale is able to enroll employees in benefits up to 2 weeks faster because the company doesn’t need to wait until the next pay cycle to view employees’ pay statement data.

Employee engagement and learning management systems

To effectively train employees and reward them for their efforts, engagement and learning management tools need to have a record of each employee and relevant census data like their hire date, job title, tenure, and more. Integrating with the employer’s HRIS allows these platforms to automatically create accounts for each employee and enroll them in rewards or training programs that are relevant to their specific role. As employees join or leave the company, they can automatically be enrolled or deprovisioned.

Use Case: Trainual uses HRIS and payroll integrations to instantly onboard and offboard employees as necessary, without asking customers to update their user data. That automation is critical for a platform that prides itself on scaling with its customers.

Fintech solutions

B2B fintech solutions rely on current employee data for headcount cost analysis, compensation management, or equity management. With HRIS and payroll integrations, you can securely pull in company, department, job title, and payroll data to enable pay and operational insights. Integrations keep employee data updated so your customers can see analysis and pull reports in real time.

Use Case: Mosaic has built a next-gen financial reporting and forecasting system that relies on seamless data integration from a company’s HR and payroll data. With this information, Mosaic provides detailed insights into employee costs so organizations can strategically plan their headcount. 

How to automate user onboarding

Some companies, recognizing the need for automated user onboarding and ongoing syncs between HRIS and payroll platforms, build their own integrations. For customers, this certainly improves the experience by removing the manual work on their end and keeping data up-to-date. 

However, building integrations comes with its own challenges. With so many HRIS and payroll platforms on the market, companies are faced with two paths: expend resources building a significant number of integrations, or limit your potential customers by only building a few integrations.

No matter the number of integrations you build, you will need developers to work with the APIs of different platforms. Even though integrations improve your end-user experience, building and testing them takes resources away from your core product.

Unified APIs allow companies to launch hundreds of integrations at once. As a single, standardized way to connect systems, unified APIs enable developers to work through a single interface. Your developers don’t have to work through the complexities and variations between each HRIS or payroll platform’s APIs. 

Finch provides secure and comprehensive two-way integrations with over 200 HRIS and payroll systems in the US, covering 88% of employers. 

With Finch, your end user’s experience is seamless and relies on customer-permissioned access to connect their systems to your product. 

With Finch’s unified APIs, you can automate user onboarding and rely on verified, real-time data to keep the systems in sync. 

Empower your customers from the beginning

The best user onboarding is forgettable: it is so easy that it takes almost no time or effort. Manual onboarding and ongoing updates cannot meet customer expectations, so companies need to rely on integrations. Efficient and automated user onboarding builds trust and serves as a prelude to your ongoing partnership. 

Finch’s powerful unified APIs allow companies in HR tech, benefits, insurance, and related industries to access the largest network of HRIS and payroll systems. 

Learn how Finch can benefit your organization by scheduling a call. You can also sign up to try Finch for free.

Businesses today use dozens of different software applications, making integrations table stakes for modern buyers. This is especially true in the employment sector, where HRIS and payroll systems act as the employer’s source of truth, holding valuable information that other B2B applications need to function. 

Building integrations in-house is resource-intensive and costly, so developers have begun turning to new tools like unified APIs and embedded iPaaS to quickly launch multiple integrations and outsource ongoing maintenance. So which of these tools — iPaaS vs. API — is right for your organization?

The answer is, of course, it depends. Each solution has its own pros and cons depending on your needs, resources, and budget. We’ll break down the ways each approach differs in function, implementation, maintenance, and cost and share helpful considerations when deciding which will better suit your needs.

Unified API vs. iPaaS: What’s the difference?

A unified API is a tool that aggregates and normalizes data from multiple systems or data sources, then delivers that data to a single endpoint. Unified APIs have pre-built integrations with dozens or hundreds of systems. The data is pulled from each platform to the central API, standardized, then pushed to your application. You only need to build one integration—to the provider—to unlock access to all of their supported platforms.

Key benefits of unified APIs include a single point of access, faster time to launch, normalized data formats, and a consistent, high-quality user experience—plus scalability and robust security controls. Since your team doesn’t need to build integrations to each individual system, you also benefit from a much higher ROI per integration, and your developers can focus on improving your core product, instead of investing countless hours into building 1:1 integrations.

In contrast, embedded iPaaS solutions are low-code, connector-based platforms that integrate applications and data across different systems. These platforms offer pre-built integration frameworks for various software designs and provide middleware that facilitates fast and secure data exchange. They also allow for customizable workflows and connectors. 

It’s worth noting that there are general iPaaS solutions and embedded iPaaS solutions: while the former integrates systems within a company, embedded iPaaS platforms enable developers to build and manage customer-facing integrations between their own company’s products and third-party systems. 

To put it simply, unified APIs are a means of outsourcing all the work of building and maintaining integrations with a wide array of platforms. Embedded iPaaS, on the other hand, is a marketplace tool that provides the basic rails for an integration, but it’s up to your development team to customize and complete the connection.

To decide which solution is better for your needs, you’ll need to consider the nuanced differences between the ways unified APIs and embedded iPaaS are used.  

Depth of data coverage: iPaaS vs. API

Unified APIs tend to focus coverage on commonly used data attributes. As a result, horizontal APIs often have limitations when it comes to accessing deeper or less common data points. However, verticalized APIs like Finch offer a deeper level of data granularity that is tailored to specific industries and use cases—in our case, employment technology. 

Embedded iPaaS solutions offer extensive coverage across a wide range of applications and data sources. But since each integration must be built separately, they require more development work and significant technical expertise. 

Bottom line: Unified APIs offer breadth and depth of coverage for standard data sets, while embedded iPaaS is better suited to providing comprehensive access to custom data fields or unique data sets. 

Data standardization: iPaaS vs. API

Data standardization refers to formatting data from disparate sources, each with their own field naming conventions, into a single, uniform standard so it’s always ingested into the end system the same way. It can save users a significant amount of time, reduce the chance of errors, and allows for automated workflows where data flows seamlessly from system to system.

Bottom line: Most unified APIs offer a single, standardized data format. This makes data handling much more straightforward because data models are always presented consistently, regardless of the data’s origin. This functionality is present in some embedded iPaaS tools, but not all. 

Development effort required: iPaaS vs. API

Unified APIs can be deployed rapidly because only one integration must be built to unlock connections to multiple data providers. They also give developers a higher level of technical control.

Embedded iPaaS platforms use pre-built rails but may need customization for each specific application. They require significantly more technical expertise and development work, particularly for long-tail systems. However, some iPaaS solutions also offer low- or no-code environments, which makes it easier for non-technical users to create and manage integrations—think of Zapier or Workato, for example.

‍Bottom line: While embedded iPaaS offers a higher level of customization, unified APIs are an excellent choice for organizations with limited development resources or budgets, or for organizations that need to access the same data sets from lots of different systems—like payroll data to administer retirement benefits, for example.

Integration flexibility: iPaaS vs. API

Unified APIs offer a simplified integration process: data flows from all connected systems through the unified API and into a single endpoint. For example, when a customer builds one integration to a unified API provider like Finch, they enable access to hundreds of different providers. 

This approach is less flexible than embedded iPaaS but is better suited to specific use cases within certain industries. As Finch is explicitly built for employment systems, it’s designed to meet the needs of industry-specific use cases, like pulling organization and payroll data so users can effectively administer benefits, monitor employee engagement, manage equity, and so on.

Bottom line: Embedded iPaaS has the potential to offer more customizable workflows and logic—but only if your team has the technical expertise to code it as such, and only if the iPaaS tool is built to work with any type of system. For example, some iPaaS tools only support cloud-based systems, which leaves on-premises legacy applications inaccessible. Unified APIs can provide fast, cost-effective, and reliable access to a wide range of industry-specific providers if you don't require this degree of customization.

Scalability: iPaaS vs. API

Unified APIs scale easily because once the initial integration to the provider is built, the user organization can access connections to all of the provider’s supported systems. Once set up, adding new providers within a unified API is simple because it’s all routed through the existing integration. The benefit of this is that organizations can access as many provider integrations as needed all at once, or as the need for new integrations arises.

Since embedded iPaaS integrations are custom-built, they can handle large volumes of data and integration complexity. But as the scale of operations increases, they may require additional configuration and management. If organizations want to add a new provider, they need to build a new integration. And that, of course, demands more time, money, and resources. 

Bottom line: Unified APIs are easily scalable, with new integrations taking moments, not months. Scaling integrations using embedded iPaaS is more technically challenging and expensive.   

Integration maintenance: iPaaS vs. API

Unified API providers handle all updates and maintenance related to the integrations, giving in-house teams more time to focus on strategic tasks. Thanks to a unified API's abstraction layer, users are also shielded from any changes to the underlying systems. 

Embedded iPaaS solutions may need ongoing maintenance and regular updates from your team to maintain a stable integration. This provides organizations with a greater level of control, but also comes with higher operational overhead. However, some embedded iPaaS providers offer maintenance and management as a service to remove the burden of this task as much as possible. 

One other thing to note is that during product development and maintenance, errors often occur because of small discrepancies in the code—say, for example, a member of your development team enters a value into the “start_date” parameter that is before the “end_date” value. Alone, handling these errors is menial, but over time, these errors can compound and wreak havoc on your integrations, and finding the source of the problems can be challenging. Unified APIs can often aggregate these errors and flag them for your developers so they can be corrected quickly and accurately.

‍Bottom line: Maintaining existing integrations within a unified API is effortless because your API provider handles everything. If you do choose an embedded iPaaS solution, it’s important to know that it will require far more maintenance and technical know-how unless your provider offers this as part of its service.

Data security: iPaaS vs. API

The security of a unified API is handled by the API provider and usually includes features like encryption, adherence to compliance standards, and access controls. The level of data security across unified APIs varies, so it’s important to carefully review the provider’s security protocols to ensure they’re compliant with standards like GDPR, HIPAA, and SOC 2, especially in industries that work with highly sensitive information, like employment. 

Vertical unified APIs are highly specialized, which also affords applications the ability to apply product scopes for domain-specific data. In other words, the organization that governs the data has greater control over the information they share with your application. Take Finch as an example: our Unified Employment API requires the employer (the application’s end-user) to explicitly authorize access to Social Security numbers. That way, the employer feels secure connecting their source of truth to your application via Finch, and your organization doesn’t have to assume liability for the sensitive data that isn’t applicable to your use case. 

Due to their enterprise-level use, embedded iPaaS solutions generally offer robust security features including data encryption, detailed access controls, and adherence to common compliance standards.

Bottom line: Both unified APIs and embedded iPaaS offer robust data security. Choosing the best option for your product will depend on the degree of sensitivity of the data you need to access, and how much control you want to offer to your end-user who is sharing their data with you.

Use cases: iPaaS vs. API

Unified APIs are best suited for organizations looking for quick access to common data sets across multiple platforms—and vertical unified APIs are ideal for use cases that require a deep level of data granularity, like individual pay statement data from payroll systems. Since minimal integration overhead is required for unified APIs, time-to-market is much faster. 

Embedded iPaaS, on the other hand, is suitable for large organizations needing complex, highly customizable integrations across multiple verticals—for example, financial services and telecommunications.

Unified API vs. iPaaS: Which should I use?

Choosing the right integration approach is a strategic, long-term decision. One is not necessarily better than the other. Instead, each offers distinct advantages that suit different situations. It’s crucial to assess your needs, considering factors like:

• Workflow complexity: How complex are the integrations you need to support? Do the systems you need to access typically have open APIs, or do they require partnership agreements?
• Level of customization required: How much control and customization do you need over integrations? Do you need to map unique or uncommon data fields between a few systems, or access common data sets across a wide array of platforms?
• Team capacity: Do you have the technical resources and expertise to build and maintain integrations in-house? Is this the best use of your developers’ time, or would you prefer they focus on improving your core product?
• Number of integrations required: How many different applications need to be integrated?
• Data-sync and standardization needs: How important is it for your integration solution to provide consistent data formats and centralized management?
• Cost-benefit analysis: Is the cost of the integration solution justified by its benefits? (Finch’s ROI calculator can help you understand the impact of a unified API.)
• Future scalability needs: What is the expected scalability and future growth of your product? How important is the speed of implementation and time-to-market?

Choosing the best integration strategy for your organization

Unified APIs provide a straightforward, standardized solution that can be quickly deployed with minimal upkeep, making them ideal for organizations with limited technical resources that require access to multiple systems within a specific category. Conversely, embedded iPaaS solutions offer extensive customization suitable for large organizations needing intricate, highly customized integrations.

What suits one organization won’t suit another because every embedded iPaaS and unified API provider will offer slightly different applications and advantages based on the use case they’re designed to serve. By understanding your specific needs and the advantages and disadvantages of each integration option, you can choose the integration path that best matches your requirements. 

Unlock payroll integrations with Finch

As a vertical unified API in the employment space, Finch provides deep data access to the largest network of HRIS and payroll systems—4x more than any other unified API. By working with Finch, developers in HR tech, benefits, and fintech can unlock data access from 200+ providers with a single integration. 

To see how Finch can benefit your organization, schedule a call with our team or try it yourself for free.

SFTP, or Secure File Transfer Protocol, is one of the most common ways organizations send and receive data in bulk; but SFTP doesn’t always scale easily. 

Both building new SFTP integrations and preparing the data once it’s received are time- and resource-intensive tasks. For companies that regularly receive data from customers, like 401(k) recordkeepers and benefits administrators, this translates to complex, lengthy customer onboarding and the need to constantly grow internal teams to keep up with manual processes.

To grow effectively, these companies need a faster, more scalable way to onboard new clients and more internal automation to keep the team lean and efficient.

What’s at stake when SFTP integrations don’t scale

Traditional SFTP integrations aren’t scalable because they’re difficult to implement and come with a host of manual processes. Relying on this method can limit your company’s ability to grow and hinder your profitability. 

• Limitations on business growth — Growing means bringing on new customers; but when the onboarding process takes months, you can quickly develop a backlog. Difficult onboarding processes take significant resources from your team, make for a poor first impression with the customer, and elongate your time to revenue. 
• Additional strain on internal teams — SFTP connections require significant manual work even after implementation as your Operations team works to normalize and process incoming data. As your customer base grows, so too will this workload, often forcing companies to increase headcount just to keep up.
• Harder to attract new customers — Today’s employers expect their applications to integrate seamlessly with one another. Many companies have invested heavily in API integrations as a competitive differentiator. A weeks- or months-long onboarding process can be a significant turnoff for modern buyers when other companies provide a simpler alternative. 

In short, without a scalable SFTP strategy, you risk falling behind in growth, competition, and customer satisfaction.

Challenges of scaling SFTP integrations

SFTP has been the industry standard for accessing payroll data for years, but it’s difficult to scale because each connection is unique to one client—the work is not amortized over time. And because the format of the data you receive varies from payroll system to payroll system, it’s difficult to build automation on top of the files you receive. Instead, someone has to manually normalize and process the data. For many companies, that means hiring to keep up with the work, which also doesn’t scale.

The most common challenges companies face when trying to scale SFTP integrations include:

• Lengthy onboarding processes — Onboarding a new customer with an SFTP connection is a time- and resource-intensive process that can take up to 18 weeks of back-and-forth between you, the customer, and their provider. This creates a frustrating experience for the customer, takes significant effort from your internal team, and delays time to revenue. ‍
• No data standardization — The data you receive from customers via SFTP comes in a multitude of formats. Each payroll and HRIS provider has a different set of data points and field names, which means it’s up to you to normalize that data into a usable format—a time-consuming process that is largely unavoidable. ‍
• Manual processes and a lack of automation — When you receive data via flat files over an SFTP server, manual operations are always involved—whether it’s your company’s standard practice or a backup to automated workflows. While plenty of recurring tasks could be automated with technology, building automation on top of SFTP connections is risky: non-matching data formats and changes to the data source’s underlying system, which are out of your control, can break any automated workflows you’ve built, leaving your team scrambling to identify and correct the error. Such a reliance on manual work can also make it difficult to maintain SLAs, especially in heavily regulated industries. ‍
• Growing strain on internal teams — Because of the degree of manual processing involved, companies that receive data via standard SFTP connections often have to hire new employees as they bring on new clients, just to keep up with the day-to-day workload. This isn’t a scalable solution, especially when you consider the cost of hiring and training new employees. 

Unified APIs: The secret to scalable SFTP

SFTP is still a secure, reliable way of delivering data in bulk. The challenges lie in creating the initial connection and processing the data once you receive it. Unified APIs are tools that can take SFTP to the next level—they can reduce onboarding time to minutes and standardize data from multiple sources, making it easier to automate routine processes.

Unified APIs can be implemented via a direct API integration to the provider; but they can also be used to power SFTP connections for companies that don’t have the development resources to build an integration or that prefer receiving data through files instead of directly ingesting the data into their core system. 

It works like this: the unified API provider has 1:1 API integrations with each HRIS and payroll system your customers might use. The data is pulled from each system, standardized into a uniform format, then delivered to your SFTP server as a file. Each file contains identical formatting, so your team doesn’t need to normalize the data, and you can run automations that will take much of the manual work off your team’s plate so you can work more efficiently. 

Benefits of using unified APIs to scale SFTP 

Below are a few of the benefits of using unified APIs to scale your SFTP connections. 

Onboard new customers in minutes

In a typical SFTP setup, you need to work with the customer and their data provider to configure a custom file for routine transfers. Each provider has different setup requirements, implementation timelines, and costs, meaning each employer must go through the implementation individually—a process that can take as long as 18 weeks.

To make SFTP integrations truly scalable, you need a way to apply a single setup process to multiple employers, so the same work doesn’t need to be replicated with each new customer. In this scenario, there’s a single connection between your company and the data source that can be used for every client that uses that provider. 

Unified API providers enable this through their direct integrations with the providers. Rather than creating custom file formats for every new customer, you can use pre-built connections with their HRIS or payroll provider to access the specific data you need, all without assuming the liability that comes with accessing the system yourself. No more months-long back-and-forth with the customer and provider—onboarding takes just a few minutes, regardless of the employer’s system.

You can not only save operational and technical resources for higher-priority work but also create a winning customer experience right from the get-go.

Receive standard data formats, regardless of the provider

Each HRIS and payroll system has its own data format. Processing the files you receive via SFTP requires someone on your team to manually translate that data into the format your company uses—a cumbersome process that introduces the opportunity for human error and that must be repeated with each new batch of data. 

Scaling processes requires eliminating tedious busywork like this. Unified APIs standardize data across providers automatically, meaning each file you receive through the SFTP server matches an identical format. This way, you can cut down on hundreds of hours of manual labor.

Automate previously manual processes

The key to scaling operations is automating as much as possible, so your employees can focus on complex or strategic tasks, rather than simple, rote labor. 

It’s possible to build automated processes on top of traditional SFTP workflows, but there are risks involved since the connection is fairly rigid. Non-standardized data can create Not In Good Order (NIGO) errors, and if the HRIS or payroll provider makes a change to their underlying system, it could completely break the automated workflow as new data arrives under a different field name. As a result, this “automation” still requires a ton of manual effort, both to ensure everything has been read correctly and to troubleshoot errors as they arise. 

SFTP connections powered by unified APIs eliminate much of this risk by delivering standardized data. They also act as an abstraction layer, so your organization is shielded from the ongoing maintenance of keeping up with unplanned or unexpected changes made by the HRIS or payroll systems. 

For instance, if you're a 401(k) administrator, having the right automation powered by accurate, consistent, and timely data will help you auto-enroll employees into specific plans and quickly determine plan contributions. The benefits of this automation will trickle down to other departments, from sales to product to customer success—resulting in improved products, faster processing, and fewer errors—boosting your organization's overall efficiency.

In highly regulated industries like retirement and employer-sponsored benefits, you’ll likely still need some checks and balances to ensure everything runs smoothly. The difference is that it’s more of a safeguard, as opposed to constantly monitoring automated systems for failure.

Scale the business without having to grow headcount

Without reliable automation, processing employer data is a manual task. That means that as your business grows and you bring on more customers, you’ll need to hire just to keep up with the corresponding workload. 

This solution isn’t cost-effective. It incurs both overt costs like salaries and benefits as well as hidden costs like time to onboard, employee attrition, and so on. 

Automating your routine processes provides a twofold benefit: it allows you to work more efficiently, and in turn, that allows you to keep your Operations team lean and focused on the tasked that can’t be left to technology. Inaccuracies in payroll data—whether from the employee or employer—are inevitable, but automating routine work allows your team to focus on identifying and remedying those outliers to provide the best possible sponsor experience.

Scale SFTP integrations with Finch Flatfile

Scaling SFTP integrations can be much easier with modern solutions like Finch Flatfile. Flatfile, now in beta, delivers all the benefits of a unified API, including automated delivery and standardized data formatting, without any upfront engineering investment or ongoing maintenance. 

Flatfile offers several benefits over traditional SFTP integrations:

• Onboard customers in minutes — With Flatfile, you can skip the complexities of traditional SFTP setups. Simply send the employer a link to authorize access to their HRIS or payroll provider and start receiving data—no need to build custom files.‍
• Standardized data — Unlike a direct SFTP integration with a provider, Finch delivers data to your server from each HRIS and payroll in a standardized format. This reduces manual work for your operations team and eliminates the need to manage unique data schemas and naming conventions. ‍
• Easy automation — As the data provided by Finch Flatfile is standardized and vetted for formatting errors and consistency, it’s easier to build and sustain automation with. 

Get started with Finch Flatfile today

If you’re looking to scale your SFTP connections, contact our sales team to learn more about our supported providers. You can also learn more about Finch Flatfile here.

Exhale is a financial wellness platform that delivers a comprehensive suite of employer-sponsored benefits ranging from earned wage access to interest-free advances and smart savings tools with rewards.

With a focus on hourly workers in industries like services, transportation, and retail, Exhale needed a way to pull current and historical pay statements to get a holistic view of each employee and their variable earnings. Before launching the product, they sought out a unified API provider that could give them direct integrations to multiple payroll systems.

Today, Finch’s payroll integrations save the Exhale team 40 hours per week and allow employees to access their benefits two weeks faster.

Financial wellness benefits for every employee

Exhale was created to help employers who were struggling to navigate the administrative and regulatory complexities of giving their employees cash advances. A well-intentioned advance to help an employee pay for a flat tire or medical bill can put undue risk on the employer if not administered appropriately. At the same time, many financially stressed employees are hesitant to ask for help directly, which can make them more likely to turn to payday lenders or rack up credit card debt. 

The platform makes it easier for employers to support their workforce with financial wellness benefits that keep employees financially healthy while helping them build a safety net. 

“We found that people need different things at different times. The goal of the product is to help alleviate cash flow problems for people,” said Giaco Corsiglia, Exhale’s Lead Engineer. 

Exhale’s “Perks” include Earned Wage Access (EWA), interest-free cash advances that can be paid back from an employee’s paycheck, and saving tools that reward employees for contributing  for a certain period of time or hitting designated benchmarks.

On the employer side, Exhale helps reduce turnover, fosters employee loyalty, and boosts productivity by mitigating financial stress among employees. 

“It's a super cost-effective way to drive retention and employee loyalty in a way that is actually doing right by your employees,” Corsiglia said. 

Getting established with time-saving automation

To deliver on their product vision, the Exhale team knew they’d need visibility into each employee’s expected take-home pay and the ability to route funds from payroll—whether that be to the employee’s bank account, an Exhale Save account, or back to themselves in the form of repayment for cash advances. All this would require integrations to potentially hundreds of different payroll systems—or significant manual work from employers.

Exhale chose to work with Finch for its industry-leading coverage of payroll systems and data granularity. As Corsiglia put it, the team was confident that their product roadmap wouldn’t be hindered by limitations of Finch’s API. 

“Payroll is just so fragmented, and we didn’t want to limit our client pool by picking one payroll software to integrate with,” Corsiglia explained. “Without Finch, we would have had to build API integrations with 100 different payroll systems in-house or we would have had to say no to a bunch of our early clients.”

"Without Finch, we would have had to build API integrations with 100 different payroll systems in-house or we would have had to say no to a bunch of our early clients."

Exhale still supports manual operations for some employers, but the resource-intensive process takes an hour each week per each employer. By leveraging automation through their payroll integrations, Exhale estimates they’ve saved about 40 hours per week for their Operations team.

“Our manual version works, and we make it as painless for our customers as possible, but it's always preferable to just say, ‘Oh, you sign in to payroll, and then you just never worry about it again.’”

‘Set it and forget it’

Employers, especially those in fast-paced service industries, have enough on their plate; so it’s important to Exhale that their product is as easy to use as possible. 

With integrations to each employer’s payroll system, Exhale is able to  pull organization and payroll data automatically to enroll employees as they’re hired, unenroll employees after a termination, and receive new and historical pay data without manual file uploads. Once the initial connection is made, employers don’t have to think about administering the benefits; an automatic invitation system allows employees to sign up for Exhale’s Perks whenever they want.

“With our integrations, we can offer these benefits automatically, and setting up Exhale is sort of set-it-and-forget-it,” Corsiglia said. “If employers had to be duplicating records manually between payroll and Exhale, not only would it be error-prone, it would just be time consuming. Our goal is to give employers less to worry about, not more.”

Plus, with access to historical pay data through Finch, Exhale can offer all of their Perks to employees on the same day the payroll connection is verified—up to 2 weeks faster than if Exhale had to wait for data from the next pay cycle. 

Unlocking new value and insights with payroll data

Because most people using Exhale are hourly employees, take-home pay can fluctuate significantly with each pay period. To get a holistic view of each employee’s financial situation and determine what they can safely afford to borrow, Exhale needs access to historical data. 

Rather than relying on the employer to send pay data dating back months or delaying employees’ access to their financial benefits, Exhale is able to pull that information directly from the payroll system at any time. 

“Take Earned Wage Access for example. We have to know how much you've earned to give you a portion of your pay ahead of time. We also have to know what your earnings typically are, so we can give you an amount that you can safely pay back,” Corsiglia said. “By pulling that data out of payroll via Finch, we can get tons of historical pay data for our users. They sign up for Exhale, and it's like, ‘Oh, here you go. You can have $100 today because we know what your paycheck is going to be.’”

Nikki Collister, Product Content Lead at Exhale, added that historical payroll data allows the product to surface insights for employers that they might not be able to glean from their payroll system alone, like average income levels across different business locations or average tenure. 

“The payroll integrations we have through Finch have helped us to understand our impact on each of these clients and show how Exhale has delivered value over time,” she said. “It not only helps us provide better benefits, but it helps the employers better understand their business and their employees.”

“[Finch] not only helps us provide better benefits, but it helps the employers better understand their business and their employees.”

Unlocking innovation with payroll integrations

In the coming months and years, Exhale plans to expand their suite of financial wellness solutions with Finch’s payroll integrations. The latest product the company is working on addresses one of the biggest reasons employees request advances from Exhale today: rent payment. This solution—which will allow Exhale to facilitate on-time rent payments that employees then pay back in smaller increments from their paycheck—is another way of providing extra breathing room for those living paycheck-to-paycheck or looking to better manage their budget.  

“We’ll continue to grow our suite, and some of that growth will require deeper integrations with payroll,” Corsiglia said. “Our goal is to become the home for all of the financial benefits you might offer your employees.” 

We’re excited to announce that Finch has partnered with isolved, a leading provider of human capital management (HCM) technology. Through this partnership, developers using Finch will soon be able to access employer data from isolved and partners in the isolved Network.

‍

As the #1 Unified Employment API, Finch is committed to creating a more accessible, open, and standardized future of employment technology—one in which all the tools employers use to manage their workforce can share data easily and automatically. To make this possible, we’re constantly growing our network of HRIS and payroll partners to sync the mission-critical data within these systems with the trusted third-party applications their customers are using to run their businesses.

So today, we’re thrilled to announce our latest partnership with isolved, the most trusted human capital management (HCM) partner.

“Partnerships with providers like isolved are critical to our mission at Finch. By collaborating closely with leading technologies like isolved, we’re empowering developers to build new, innovative tools that will help employers to manage their workforce more effectively and efficiently.” — Runae Lee, Head of Partnerships at Finch

What the partnership means for developers

Available through the isolved Marketplace, developers using Finch will soon be able to access organization and payroll data from isolved and write changes back to isolved’s payroll through Deductions. This bidirectional, evergreen access to employer data can be used to power innovative use cases across HR tech, benefits, and fintech:

• 401(k) and retirement providers – Use census and payroll data from isolved to streamline sponsor onboarding, automate 401(k) enrollment, and manage deductions on the employer’s behalf.

• Employee benefits administrators – Easily pull employee data to streamline employer onboarding, benefits enrollment, and deductions management.

• B2B fintech applications – Collect data to power financial insights, compensation benchmarking, equity programs, and much more.

• Insurance carriers – Stay up to date on ever-changing employer data to reduce premium leakage and unlock pay-as-you-go pricing.

• HR technology software – Deliver automated experiences, workforce insights, and KPI tracking to help your customers work more efficiently.

• Tax and compliance applications – Automate employee provisioning requests, streamline security certification processes, and determine tax credit eligibility based on employer data, pulled straight from the source.

Help us build our roadmap

Because of the breadth of the isolved Network, Finch will be rolling out support for providers in batches. Have a provider you want to see supported? Tell us which are most important to you so we can get to work on them first!

Not using Finch yet? Talk to sales to learn more about our API, or take it for a test drive yourself—your first five connections are free.

A 2024 survey of nearly 1,000 working Americans found that less than half (47%) report feeling financially healthy. In the US, workplace benefits like medical insurance and tax-advantaged savings accounts have a direct impact on employees’ financial health and stability; but employers are struggling to afford the benefits their employees need and expect. 

This is especially true for small and mid-sized businesses (SMBs), many of which have struggled for years to afford even the most basic benefits. Only 56% of small employers offer health insurance, and 98% of those said they’re concerned that the cost of medical benefits will become unsustainable in the next 5-10 years.

Employers of all sizes are looking for more accessible, affordable benefits that can scale with their workforce without exponentially increasing costs. Fortunately, a convergence of factors, from government legislation to evolving technology, has paved the way for a new wave of modern benefits providers. These tech-forward companies are quickly gaining traction, and stand to revolutionize the benefits industry as we know it.

Unlocking Scale: The Revolution in Employer-Sponsored Benefits

What are workplace benefits?

Before we dive into the new benefits on the rise, it’s important to understand what we mean by workplace benefits, or employer-sponsored benefits. To put it simply, these are perks or financial incentives that are available to employees through their employer. While most of these are available to individuals, they’re typically far cheaper when accessed through an employer (or sponsor).

Common workplace benefits, or employer-sponsored benefits, include:

• Health insurance
• Health Savings Accounts (HSAs) or Flexible Spending Accounts (FSAs)
• Retirement plans, like a 401(k), 403(b), or pension 
• Financial Wellness tools or access to a financial advisor
• Physical and mental wellness programs or tools, like a gym membership or access to a mental health counselor 
• Equity 
• Student loan assistance or tuition reimbursement
• Commuter benefits

Most of these programs are nothing new, although fringe benefits like student loan assistance, commuter benefits, and pet insurance have risen in popularity in recent years. But the latest wave of benefits providers have approached these traditional benefits in novel ways that have allowed them to offer their services to employers more affordably. 

The state of workplace benefits

Employees rely on workplace benefits, especially at a time when inflation, high interest rates, and skyrocketing healthcare costs have made it increasingly difficult for individuals to save: 56% of Americans say they cannot afford a $1,000 emergency expense.

But employers are also struggling to afford the benefits their employees expect. The average per-employee cost of health insurance alone rose 5.2% in 2023 to a whopping $15,797. That number is even higher for SMB employers—over $16,000. And that’s just one workplace benefit. Employees are also seeking access to tax-advantaged savings accounts, emergency assistance, and fringe benefits like help paying down debt and funding their commute.

As a result of these macro economic trends, accessibility and affordability have been the defining trends in the employer-sponsored benefits market over the past five years. The federal government has responded by introducing new legislation and incentives aimed at encouraging benefits enrollment. These changes have lowered the barrier to entry for a new breed of employer-sponsored benefits to emerge in what has otherwise been a closed and complex industry. 

Scaling workplace benefits: the tech advantage

New legislation may have opened the door for a new breed of benefits providers to enter the market, but technology is the linchpin that has allowed them to compete with established incumbents on price and the accessibility of benefits administration. 

Despite the intense competition in the workplace benefits industry, these companies have thrived by optimizing their products for ease-of-use, affordability, and scale—a combination perfectly tailored to small employers, some 95% of which have been underserved by benefits providers. 

Their secret to success? HRIS and payroll integrations. 

By accessing employers’ data directly via APIs, modern benefits providers are powering time- and cost-saving automation that renders their products more efficient and more profitable. They also take on a greater portion of the administrative burden associated with benefits management, making them even more attractive to businesses big and small. 

Unlocking Scale: The Revolution in Employee-Sponsored Benefits

In our latest white paper, we explore the new-age benefits providers that are leveraging technology to deliver high-quality, high-impact benefits experiences for employers of all sizes—from 10-person startups to enterprises with tens of thousands of employees. 

Download your free copy now to learn more, including:

• The economic trends that are driving a fundamental shift in workplace benefits
• The new employer-sponsored benefits that are on the rise 
• How modern providers are leveraging new technology to optimize their products for under-served markets
• Success stories from real providers—and the actual impact integrations have had on their business

The Finch team just got back from SHRM24 in Chicago, where we joined more than 26,000 HR professionals in exploring the current human resources landscape.

We met with dozens of attendees to discuss all things HR tech, including accessing employer data from HRIS and payroll systems for use cases like employee benefits, engagement and learning, accounting and financial forecasting, and more. 

Below are our top takeaways—including the biggest insights from our survey of nearly 200 HR professionals.  

1. Industry-leading providers made a splash

This year’s conference drew lots of attention from industry-leading HRIS and payroll providers like Rippling, ADP, UKG, Paychex, Paycom, Paycor, Insperity, and Bamboo. They came prepared to both educate and entertain: Paycom brought “unnecessary action hero” Shemar Moore, while Insperity hosted a speakeasy-style bar and UKG printed edible photos on cookies.

The competition is still fierce among payroll providers—the latest data shows there are 5,700 payroll companies in the US alone, and the market share of the top 10 combined is only about 55%. 

Many of the attendees at SHRM24 were in the market for a new HRIS or payroll solution. Top-tier, human-centric customer service was a big selling point for most of them, as was tech that could cater to small businesses. 

2. System connectivity—or a lack of it—is top of mind

We spoke with dozens of attendees who were excited about increasing connectivity between the HR systems they use via integrations. Our own research has found that almost half (49%) of HR professionals use 7 or more employment systems of record—so keeping information up-to-date and accessible across those databases is paramount. 

We surveyed nearly 200 HR professionals at SHRM24. The respondents were fairly evenly distributed across company sizes, though the biggest group (40%) worked for enterprise companies with 500 or more employees. The professionals ranged from individual contributors to managers and executives.

In the survey, we asked respondents about the tools they use that don’t integrate with their HRIS or payroll system—and what challenges they face because those systems don’t communicate. The biggest problems they reported were a high degree of manual work, lost time, and keeping data updated across systems.

• Too much manual work — 34%
• Takes too much time — 30%
• Difficult to keep data updated across systems — 20%
• Administrative costs are too high — 18%
• Lack of reporting capabilities — 17%
• Security risks — 14%

Finch is on a mission to alleviate these pains by creating the Open Employment Ecosystem—an open, standardized, interconnected future of employment technology. You can learn more about it—and see our market map of companies at the intersection of payroll, HR tech, benefits, and fintech—here.

3. AI continues to be a hot topic

We already knew artificial intelligence was hot from the conversations we had with HR professionals at Transform 2024—but SHRM doubled down on it. Twelve of the sessions at the conference were focused on AI and how it can help HR teams be more effective and productive. 

Much of the conversation at SHRM24 was around how AI can answer internal questions and act as a second set of hands for busy HR professionals. While AI has been around for years, companies’ investment in it has accelerated recently—and will likely be at the heart of the next wave of disruptive technologies. 

Unlock hundreds of integrations with Finch

Finch's Unified Employment API allows applications across HR tech, benefits, and fintech to integrate with hundreds of HRIS and payroll providers, enabling streamlined employer onboarding, time-saving automation, and evergreen access to the employee data you need. Learn more by scheduling a call with our Sales team, or try it yourself for free.

Almost half (49%) of HR professionals use seven or more different software products every day to manage their workforce. These systems are rarely able to communicate with each other, which means the data often differs slightly in each database—unless the HR team manually updates each system daily—making it difficult for employers to get a comprehensive overview of their workforce. Fortunately, there’s a better way: payroll integrations. 

From streamlining pay to keeping retirement benefits up-to-date and efficiently managing benefits enrollment and deductions, payroll integrations enable the faster, more accurate workflows that HR professionals want. 

In this guide, we’ll look at payroll integrations in detail—including common use cases, benefits, and challenges—as well as how they’re commonly built and maintained. 

What are payroll integrations?

Payroll integrations are a means of connecting payroll systems to the other HR, benefits, and fintech solutions HR teams use to manage their workforce. Built on APIs, payroll integrations automate the exchange of data between the employer’s primary source of truth (the payroll system) and other applications, so the information held in each system is always accurate and up to date.  

As payroll processing becomes more complex, API payroll integrations offer a range of benefits, including easier access to accurate data, automation, and more intuitive workflows.

Common use cases for payroll API integrations

From managing 401(k) plans to streamlining tax compliance, payroll API integrations optimize various HR and administrative functions, enhancing efficiency and accuracy. Typical use cases for these integrations include:

401(k) and retirement

By integrating with payroll systems, 401(k) recordkeepers and third-party administrators (TPAs) can streamline sponsor onboarding, automate retirement plan enrollment, easily manage deductions, and access all the information required for yearly record-keeping audits. 

Real-world success: How Human Interest Streamlines 401(k) Operations and Onboarding with Finch

HR tech

HR tech platforms are supposed to integrate with a company’s existing systems—but with so many payroll providers, that’s not always feasible. With an API-based payroll integration, there’s no need to update employee data across systems—it’s synced automatically.

Employee benefits

Benefits platforms rely on frequent, manual updates, often leading to errors and delays. Using a payroll integration helps employers onboard new hires, enroll them in any benefits programs, and automatically manage deductions.

Real-world success: How Lane Health Helps More Employees Afford Medical Expenses 

B2B fintech

By connecting payroll and HRIS data, API integrations allow employers to quickly and easily access insights around pay data, operational expenditure, compensation benchmarking, and more.

Real-world success: How Rillet Stood Up 40 Payroll Integrations in Just 5 Days 

Insurance

Insurance carriers need accurate and up-to-date company and employee data when providing quotes, underwriting policies, and managing claims. Integrations allow carriers to access the data held in employer systems of record. 

Tax and compliance

Up-to-date information is also crucial for tax and compliance platforms, but collecting this data is labor-intensive and manually sharing that data can often produce errors. Payroll integrations allow instant access to critical employee data in near real time. 

Benefits of payroll integrations

Payroll integrations bring numerous benefits, from saving time and eliminating data silos to enhancing the employee experience. Here's a closer look at how they benefit various stakeholders, including app developers, employers, and payroll providers:

Benefits for application developers

• Improves access to high-quality data: Your potential customers have had enough of dealing with out-of-date, inaccurate data. But they also want to know that their data is in safe hands. Payroll integrations can reduce compliance risks by only collecting strictly necessary data directly synced from employer systems of record—not via email or other unsecured channels. By pulling the data automatically, your application can build automated workflows to expedite payroll processing, increasing the likelihood of meeting Service Level Agreements (SLAs). 
• Simplifies workflows: Streamlined onboarding and an intuitive user experience help your customers achieve a faster time to value. Since they no longer need to manually enter data or switch between multiple applications, they can operate more efficiently and realize a return on their investment much faster. 
• Increases total addressable market (TAM): HR teams don’t want more solutions that can’t integrate with their existing tech stack—they’ve got enough of those. Integrations are now table stakes for them. For employment tech SaaS tools, ensuring your solution integrates with as many payroll systems as possible significantly increases your potential customer base—and ultimately, your revenue.

Benefits for employers

• Reduces administrative burden: Payroll integrations streamline HR tasks, saving valuable time. With 84% of HR professionals emphasizing the importance of tech stack integration, it's clear they spend too much time—up to 10 hours a week—working in disparate employment systems. Integrations free them from mundane data entry, allowing them to focus on HR tasks that require a human touch.
• Improves employee experience: Payroll integrations make it easier to create a comprehensive experience for the employee across all the systems they use to log hours, review pay statements, and manage their benefits, like health insurance and retirement plans. When all of this data is synced across platforms, employees can make changes—like updating their 401(k) contribution, for example—and rest assured that it will be accurately reflected in their next paycheck. 
• Removes data silos: Instead of toggling between multiple applications, integrating payroll systems with other HR applications creates a centralized system for managing employee data. This kind of integrated experience isn’t just more user-friendly—it’s more accurate and efficient, too.

Benefits for payroll providers

• Efficient, reliable connections: Payroll providers are the gatekeepers of mission-critical employee data. Integrations allow these systems of record to freely exchange data with the other applications their customers use. That creates a better experience for the employer and further cements the provider’s role as the primary source of truth for their customers.

3 ways to build payroll integrations

Payroll integrations can be split into three main build options—building a direct (custom) integration using the payroll provider’s API, using a unified API, or using an iPaaS solution. Here’s a closer look at the pros and cons of each method—and when they are most appropriate to use:

Custom API integrations

Custom API payroll integrations are usually created in-house, connecting the application to a single payroll provider. These are best suited for organizations that require a high level of customization and that have significant development resources.

Unified payroll APIs

Building payroll integrations with a unified API like Finch means organizations only need one integration to seamlessly connect with any one of hundreds of payroll providers. A unified API is an excellent choice for organizations with limited customization needs that don’t have the time or resources to build custom integrations in-house. Choosing a unified payroll API also allows for rapid scalability and data standardization across multiple providers.

iPaaS solutions

Integration Platform as a Service (iPaaS) solutions help internal development teams create custom 1:1 payroll integrations. iPaaS solutions are best suited to organizations with limited in-house technical capabilities that don’t need to move quickly. That’s because they are fairly low-code solutions as compared to other approaches and provide the basic rails for building an integration but still require a decent amount of internal development work to customize the integration to the particular application using it. iPaaS solutions can be difficult to scale because they’re often tailored to specific, well-defined use cases.

Challenges of building and maintaining payroll integrations

Building and maintaining payroll integrations can pose significant challenges, from varying data quality standards to ongoing maintenance demands. Common challenges include:

Data quality and standardization

The format and quality of data often vary significantly between payroll providers, so applications building a custom 1:1 payroll integration need to ensure the data is standardized to match their internal field names and formatting. Otherwise, the Operations team would need to manually map each data field, costing precious time and making it more difficult to build automated workflows. Establishing data standards can help standardize the quality, accuracy, and consistency of data from a wide range of sources. 

Gated APIs and partnership requirements

Payroll platforms don’t often have public APIs, which means partnerships with providers are required to access API keys, documentation, and other essential information. Getting these agreements approved can take a significant amount of time, on top of the additional burden of security checks and fees. This can be challenging to overcome for start-ups looking to integrate their products with the broader market.

Cost of building and maintaining 1:1 integrations 

The cost of building just one custom integration can quickly run into six figures—our research shows that just one in-house integration typically costs upwards of $187,000. In the highly fragmented payroll market, where the top three providers only account for about 45% of employers, applications need to build dozens or even hundreds of in-house integrations to support all of their customers, which is rarely cost-effective. 

Source: Finch’s Guide to the U.S. Payroll Landscape

‍

Ongoing integration maintenance requirements

Building 1:1 integrations is one thing—maintaining them is another. Even after they're built, these integrations need ongoing maintenance—including updates as and when required—which can be costly and resource-intensive. 

Lack of scalability 

Scaling in-house payroll integrations is expensive and requires significant time from software development teams. From accessing the API and developer documentation for each payroll provider to creating custom code and untangling data intricacies, it’s a massive amount of work. Multiply that by the number of integrations required—and it’s an untenable option. 

Get started with payroll API integrations

For businesses looking to simplify payroll integrations, Finch’s Unified Employment API streamlines connectivity across hundreds of payroll providers. Only Finch offers secure, standardized, and comprehensive two-way integrations with the largest network of payroll and HRIS systems. 

Our experience makes Finch the best choice for developers working in employment tech, too: we’ve got the integration know-how, data depth, granularity (down to individual employee pay statements), and SME knowledge you need to succeed. Finch also uses assisted integrations to significantly expand data coverage—particularly important for niche or “long-tail” providers with only a small market share—and Finch Flatfile for organizations that want the benefits of a unified API without the need to build an integration to Finch.

If you’re ready to tap into the power of payroll integration, we’re here to help. Try Finch for free or schedule a consultation with our team.

Introduced in 2020, the Individual Coverage Health Reimbursement Arrangement, or ICHRA, has gained popularity as an affordable employer-sponsored health benefit. ICHRAs deliver employees access to more personalized health insurance plans and can make it easier for employers to manage their costs. 

The nature of ICHRA administration requires providers to manage dynamic payroll contributions and deductions that can change from month to month and employee to employee. As a result, ICHRA providers are increasingly relying on payroll integrations to access their customers’ payroll systems and manage reimbursements and deductions on their behalf. Bidirectional payroll integrations give providers two-way access to employers’ payroll systems, meaning they can work faster—and with fewer resources.

What is an ICHRA?

An Individual Coverage Health Reimbursement Arrangement (ICHRA) is an employer-sponsored health benefit that reimburses employees for individual health insurance premiums and medical expenses. Employers set aside a monthly allowance for each employee, which they can use to cover the cost of their plan, eligible medical expenses, or both.

Unlike traditional group plans, ICHRAs offer flexibility, allowing employees to select any health plan that suits their needs and get reimbursed up to a limit defined by their employer. This provides tailored coverage options while effectively controlling costs.

Under an ICHRA, employees are reimbursed for qualified healthcare expenses through their paycheck up to the employer limit. In some cases, the employee may be able to pay for costs that exceed their reimbursement limit through payroll deductions. That means ICHRA providers need to be able to reimburse employees for their expenses and make deductions from their paychecks. 

Key components of ICHRA administration

Administering an Individual Coverage Health Reimbursement Arrangement (ICHRA) involves three key steps. 

Step 1: Set up reimbursement plans

To implement an ICHRA, the employer has to set reimbursement limits for each class of employee. The classes are defined by employment status (full-time, part-time, or temporary), geographic location, whether the employee is salaried or hourly, and whether the employee is part of a collective bargaining agreement. 

Step 2: Manage employee eligibility and enrollment

Once the reimbursement limit has been set, employees need to be enrolled in the plan based on eligibility criteria. ICHRA providers need to be able to pull employee data like hire date, employment status (full-time or part-time), and salary and wage information to determine eligibility and the right class for each employee. They’ll also need to track employees’ proof of coverage once submitted to ensure the plan meets regulatory requirements.

Step 3: Manage reimbursements and deductions

When an employee submits a reimbursement request, the provider needs to be able to track and approve requests and reimburse the employee for the correct amount through their paycheck. If the employee exceeds their reimbursement limit, they may be able to pay the balance through their paycheck as well—so providers also need to be able to manage payroll deductions within each pay cycle.

How payroll integrations power ICHRA administration

As the provider, the first step to successful ICHRA administration is ensuring you have accurate and timely access to an employer’s payroll data. Because health expenses can fluctuate month to month and employee to employee, the reimbursements and payroll deductions that ICHRAs require are complex and always changing. 

Without the ability to pull data directly from the payroll system and write changes back to that system, the responsibility of updating employees’ paychecks would fall on the employer. That’s a ton of work for any HR department, but especially taxing for small employers without the resources of enterprise businesses. Creating a best-in-class customer experience means reducing the administrative workload on your customers by managing this work on their behalf. 

But with multiple employers, all of which could have tens, hundreds, or thousands of employees, this is no small feat. Automating this work can help—and that’s where payroll integrations come in.

360° payroll integrations allow ICHRA providers to fetch data directly from the employers’ payroll systems and update reimbursements and deductions automatically—making it the most efficient and secure way to access mission-critical payroll data for ICHRA administrators. 

Let’s take a closer look at how payroll integrations can power ICHRA administration. 

1) Comprehensive, reliable data access

Payroll integrations create a seamless connection between the payroll system and your own software, syncing information between the two on a daily basis or on-demand. When an employee is hired, terminated, or sees a salary adjustment, that information is automatically shared with you—along with all the details you need to determine eligibility. And when the data is standardized—as it is through unified API providers like Finch—you can receive data from any payroll provider in the same format. (In other words, data is mapped across different providers’ various field names to a single, consistent field name.)

Removing manual processes from the workflow—like asking employers to manually send files with payroll information—can increase the overall accuracy of the data and create a better experience for your customers. HR admins spend an average nine hours per week manually updating benefits-related data between systems. 

2) Automated payroll contributions 

After each statement period, you likely deliver a report with the total reimbursements due to each employee. The employer will then take that information and either upload it to their payroll systems themselves or work with their payroll provider to distribute the reimbursements to each employee. 

Now imagine how much better the employer experience would be if that were done automatically. Bidirectional payroll integrations enable just that: you can write the employer’s contributions to each individual employee’s paycheck, through the payroll system, without ever having to involve the employer.

Each employee’s total reimbursement can vary each period, so using automated workflows to calculate what they’re owed and write the amount back to the payroll system guarantees the employer makes accurate contributions each period. This ensures that each employee is reimbursed in full for all of their qualified medical expenses in a given period, and unused funds are retained by the employer.

3) Automated payroll deductions

Under some plans, employees whose premiums exceed their reimbursement limit can use pre-tax deductions from their paycheck to pay the balance. In that case, you as the provider need to be able to make payroll deductions equal to the amount the employee owes each month.

Like with employer contributions, deductions can be automatically managed through 360° payroll integrations. Based on their class and reimbursement limit, you can calculate how much needs to be deducted from an employee’s paycheck before taxes to cover their health plan expenses, then send that information to the payroll system on the employer’s behalf. 

4) Improved efficiency

Directly connecting to an employer’s source of truth through a payroll integration eliminates bottlenecks in ICHRA administration. For example: you can pull all the data pertaining to employee eligibility to quickly identify eligible employees and their reimbursement class during enrollment. Plus, when employee data is refreshed daily or on-demand, you don’t need to wait for employers to send their payroll data through manual channels or SFTP to begin processing contributions or deductions.

5) Improved compliance and better reporting

As in any regulated industry, maintaining compliance with state and federal ICHRA requirements is paramount. With on-demand access to standardized data from each employer, you can easily verify that each employee is eligible to participate and that the plan complies with requirements defined by the ACA, ERISA, and other government regulations. For example, payroll integrations make it easier for you as an ICHRA provider or for a third-party administrator to automatically verify that ICHRA plans do not favor highly compensated employees and adhere to IRS non-discrimination rules. 

Plus, evergreen access to employers’ organization and payroll data means you can more easily offer additional administrative benefits, like year-to-date summaries and insights from census data that could help employers to understand how they can best serve their workforce. For example, you might highlight that the employer has enough hourly employees to add an additional ICHRA class.

Unlock access to hundreds of HR and payroll systems with Finch

Payroll integrations have immense value in ICHRA administration, but building and maintaining multiple API integrations is costly, resource-intensive, and often not scalable. With Finch’s Unified Employment API, you only need to build one integration—to Finch—to access hundreds of payroll and HR systems at once.

Finch offers the widest and deepest available coverage of HR and payroll systems—4x more than any other unified API. Schedule a call with our sales team to learn more, or try it yourself for free.

We are thrilled to announce that we have partnered with Rippling, an innovator in workforce management software. Now, approved developers can use Finch to read organization data from Rippling and get featured in Rippling’s highly competitive App Shop. This partnership is a major step toward realizing our mission: to make it easier for employers to share data across the suite of HR, Benefits, and Finance products they use.

‍

Today’s employers use dozens of software products to manage their workforce; but few of these products are able to share data directly. Maintaining complete and accurate data across these disconnected systems is an enormous challenge that hinders productivity and efficiency, especially among small or quickly scaling teams.

Finch recognizes this as the biggest problem facing the employment industry. 

“Finch and Rippling have approached the challenge of connecting employment infrastructure in complementary ways,” said Jeremy Zhang, CEO and Co-Founder of Finch. “This partnership will allow us to unite our efforts toward realizing Finch’s mission: to create a connected future of work where employers can seamlessly and automatically share data across the products they use to manage employees and track business KPIs.”

Rippling at a glance

Rippling is pioneering a new category of workforce management through its Unified Workforce Platform: a compound suite of products that together create the source of truth for employers. Rippling’s product offerings include systems of record like HRIS and payroll, as well as verticalized tools to manage Benefits, IT, Finance, and more.

In addition to its in-house products, Rippling offers integrations with 500+ software applications through its App Shop. 

The Finch + Rippling partnership 

With our partnership, approved developers will be able to access organization data from Rippling through Finch. Those developers will also be able to list their application on Rippling’s App Shop. 

Finch will submit the application to be listed on the App Shop on our developers’ behalf, so integrating with Rippling is as simple as integrating with any other Finch-supported provider. 

Benefits of integrating with Rippling through Finch 

Through an API integration with Rippling, developers using Finch will be afforded evergreen access to organization data, updated daily or on-demand. This continuous, direct access to the most up-to-date employee data can power innovative use cases across workforce management, employee engagement, learning and development, and more.

• Workforce Management — Automate and streamline HR teams’ tasks to help your customers improve efficiency. Automatically trigger on- and offboarding processes based on employment status, and quickly review benefit eligibility to manage enrollment. 

• Employee Engagement — Empower your customers to personalize their employee recognition programs and save time by automating rewards for milestones like birthdays and work anniversaries, or for achievements like promotions. 

• Learning & Development — Help employers navigate the development of their workforce by syncing their employee roster, automating enrollment in training, and customizing training requirements based on job title or department.

Integrate with Rippling through Finch

Finch’s Unified Employment API allows developers to access employee data across hundreds of HRIS and payroll systems, including Rippling, through a single integration. Talk to our sales team to get started, or sign up for free.

If you’re a provider, increase compatibility with third-party applications by partnering with Finch. Contact us for partnership information.

Getting access to the employment data locked inside HRIS and payroll systems can be a huge challenge for apps across HR, benefits and fintech. For decades, the industry standard has been to use secure file transfer protocol (SFTP) integrations or manual file uploads to share data between systems. While API integrations —the gold standard for data access—have grown in popularity over the past few years, many organizations don’t have the technical resources to build or maintain these integrations themselves. 

At Finch, we recognize this challenge. That's why we’re excited to introduce our newest beta feature: Finch Flatfile. Flatfile helps organizations with limited technical resources leverage our infrastructure to retrieve data from HRIS and payroll systems – without engineering resources. Flatfile customers can retrieve standardized data from 30+ HRIS and payroll systems, without subjecting employers to a drawn-out SFTP onboarding process or manual administration work.

Get started with Finch Flatfile today -->

What is Finch Flatfile?

Flatfile enables you to get up and running with Finch faster to unlock streamlined employer onboarding, data standardization, and secure file delivery. Flatfile users don’t need to build an API integration to Finch, making the feature accessible to all companies, regardless of their development resources.

Flatfile users can simply log in to the Finch Dashboard to provide a destination for SFTP-based file transfers, generate Finch Connect links, and monitor the status of connections. Employers still connect their system through Finch Connect, and all data is standardized across providers. 

In short, Flatfile lets you enjoy all the benefits of Finch’s Unified Employment API without the heavy lift of building to our API.

How does Finch Flatfile work?

Finch uses its existing integrations with leading HRIS and payroll providers to pull data directly from their systems. This data is then standardized through the Finch API and delivered by file to any single SFTP server you provide. 

Here’s how it works:

1. Share a link: Simply log in to the Finch Dashboard to generate a Finch Connect link. You can then share this link with any employer to enable them to connect their HRIS or payroll system.
2. Connect Providers: Employers can then go through the Finch Connect process to authenticate as usual. Finch walks them through any nuances between providers.
3. Receive Files: Each pay run, you’ll receive a file that is standardized across every provider. The file is delivered by SFTP, and contains all the information you could get through our API.

For more details, check out our step-by-step guide on working with Finch Flatfile.

How is Flatfile different from a traditional SFTP integration?

While Flatfile uses SFTP, there are a few key differences when compared to a 1:1 SFTP integration with an HRIS or payroll provider. 

In a typical SFTP setup, the provider (HRIS/payroll) would work with an individual client (employer) and third-party application (your app) in order to configure a custom file to transfer routinely. Each provider has different setup requirements, implementation timelines, and costs associated with this process. Generally, each employer must go through the implementation individually, making it difficult to scale.

With Finch Flatfile, you can avoid the months-long SFTP setup process and get up and running in minutes. You begin receiving files over SFTP once an employer has permissioned your app to access their system.

Benefits of Finch Flatfile

Flatfile users enjoy a range of benefits over traditional SFTP integrations and manual file uploads.

• More integrations: By eliminating the Operational burden of managing multiple SFTP processes, we make it easier for you to support more of the integrations your customers need. Flatfile is currently compatible with 30+ providers.
• Easy authentication and onboarding: Traditional SFTP integrations involve a lengthy implementation process with a lot of back-and-forth between your support team, the provider, and your client. With Flatfile, employers simply go through Finch Connect to authenticate. No data mapping, implementation fees, or testing required. 
• Data standardization: Unlike a direct SFTP integration with a provider, Finch offers a single, standard file format for every HRIS and payroll system that matches our unified API. This simplifies any manual work for your Operations team, and eliminates the need to manage unique data schemas and naming conventions. 
• Secure file delivery: If you already use SFTP for integrations, there’s no need to set up something new. Simply provide your credentials to Finch, and we’ll upload fresh files upon first connection and after each pay run.

Get started with Finch Flatfile today

Once enabled, Finch customers can start using Flatfile in minutes. Learn more about our supported providers by contacting our Sales team. 

Jeremy Myers is an experienced leader across the IT spectrum, from engineering to consulting to project management, having last served as Vice President of Global Technology Services at Cornerstone On Demand.  He has over 13 years’ experience leading B2B software implementation and integration projects in the HR industry.

‍

As with everything: it starts in Sales. 

As employment technology evolves and matures, it becomes more and more evident that employers are looking for comprehensive solutions to add to their tech stacks. Bespoke point solutions that offer unique functionality are only valuable when they can seamlessly share data with the rest of the organization’s tools. 

As a result, integrations have profound significance in the modern sales cycle—for both the prospect and the Sales team trying to close the deal. To fully examine this significance, I spoke with several SaaS leaders—in both Sales and Service Delivery—to get their take on integrations’ role in the sales cycle. 

The consensus among the people I spoke with was that integrations are no doubt pivotal to closing new business. In their experience (and in my own), the existence of specific integrations, or at least demonstrating competence in building like integrations, often furthered deals along; but the absence of or ignorance toward those integrations often imperiled the deal.

At the same time, these industry veterans noted that building integrations—those pivotal deal-makers—presents a challenge. API integrations require a large investment of time and resources upfront, plus ongoing maintenance; but many integrations don’t offer widespread value because they’re used by only a handful of customers. In other words, sometimes the cost of building an integration outweighs the return on investment. 

To compete in today’s cloud-based tech market, Sales and Delivery Service teams need to approach integrations strategically and may consider leveraging emerging solutions like unified APIs to get a leg up on the competition.

Deals don’t progress without integrations

The rules of engagement for Sales and Solutions Consultants are seemingly straightforward. 

Rule #1: Close the deal.  

Rule #2: If a hurdle is encountered, by all means: See Rule #1.

Of course, any frontline Sales leader will understand that these rules come with nuance. The topic of integrations poses a tricky hurdle for account executives—by raising the issue, they risk opening a can of worms that could potentially derail the sale. But as many of the leaders I spoke with attested to (and as I’ve seen in my own experience), avoiding the integrations conversation can have an adverse effect on the prospect. 

When the salesperson can offer an integration that solves a pain point, or at least demonstrate a competency in building like integrations, it often furthers the deal. When they avoid the conversation for fear of encountering a hurdle, these account executives run the risk of appearing incapable or ignorant when it comes to integrations—which kills deals more often than you might think.

Most, if not all, prospects in the employment technology market will have some need for integrating their systems, so it’s up to the Sales leader to quickly identify whether a deal is worth pursuing—to open the worm can, so to speak. If a prospect is looking for an integration that isn’t readily available, the question is whether or not the deal is big enough or strategic enough to even entertain the discussion. 

As one professional services veteran I spoke with put it, it’s binary: “We will flat out walk away from a deal if our tech team identifies an integration that needs to be added. Sales need discipline and rigor. Sometimes it’s painful.”  

Another leader—this one, a solutions architect and sales leader—added a similar sentiment: he said he’d rather turn down a deal early, at the widest part of the funnel, than spend time internally and externally discussing the requirements of building a new integration just to bow out or be disqualified later on. 

But when an integration is available, it can be a boon for Sales teams, offering an opportunity to expedite a deal. If the discovery phase doesn’t uncover any critical need from the prospect that would disqualify them, the Sales team can begin to gauge their interest in the company’s existing catalog of integrations and partners.

Oftentimes, the buyers negotiating the sale aren’t IT specialists, so comprehensive data flow isn’t their core competency nor their top priority. They’re laser-focused on securing a functioning suite of software that solves their basic business replacement needs. The integration leaders I spoke with pointed out that this is an opening for the Sales team to present their existing integrations as a strength and a potential differentiator. If, during the course of the initial meetings, the Sales team identifies crucial third parties and can expertly address integration pain points by presenting competency and/or an existing catalog, it could set them apart in the selection process. 

Bottom line: Deals are won when the Sales team displays integrations competence. If you’ve got it, flaunt it. 

Roadmap prioritization: To build or not to build?

During my research, one of the experts I spoke with called integrations both the crucial backbone of data flow and an unsexy, oft-ignored framework. They’re something that most people only think about when they’re not working—the dreaded 404 error. 

But integrations are only on the rise—API integrations in particular, as the employment tech industry continues to move toward SaaS and the cloud. There is a direct correlation between the size of the prospect company and the number of integrations they need. A colleague who’s been in the professional services space for some time called it a repeated reinforcing journey, in which buyers demand ever-increasing counts of “set and forget” integrations that work without manual intervention. 

Ideally, any integration a prospect requests will be readily available, pre-built by the company and easy to implement for a new user. That’s the holy grail. But when that’s not the case, Sales teams need to work closely with their colleagues in Product, Engineering, and Service to determine whether the juice is worth the squeeze. New integrations require significant investment of time and resources, which can force companies to make difficult decisions. 

There are three major factors the company must consider: 

1. How necessary is this integration?
2. What will need to be deprioritized?
3. How much will it cost?

How necessary is this integration?

If a prospect requests a non-existent integration, it begs questions like: Is this really a deal-breaker? Is it required at Day 1, or can it be post go-live? How large or strategic (or both!) is this prospect? Have other prospects asked for this integration, or would adding the integration allow the company to enter a new market vertical?  

What will need to be deprioritized?

If the company decides the integration would be beneficial, the next consideration is the investment of resources required. Assuming the APIs are available, there’s a painful tradeoff to be made—what drops from the product roadmap? One of the professional service leaders I interviewed explained that at his company, there’s a troubling awareness that committing to a new integration means less innovation and less tech debt retirement. 

How much will it cost?

Sales leaders consistently report “sticker shock” when it comes to external builds. In one recent example, the price tag came back at $250k. This was on a $60k/year ARR deal. For this particular integration, the available pool of qualified consultants was small, so per the rules of supply and demand, they charged a high hourly rate. 

Sometimes, a company will go ahead and eat the cost in order to win the ARR or an influential logo, or to break into a new vertical. And while companies may have different buckets of money to spend on new deals (NRR vs ARR), most often, situations where one-time upfront costs dwarf the customer’s subscription spend so significantly are non-starters. 

Empowering Sales teams with accessible integrations

Employment applications’ Sales teams are at a crossroads: while integrations are critical to closing deals and winning new business, they’re also difficult to build and maintain, and are often too costly to justify building for just one client. 

Fortunately, new tools have emerged to solve these challenges—namely unified APIs. Global investment firm Activant Capital recently published research that called the case for unified APIs “compelling,” predicting that the market will quickly grow as API-first businesses continue to proliferate.

Unified APIs work as an abstraction layer, building and maintaining integrations with dozens or hundreds of software systems. Customers of unified APIs need only build one integration—to the provider—to connect to all of these systems. 

Unified APIs provide value to at least three departments at any B2B software organization. The Development team can expand the breadth of the company’s integration portfolio with a single connection. The Sales team can revise their pitch to be experts—not novices—in the integration space, providing newfound leverage in negotiations. And the Marketing team is able to uplevel their messaging by positioning the company as modern, forward-thinking, and connected.

By deploying tools like these, employment applications can bring new integrations to market in a fraction of the time and for a fraction of the cost of custom-building them in house. Companies that adopt unified APIs have the opportunity to transform a weakness into a strength and disrupt the marketplace. 

After all, as with everything: it starts in Sales.

Saveday, a zero-employer cost 401(k) provider, has built its company ethos around the Golden Rule: treat others as you would like to be. To cultivate this service-first culture, the company needed a way to remove as much friction as possible from the employer experience, from onboarding to day-to-day operations. 

Today, Saveday integrates with 40 different payroll providers through Finch to power retirement plans for more than 300 employers. Since transitioning from manual operations to automated integrations, Saveday has reduced onboarding time from 5 hours to less than 15 minutes and reduced payroll processing time by nearly 100%.

Manual Processes: When Good Isn’t Good Enough

Before partnering with Finch, Saveday ran its operations the way most 401(k) providers have for decades: the Operations team collected employers’ payroll data through automated file transfer, manual uploads, or even tools like Dropbox, then normalized and entered that data into the Saveday system. 

“We were too inefficient, we were losing too much money, we were experiencing too many errors. We were spending all of our time trying to be in compliance with plans,” explained CTO Albert Swantner. “Just because of the sheer amount of data we were trying to sift through, it was hard for us to keep track of it all.”

"We were spending all of our time trying to be in compliance with plans. Just because of the sheer amount of data we were trying to sift through, it was hard for us to keep track of it all.”

Even under the best of circumstances, processing an individual sponsor’s payroll took 2 hours on average. But there were other factors at play: sometimes sponsors forgot how to export the data correctly, or their main point of contact left the company or went on vacation, taking their institutional knowledge with them. Other times, typos made their way into the manual data entry, or sponsors were late in sending their data.

Processing hundreds of payrolls manually each week was time-intensive and made it all too easy to make contributions late or calculate deductions wrong. That had big implications for Saveday, from spending hours on back-calculations and corrections to making up the cost difference in what the investment should have been—all of which amounted to direct, hard costs against the company’s bottom line.  

“There was a whole workflow of things that all had to be perfect,” Albert said. “It's not good enough to just be good in this business—it has to be perfect.”

Data at the right place at the right time

The team at Saveday had tried to make their processes more efficient by building 1:1 API integrations with the payroll providers they encountered most often, but none ever made it “across the finish line.” When Albert joined as CTO in 2023, he immediately began looking for a unified API solution.

“From an engineer’s perspective, it’s easy to imagine you can just do it by yourself; but the other side of me is business-oriented. If we tried to build this all ourselves, the maintenance would be insane. That’s all we’d do—maintain the product. We’d never achieve our other goals and hit our growth metrics.”

Finch ultimately came out on top, in large part because its Unified Employment API standardizes data across all payroll providers, so Saveday’s operational and technical teams don’t have to. 

Saveday uses Finch to natively integrate with 40 different payroll providers. Processing a single payroll for a sponsor—a process that used to take 2+ hours—is now instant for Saveday and the sponsor.

“There have been a lot of benefits to Saveday. We’ve saved a ton of money, made our model profitable, and reduced compliance issues. Everything has gotten better for our team,” Albert said. 

“We’ve saved a ton of money, made our model profitable, and reduced compliance issues. Everything has gotten better for our team."

401(k) in 15 Minutes or Less

Saveday is focused on making it as easy as possible for SMB employers to offer a retirement plan, partially by stripping out the “million and one bells and whistles” that the majority of employers don’t need or want.

By coupling those simplified investment portfolios with Finch’s payroll integrations, Saveday was able to reduce its standard onboarding time from 5 hours to just 15 minutes.

Aaron Frankel, Saveday’s VP of Marketing and Sales, recalled speaking to the owner of a 5-person company that turned to Saveday after another 401(k) provider had them sit through 5 one-hour meetings just to choose all the specifics of their plan. 

“They told us, ‘It was maddening. I don’t have time for all of that,’” Aaron said. “With the Finch integration, once you hit that button to start onboarding, it’s 15 minutes or less, and you don’t even have to have a conversation with anyone at Saveday about it.”

Once the initial onboarding is complete, Saveday is able to pull employee data and write changes back to the payroll automatically, meaning the sponsor doesn’t need to have any involvement with the day-to-day management of their plan. 

“The plan administrator doesn't have to do anything, because the payrolls are synced, the censuses are synced, everything is done,” Albert said. “Most people are just like, ‘That can't be it.’ And we can tell them no, really, that’s it. You don't have to think about us ever again.”

More Transparency Means Better Compliance

Saveday’s bidirectional access to its sponsor's payroll systems does more than just bring critical employee data into its own system; it also allows the team to make changes back to the employer’s payroll. 

Before Finch, when a participant made a change to their contribution amount, Saveday’s team sent a notice to the sponsor, who then had to manually update the payroll system. This created a problem on two fronts: it put more work on the sponsor’s plate, and it left Saveday completely in the dark as to whether the change had actually been made. 

“There was always a kind of disconnect between the participant, the sponsor, and us. It was hard for us to validate whether a change had been made or not, or if they put in the right number, because we had no access,” Albert explained. “When we integrated, we were able to go back and validate: are the deduction percentages correct? If not, we need to update them with what the participant thinks they are.”

These 360° integrations have made it far easier for Saveday to stay compliant under SECURE 2.0, because they can automatically enroll participants and auto-escalate those participants’ contributions, all without ever having to go through the sponsor.

“Pre-integrations, that additional manual workload on the back end translated to a higher expense for the customers,” Aaron added. “Every time we can gain efficiency, that allows us to be much more competitive and accessible for our clients.”

“Every time we can gain efficiency, that allows us to be much more competitive and accessible for our clients.”

Innovating at Lightning Speed

Saveday already has impressive market coverage with the 40 payroll integrations the company uses today, but Albert and Aaron have plans to add more—much more.

“With Finch, we were able to get 40 integrations up and running in 3 months. We might have had a single payroll integration in 3 months if we’d written it ourselves,” Albert said. 

Whenever the team encounters a new payroll provider through a prospective customer, their first step is to see if Finch already has an integration with that provider. And if the integration doesn’t already exist, Saveday asks if they can make an introduction. 

The way Aaron sees it, Saveday has an opportunity to make retirement benefits more accessible to the 57 million Americans that don’t have a plan for the future. Partnering with a unified API like Finch makes it possible to expand Saveday’s offering at scale and at an affordable price. 

“It's been great for our business,” Albert added. “Finch has helped us deliver on the promise of a high-quality 401(k) at a price that everyone can afford and be happy with.”

Finch kicked off the 2024 fiscal year by being named San Francisco Startup of the Year by HackerNoon, and recognized by Activant Capital as a leader among Unified APIs—an emerging market that Activant anticipates will grow rapidly. 

Following a strong fiscal 2023, Finch continued to build momentum in the first fiscal quarter of 2024, which ended April 30, with the following accomplishments:

• Grew platform usage at a 99% annualized growth rate. 
• Announced a partnership with Oyster, a leading global employment solution, and finalized partnerships with six more HRIS and payroll providers, to be announced in the coming months.
• Signed a major payroll and benefits provider to assist them with connectivity for their benefits product in cooperation with existing partners.
• Finch Dashboard updates, including: a new way to enable, disable, and configure integrations, more granular permissions with role-based access control, and enhanced dashboard security with MFA (multi-factor authentication).
• Finch API updates, including a new rehire date field in the /employment endpoint, and a new endpoint to help ‘register’ existing payroll deductions (/register).
• Improved or expanded integrations with five leading HRIS and payroll providers: Workday, UKG Ready, Justworks, TriNet, and Paychex. 
• Expanded support for the Finch Sandbox, which can now be used to test our Deductions product and assisted providers. 

“As part of our commitment to the Open Employment Ecosystem, we’re excited to work with one of the largest payroll and HRIS providers in the US to assist them with their benefits product,” said Jeremy Zhang, Co-Founder and CEO. “We look forward to working with providers as customers in concert with our partners to facilitate complementary use cases where everyone wins.”

To learn more about how Finch can help your organization broaden connectivity to HRIS and payroll systems, speak with an integration expert today. 

‍

About Finch

Finch is the #1 unified API for employment systems, with industry-leading coverage across hundreds of payroll and HRIS providers. Our technology underpins the employment ecosystem, securely connecting applications with the employers they serve. Finch powers integrations for hundreds of platforms including Human Interest, Carta, and Nayya.

Applications across HR technology, benefits, tax and compliance, fintech, and insurance use Finch to access a wide range of employment data — including company information, employee directories, employment status, pay statements, benefits eligibility, and more. 

Finch has helped over 40,000 employers securely connect their data between applications. As the world moves toward standardized, open and interconnected data systems, Finch is building the infrastructure to make it easy to share employment data securely. Our vision is to create a connected and programmable employment ecosystem for all.

Is the tech stack about to topple over? 

In the employment tech market, switching between multiple applications has become the norm, with 49% of HR professionals juggling seven or more different employment systems within their tech stack. 

But this way of working isn’t just tiring and frustrating—it’s sending productivity into a nosedive. Research shows that after switching between apps, it takes an average of nine and a half minutes to get back into a focused and productive workflow. What’s more, 56% of HR pros report finding incorrect or outdated information in employee data at least weekly—often a result of having to manually enter and move data between systems of record.

Consequently, it's unsurprising that 97% of HR professionals emphasize the importance of integration among their employment systems. But how is this possible in the expansive and fragmented employment technology landscape, where there are nearly 6,000 payroll systems alone?

The answer lies in unified APIs. 

Also known as universal APIs, this rapidly emerging market addresses the pressing demand for platform connectivity. As the employment tech market encompasses many systems of record and point solutions, connecting the employment ecosystem can bring immense benefits. In this article, we’ll delve into the world of unified employment APIs, exploring their benefits and how to get started with them.

What is a unified API? 

In the employment technology space, point solutions—the applications that employers use to manage human resources, employee benefits, and finances—must integrate with systems of record like HRIS and payroll to pull in pertinent employee data. 

A unified API acts as an abstraction layer or an API aggregator, pulling information from all these applications and systems and presenting them in a secure, standardized way. Companies only need to build one integration—to the API provider—to connect to dozens or hundreds of outside systems. The provider handles the complexity of varying backend data models and the ongoing maintenance of the connections. 

To use an analogy, think of a unified API as a power strip, with the systems of record as the appliances and the electricity as employee data. When using a unified API, applications need only to plug the strip into their own outlet to send data flowing between their own software and every system of record their customers use.

Unified APIs offer seamless connectivity between systems that vastly improves the user experience. In turn, that allows the applications and systems of record to grow their market share and free up internal teams to focus on building a better product. 

Types of unified APIs

The unified APIs available today can be broken down into two types: generalized and niche. Each type serves distinct purposes and offers unique advantages:

• Generalized or horizontal unified APIs: These connect and integrate software systems across various verticals and use cases. For example, they could provide API integrations to systems that range from marketing automation platforms to accounting tools. While generalized APIs are great for accessing surface-level data, they lack the deep data coverage and granularity that's found in a niche unified API.

• Niche or vertical-specific unified APIs: These are hyper-focused on a specific sector, like employment tech. They’re best for nuanced use cases that need deeper data granularity than what’s available with a generalized API, like administering retirement benefits. For example, a niche payroll API is able to go down to an individual pay statement level—something a generalized API can’t offer. Finch’s Unified Employment API is specifically focused on the employment ecosystem at the intersection of HR tech, benefits, and fintech.

Benefits of unified APIs

From offering a great return on your investment to making things easier for users, there’s a lot to like about unified APIs. Here’s a rundown of the most common benefits. 

Drive cost efficiencies

Building custom integrations doesn’t just take a long time—it’s expensive too. Our research shows that creating just one in-house integration can easily cost $187,000 (or more). And that’s before you consider any ongoing maintenance costs.

On the other hand, choose the right unified API and you can unlock access to hundreds of employment systems in just a few moments. No matter how many integrations you need, the cost is far less than creating custom integrations from scratch.  

Improve the developer experience 

Burnout is rife among software developers and IT professionals, with work exhaustion being one of the main reasons developers leave their jobs. When developers can’t easily connect to new systems and need to repeat tedious manual integration work, it’s no wonder they feel frustrated and exhausted.

But demand for developers is high across all industries, so keeping hold of your team is critical. One way to boost retention is to focus on improving the employee experience for your dev team. A unified API frees up developers' time to focus on value-added tasks—instead of fighting fires all day.

“The best developers are the laziest. They focus on tasks that add value to the product and avoid work that doesn’t. Reproducing what other people have already done and reinventing the wheel is just useless for them.” — Nimrod Hoofien, former Head of Engineering at Gusto

Enhance the end-user experience 

HR and benefits professionals who use employment technologies are expected to do more with less—but the systems they rely on are often slow, clunky, and frustrating. 

In The 2023 State of Employment Technology Report, we surveyed HR professionals and uncovered:

• 68% switch between different employment systems throughout the day
• 49% leverage seven or more employment systems in their tech stack
• 26% spend 10 or more hours per week in their employment systems 

The kind of seamless integration that a unified API offers makes for a better user experience. For the employers that use your application, it also allows them to achieve faster time to value—streamlining the onboarding process, eliminating manual work, and creating a better product experience that ultimately drives adoption.

Easily scale product integrations 

Building custom integrations is a costly, time-consuming exercise. Add up all the integrations you’d need to create to connect to the number of HRIS and payroll systems available today, and you’re looking at a serious amount of time and money.

Instead, a unified API allows you to build and maintain product integrations at scale. But despite the name, not all universal APIs are truly universal—because they don’t always integrate with all employment systems. Before choosing a unified API provider, it’s essential to ensure it offers extensive coverage of employment systems. 

Increase total addressable market (TAM)

For HR teams, whether or not your application can easily integrate with their existing tech stack is one of the most critical buying considerations. They don't want yet another disconnected, siloed solution cluttering their tech stack—they crave integration and efficiency.

Choosing a unified API that connects with many systems of record ensures you’re reaching as much of the market as possible. Take Finch, for example, which integrates with over 200 different HRIS and payroll systems—the same ones nearly 90% of all U.S. employers use—including top employment providers like Gusto, ADP, Paychex, and Quickbooks. 

Unified APIs vs. other integration methods

Unified APIs aren’t the only option when it comes to integration. Here's a closer look at some popular alternatives and how they compare:

• Custom 1:1 API integrations: A custom integration between two specific systems offers the same benefits as a unified API, but only for one provider. Since each integration requires additional development efforts, they’re time-consuming and expensive to implement and maintain.

• Workflow tools: These streamline data analysis and automate time-consuming manual tasks within a specific system, which can reduce the amount of effort required to manually move data between systems. But because these aren’t true integrations, they cannot facilitate the flow of information between two systems; that part still requires manual intervention.

• iPaaS (Integration Platform as a Service): iPaaS platforms are tools that help internal dev teams build custom 1:1 integrations faster. They provide the basic rails for integrating with various systems and manage the governance and security of these connections. iPaaS platforms are useful for businesses that need a high degree of customization for every integration, but compared to unified APIs, they require much more work of the internal development team.

• iMaaS (Integration Management as a Service): iMaaS is a managed service that helps SaaS companies distribute integrations to their customers by providing access to other applications’ APIs through a marketplace within their app. Similar to iPaas, this service can help expedite the time it takes to build an integration, but the integrations still need to be built one at a time and require development work. 

When to opt for a unified API

Unified APIs offer distinct advantages over other integration methods, but determining when to opt for a unified API depends on various factors. Here are a few scenarios where choosing a unified API is ideal:

• Limited development resources: If your organization operates with a small or underresourced development team, it makes sense to use a unified API. This removes the expense and time involved in creating custom-built APIs—not to mention the effort required by your team.

• Need for wide integration coverage: Suppose you're an employment application aiming to integrate with as many payroll providers as possible. If you can build just one integration (to the unified API) to connect with multiple providers, you can quickly increase your market potential. In this case, a unified API makes the most business sense.

• Desire to reduce ongoing costs: Operating and maintaining custom-built integrations is expensive and time-consuming. By outsourcing the burden of ongoing maintenance to the unified API provider, teams can spend their time on tasks that add value to the business rather than routine maintenance activities.

How to choose the best unified API tool 

Ready to start exploring unified employment APIs but unsure what to look for? Our comprehensive buyer’s guide gets into the nitty gritty of key features to consider, such as broad coverage, dataset granularity, and a frequent data sync cadence. With these insights, you can confidently evaluate your options and make an informed decision. 

Scale your integrations with Finch

If you’re looking for a unified employment API that checks all the boxes (and then some), look no further than Finch.

Finch allows employment applications to access data and make changes across hundreds of HRIS and payroll systems—covering 88% of US employers—through a single API. See why Finch is the #1 Unified Employment API. Try it for free today.

The demand for specialized employee benefits management solutions is rising as employers seek better, more personalized packages to attract and retain top talent in an increasingly diverse and virtualized workforce. The global employee benefits platform market is projected to double to $2 billion between 2024 and 2032, while the broader benefits broker market is already valued at $43 billion.

New federal legislation and employer incentives that aim to increase the average American’s savings have given rise to a new breed of tech-forward, personalized benefits that offer more affordable alternatives to traditional employer-sponsored benefits. By leveraging technology like API-based payroll integrations, these benefits providers are able to automate and streamline admin processes, which significantly reduces costs for employers. The result is more accessible, affordable, and easily implemented benefits for employees.

What are employer-sponsored benefits?

Employer-sponsored benefits include workplace benefits that are fully or partially paid for by the employer—things like health insurance, health savings accounts (HSA), retirement plans, financial wellness programs, emergency financing, and fringe benefits. Benefits sponsored by an employer are typically available to employees at a significantly lower cost than if they were to access them directly. 

Today, the cost of offering and administering traditional benefits like retirement accounts and health insurance has become so expensive that some small to midsize business (SMB) employers can’t afford to sponsor them. The new wave of employer-sponsored benefits, supported by tech-forward providers, offer alternative benefits, made more affordable in large part because they’re more efficient. Examples include health savings and reimbursement arrangements (ICHRA), simplified retirement plans, and emergency savings/financing options. 

Many of these new-age benefits work by directly integrating with the employer’s payroll system to streamline data collection and manage payroll deductions automatically. This direct connection reduces the administrative burden on both the employer and the benefits provider and makes it easier to calculate the tax impact of those deductions and contributions.

But gaining bi-directional access to those payroll systems is easier said than done, which is why employee benefits management has traditionally been so challenging and expensive. 

Challenges of traditional employee benefits management

To effectively administer benefits to their customers’ employees, benefits providers need to enroll eligible employees in relevant plans, stay up-to-date on qualified life events, manage employee deductions or employer contributions, and maintain compliance with state and federal regulations. Without direct access to the employer’s payroll system, these tasks become challenging for a variety of reasons.

Challenge 1: Difficulty in collecting accurate and timely data 

Without payroll integrations, benefits applications have to rely on file-based data-sharing methods like SFTP or CSV uploads to access the information held in employers’ payroll systems. This requires significant HR admin work: employers either manually enter details into the benefits systems or request batch files from payroll providers, often at an additional fee. While file-based data transfer doesn’t inherently impact the data, manual touchpoints in file-based data-sharing methods increase the risk of errors and lead to bad data in the form of typos and other inaccuracies. 

“Manual file uploads are not only time-consuming, they’re wrought with errors. It simply didn’t align with our product vision.” – Erika Davison Aviles, Co-Founder and Head of Product, TempoPay. 

Moreover, payroll data isn’t standardized across providers, meaning each provider stores the same information in different formats and under different field names. File-based data sharing methods like SFTP don’t address this issue, forcing benefits providers to standardize the incoming data and adding further complexity to the process.

Challenge 2: The complexity of creating and updating deductions

Benefits providers need to keep a close tab on payroll deductions, which can vary based on things like employees enrolling in new benefits, adjusting their elections, or making changes to retirement contributions. For example, an employee might want to increase their contributions to a 401(k) or payroll-linked emergency savings account at any time.

Benefits applications also need to write those changes back to the employer’s payroll system so the most updated deductions and contributions information are reflected on the employee’s paycheck. Accuracy and timeliness here are critical, raising the stakes for benefits applications that rely on manual processes. 

If the benefits provider doesn’t have direct access to the payroll system, HR administrators may be on the hook for manually making these adjustments—a workflow that costs employers hundreds of man-hours and thousands of dollars each year. For instance, 64% of HR leaders spend 9 hours weekly on manual data entry, with each data point costing an average of $4.78. 

This is particularly challenging for SMBs with small HR teams and without the budget to sponsor traditional benefit packages.

Challenge 3: Security and compliance issues

The sensitive and personal nature of employment data, which includes details like SSNs and financial information, makes employee benefits a highly regulated industry. Payroll and employment data are governed by strict regulations regarding how this data is collected, stored, and used. 

And staying compliant isn’t just about how that data is shared—the provider also has to keep track of employee eligibility data, like when new employees can join plans, when employees leave the company, or when a qualifying life event occurs. Non-compliance means steep penalties for the employer—talk about a bad user experience.

The slow, manual nature of old-school integration methods makes it hard for both employers and benefits providers to stay on top of compliance guidelines while managing employee benefits.

Advantages of using payroll API integrations to power employer-sponsored benefits management

Application programming interfaces (APIs) allow two systems to connect with each other to share information reliably and securely. Specifically, payroll APIs allow benefits providers to connect their software with the employer’s payroll system to automatically pull relevant data and write changes back.

API-based payroll integrations are a game-changer when it comes to employee benefits management. They offer several advantages like:

• Automatic data collection
• Enhanced data security
• Automated eligibility checks
• Streamlined onboarding and enrollment
• Dynamic deductions management

Automatic data collection

Payroll API integrations create a direct connection between the payroll provider and the benefits application, offering access to payroll data in near real-time. 

Unlike manual data-sharing methods that only update periodically, API integrations ensure data is always current. This enables benefits providers to quickly verify employee information, track changes, and adjust contributions or deductions on an ongoing basis, not just at the end of each pay cycle. This near-real-time data transfer significantly improves accuracy and plan responsiveness and reduces the risk of compliance failures.

Plus, with API integrations, employers only need to authorize data access once when setting up the connection. After that, they don’t need to worry about how and when the data is shared on a day-to-day basis. This saves HR admins hours each week, allowing them to focus on more strategic tasks. 

Enhanced data security

Using payroll integrations enhances data security by eliminating the need to send sensitive personal information (PII) through insecure channels like email. Even FTP-based file transfers are at risk of being intercepted if not properly authenticated and encrypted.

API-based payroll integrations, on the other hand, provide a secure, thoroughly encrypted connection between payroll systems and benefits applications, protecting employee data from unauthorized access and breaches. This increased security is crucial for maintaining trust and compliance with data protection regulations, safeguarding both employee information and the organization’s reputation.

Automated eligibility checks

With payroll API integrations, benefits applications can efficiently collect and organize key details like hire dates, employment status, and compensation. This allows them to automatically determine eligibility based on criteria like tenure, job title, and salary—improving the operational efficiency of benefit plans. For example, they can automatically verify if an employee meets the service length, employment status, and compensation requirements for various tax-advantaged plans like 401(k).

Streamlined enrollment

Payroll integrations make enrolling in benefits faster and easier through continuous access to the most up-to-date employee data. Auto-enrolling employees in benefits plans using payroll integrations eliminates the need for monotonous data entry and multiple back-and-forths. This further reduces the complexity and friction often associated with benefits administration, leading to a better overall user experience.

Dynamic deductions management

Bi-directional or 360° payroll integrations let benefits applications automatically read vital employment data and write deductions back to each employer’s payroll system without having to go through the employer or communicate with the payroll provider. This ensures that payroll is always up-to-date and adjusted for any changes in employee benefits, like changes in coverage or contribution levels. By giving the benefits provider the ability to adjust the payroll directly, API integrations minimize errors, ensure compliance, and provide a smooth, hassle-free user experience throughout the benefits lifecycle.

Examples of how payroll integrations simplify employee benefits management

Payroll integrations simplify the implementation and management of various employee benefits by automating data collection and deduction updates, reducing errors, and enhancing overall efficiency. Let’s look at a few real-life use cases.

1) How payroll integrations simplify HSA/FSA benefits processing

API integrations play a crucial role in managing Health Savings Accounts (HSAs) and Flexible Spending Accounts (FSAs). These applications need access to payroll data like employees’ contribution rates and salaries or hourly wages in order to calculate how much should be deducted from each paycheck. With 360° payroll integrations, HSAs and FSAs can automatically create and modify pre-tax contributions in the payroll system. They can then confirm that contributions are correctly withheld from each paycheck and updates are seamlessly applied in accordance with IRS limits.

For example, Lane Health, a Health Savings Account (HSA) provider, saved their customers 8-12 hours of manual data entry each month by using payroll API integrations.

2) How payroll integrations streamline student loan repayment benefits

Helping employees to pay off their student loans through tax-free deductions is a benefit that is quickly increasing in popularity. Payroll integrations dynamically adjust deductions based on what percentage of their paycheck employees choose to contribute. They can also incorporate employer matches, automatically calculating and adding these contributions. This automation ensures that repayments are consistent and accurate.

3) How payroll integrations simplify financial wellness benefits processing

Financial wellness programs benefit greatly from payroll integrations. By syncing detailed and holistic compensation information—including salary, bonuses or commissions, and equity—these platforms can offer personalized educational insights and tips to employees, such as how much to save or budget each month. This data-driven approach helps employees make informed financial decisions, enhancing their overall financial health. Payroll integrations also ensure that the advice provided is based on the total picture of the employee’s compensation, making financial wellness programs more effective and tailored to individual needs.

4) How payroll integrations simplify fringe benefits processing

Fringe benefits can include anything from commuter benefits to mental wellness programs. By using payroll integrations, fringe benefit platforms can offer a smoother and more enjoyable experience to employers and employees. For example, commuter benefits applications can use payroll integrations to accurately calculate and apply pre-tax deductions for transit passes or parking expenses. 

Payroll integrations are the future of seamless employee benefits management

To sum it up, the demand for affordable and personalized employee benefits is growing rapidly, and tech-savvy benefits providers are riding this momentum by using 360° payroll integrations to offer innovative solutions to employers of all sizes. By directly integrating with employers’ payroll systems, these benefits applications are streamlining data access to save time and reduce errors—ensuring a more affordable and more accessible experience for both employers and employees. 

Unlock access to hundreds of HR and payroll systems with Finch

Finch’s Unified Employment API gives benefits providers read and write access to data from hundreds of HR and payroll providers, covering 88% of the U.S. payroll market—all through a single integration. With Finch, you can scale HR and payroll integrations, simplify employer onboarding, auto-enroll employees in benefits plans, and manage deductions automatically, all without the hassle of ongoing integration maintenance.

Using Finch means spending less time building technical bridges and more time on product innovation. Schedule a call with our sales team to learn more about how we can support your specific use case, or try it yourself for free.

‍

We’re thrilled to share that Finch has been named the Best Enterprise Software Product in the SaaS Revolutionaries by SaaStock. This award highlights our relentless dedication to innovation and excellence in democratizing access to employment data.

SaaS Revolutionaries recognizes and celebrates the SaaS startups taking the reins in North America. This year it honored SaaS disruptors across six different categories, including business growth, go-to-market strategies, entrepreneurship, and product. 

Finch's recognition in this competitive arena underscores our status as a disruptive SaaS solution that provides exceptional value to enterprise customers, further solidifying our reputation as a leader in the rapidly emerging unified API market.

“Our mission at Finch is to revolutionize the employment ecosystem by enhancing connectivity and providing seamless access to critical employment data,” said Ansel Parikh, Co-Founder and COO of Finch. “SaaStock’s recognition reinforces our dedication to supporting innovators as they continue to push the boundaries of what’s possible in employment technology.”

Want to learn more about Finch?

Finch is the #1 unified API for employment data, arming innovators with read and write access to 200+ employment systems, all through a single integration. If you are driving innovation with employment data, get started with our self-serve platform today—it’s free!

‍

Sitting at the intersection of payroll, HR, benefits, and fintech is the employment ecosystem: the collection of B2B software applications that employers use to manage their workforce. Combined, the billions of employee records and data points within these systems power nearly every digital interaction between employers and the employees they serve: onboarding, day-to-day communications, job performance, compensation, healthcare, and more.

But the employment ecosystem of today is deeply fragmented across more than 20,000 software systems—6,000 of those in payroll alone. These distinct systems are siloed, leaving critical employee data scattered across various systems in differing formats. 

At Finch, we believe employment technology is on the precipice of a new era—one in which the tools in employers’ tech stacks are connected by a robust foundational infrastructure that makes access to employment data secure and programmable. We call this the Open Employment Ecosystem.

Introducing the Open Employment Ecosystem Market Map: our visual representation of the technologies that sit at the intersection of HR tech, benefits, and fintech. Get your copy → 

The problem with the disconnected employment ecosystem

The employment ecosystem consists of two primary types of technology: systems of record like HRIS and payroll that act as employers’ source of truth, and point solutions, which we refer to simply as “applications”—the standalone human resource, benefits, and financial tools that rely on employment data to function.

The ecosystem’s lack of a common infrastructure presents two major problems. The first is that it’s incredibly challenging to derive and act on insights from disparate data sources. The second is that any change made to one system needs to be manually changed in every other system—creating a poor user experience that can lead to customer churn for applications. 

This lack of connectivity stifles innovation and creates an onerous, unavoidable administrative burden for HR departments: 64% of HR leaders report wasting up to nine hours every week on manual data entry, where the average cost of a single point of data entry is a whopping $4.78. 

To effectively serve employers—and by extension, their employees—we need standard rules, processes, and procedures for sharing data between systems of record and applications. This dynamic has paved the way for the gradual but undeniable emergence of the Open Employment Ecosystem. 

What is the Open Employment Ecosystem?

More than 150 million employment records are exchanged via CSV upload, SFTP, and manual operations every year. The world no longer works this way, but the employment sector still does because until now, there’s been no alternative. 

As the source of truth for employers, systems of record like HRIS and payroll are the gatekeepers of this mission-critical employee data, but they lack the infrastructure that would allow point solutions to easily integrate with their technology. Building 1:1 integrations between every system of record and point solution is an impossible task, the collective cost of which would reach into the billions. Too few of these integrations exist today because of the risks associated with such a large resource investment. 

The Open Employment Ecosystem will enable employers to share mission-critical employment data efficiently, reliably, and automatically through a shared infrastructure built on API integrations. That data flow has enormous potential to unlock new innovation in employment tech and deliver vast improvements to how employers can attract, serve, and support employees.

The first step in achieving this Open Employment Ecosystem is building the open, programmable infrastructure that helps all of these technologies—systems of record and point solutions—to integrate with one another. Similar to the way Plaid introduced the era of Open Finance through its financial API, Finch aims to create the Open Employment Ecosystem through our Unified Employment API. 

Our mission is to empower innovators with democratized access to global employment systems. With security and compliance as the backbone of our infrastructure, Finch will ultimately build the connection between all of these platforms and empower a new wave of innovators to create a better future of work.

The inevitability of the Open Employment Ecosystem 

The movement toward openness, connectivity, and programmability within the employment ecosystem is driven by three key trends: the proliferation of point solutions, a growing demand for interoperability, and the emergence of unified APIs.

More point solutions and a growing need for connectivity

Since the turn of the century, there's been a shift from do-it-all tech to specialized, best-of-breed software that excels at one thing, leading to a surge in tool usage—the average large company now leverages 80+ employee-facing systems. 

Each of these tools hold employment records that regularly need to be updated, ideally all at once, which means employers don’t have the bandwidth to continue adopting point solutions that operate in a silo. That leaves two options: relying on monolithic, closed systems with native connectivity (similar to the legacy systems that dominated the industry before the cloud), or creating an interconnected ecosystem in which all applications, regardless of their parent company or backend data model, can communicate seamlessly. 

We at Finch believe that the second approach is a better fit for the employment sector because of the inherent nuance in employment. For example, a construction company will have far different needs for managing their employees as compared to an advertising firm. By creating the Open Employment Ecosystem, employers will have the freedom to choose the best solution for their unique needs while still enjoying the benefits of an integrated system.

Emergence of unified APIs

Application programming interfaces (APIs) are widely adopted today, but they aren’t standardized—they operate on different backend data models, which can make it difficult to teach two systems to “talk” to each other.

This challenge has fueled the emergence of unified APIs. They act as an abstraction layer, managing the complexities of communicating with many APIs on their customer’s behalf. Companies need only build one integration to the API provider to unlock two-way communication with dozens or hundreds of applications. 

Plaid is one of the most widely recognized unified APIs. By creating a standardized data bridge in the financial industry—infamous for being antiquated, heavily regulated, and slow—Plaid unlocked unprecedented innovation in fintech. The employment industry, which is even more deeply fragmented than finance used to be, is primed to benefit from the same kind of unified, standardized connectivity model. 

Why everyone wins with an Open Employment Ecosystem 

When employment data is free to securely flow between systems of record and applications, everyone wins. Systems of record can freely integrate with more applications, furthering their product stickiness; applications are able to access the employee data they need to function while lessening the administrative burden on their customers; and employers are afforded the freedom to use the tools best suited for their workforce, unencumbered by system incompatibility.

Benefits for HRIS and payroll providers

Systems of record recognize the value of the data they hold, so it may seem at first that they’d have something to lose in an open ecosystem. In reality, they have much to gain by simplifying their customers’ data sharing experience: the more applications that can easily plug in to their databases, the more these systems will be able to stabilize and expand their footing as the primary source of truth for employment data for each customer. 

Integrating with more applications also allows HRIS and payroll systems to attract new customers by selling a product that will give employers the freedom and flexibility to use whatever supplemental point solutions they choose.

The Open Employment Ecosystem will benefit both large- and small-scale providers by lowering the costs associated with opening their APIs. Enterprise-focused providers will be encouraged to tap into SMB markets, where the investment risk has traditionally been considered too high. Meanwhile, SMB-focused providers will be empowered to compete with larger incumbents that have traditionally had a leg up given their larger pool of resources.

Benefits for applications 

The lack of integrations with existing HR systems, particularly HRIS and payroll tools, is often a deal breaker for employers in the market for new point solutions. In order to grow their business, these applications need native integrations with employers’ sources of truth or risk a poor user experience and reduced product functionality.

The challenge is that it’s incredibly expensive to build and maintain these integrations, as every system of record has varying infrastructure, data formats, and governance. Many also require formal partnerships or other barriers to entry. In an Open Employment Ecosystem, these applications would be able to spin up integrations much faster, via API, and deliver greater value by eliminating manual administrative work for their customers. The applications can also focus their engineering teams on core or innovative product improvements, rather than building and maintaining integrations.

Benefits for employers

Today, many employers choose software based on compatibility with existing systems like HRIS and payroll or opt for all-in-one solutions instead of cherry-picking the tools that would best serve them. In fact, 97% of HR administrators say it's important for their employment systems of record to integrate with other tools in their tech stacks, and 84% say this connectivity is very or extremely important.

But with the connectivity enabled through an Open Employment Ecosystem, employers will be able to opt for the best rates, the lowest fees, the most impressive features, and the best user experience. And with the security, reliability, and automation of API integrations, HR admins will be freed from the administrative burden of manually sharing employee data with their service providers and updating records across disparate systems.

Moreover, this newfound choice and control over what employment data is shared and who gets access to it will enable employers to simplify onboarding, offer enticing benefits, protect sensitive information, and craft the best-in-class experience for their employees.

How Finch is building the Open Employment Ecosystem

The concept of the Open Employment Ecosystem hinges on the shared infrastructure that connects all employment systems. At Finch, we’re building the foundation of that infrastructure. 

Our Unified Employment API bridges the gap between systems of record and applications on behalf of employers. We’ve built integrations with hundreds of HRIS and payroll systems that use data standardization and clear rules of engagement for seamless syncing, so employee data is securely delivered to applications in a standardized format, regardless of its origin system.

The point solutions that use Finch’s product need only build one integration—to us—to unlock access to all of our HRIS and payroll connections. The systems of record that partner with Finch similarly benefit from access to pre-built integrations with Finch customers when both parties share a common employer. 

When an application integrates with an HRIS or payroll system through Finch’s unified API, they get streamlined, permissioned access to the data they need, explicitly authorized by the employer. This eliminates the need for manual data entry, offering a more accurate, secure exchange of data for all parties—the employer, application, and system of record. 

The rise of the Open Employment Ecosystem is the inflection point that will finally allow the employment sector to operate like other tech-forward industries. The benefits are too numerous to list, but they include easier access to employee benefits, greater insights into workforce trends, increased innovation, and far greater data security. 

The road ahead

We believe the Open Employment Ecosystem is inevitable. The world is shifting towards standardized, open, and interconnected data systems. Employers and developers are prioritizing tools that offer greater flexibility and interoperability. 

At Finch, we're leading the charge into this era of open and programmable employment. We kick-started this revolution with HRIS and payroll integrations; but to truly transform the employment landscape, we must extend beyond these core systems and integrate with new segments to unite the entire spectrum of employment tools.

Just as Twilio revolutionized communication and Plaid transformed finance, Finch is committed to reshaping employment by connecting the world of closed, complex, and archaic employment systems. 

Learn more about the companies that make up the Open Employment Ecosystem by exploring our Market Map.

Download the Open Employment Ecosystem Market Map

‍

The employment ecosystem—the collection of B2B software applications that employers use to manage their workforce—is deeply fragmented and complex. 

To date, this has been broadly accepted as the unavoidable reality of a highly regulated, disconnected industry. But at Finch, we have a vision for an open, standardized, interconnected future of employment technology. We call it the Open Employment Ecosystem. 

To illustrate this vision, we created the Open Employment Ecosystem Market Map: a visual representation of the technologies that sit at the intersection of payroll, HR tech, benefits, and fintech. Alex Tran, Managing Director at General Catalyst, put it this way:

"Companies today use many applications to manage their workforce, leaving critical employee data scattered across systems of record and point solutions. While companies continue to choose best-of-breed tools for their specific needs, the lack of connectivity between these systems is a huge challenge—especially to and from payroll systems.

"The vision of an Open Employment Ecosystem where data flows seamlessly is the primary reason we backed the Finch team, and we’re thrilled to see the first version of their market map feature other General Catalyst portfolio companies such as Awardco, Factorial, Gusto and Thatch."

Understanding the Open Employment Ecosystem Market Map

The employment ecosystem consists of two types of technology: systems of record and point solutions, or applications. 

Systems of record are tools like HRIS and payroll that act as the source of truth for employers. These systems hold all of the information about a company’s workforce: census details, earnings statements, employment history, tax data, and much more. Applications are the standalone human resource, benefits, and financial tools that rely on that employee data to function. 

Given this relationship, all of the tools within this ecosystem are interlinked and must rely on each other in some way. At the center of the map are HRIS and payroll systems: where all employee data originates. From here, the data must be shared with applications that fall under one of three main categories: HR tech, benefits, and fintech. Data may ultimately move from application to application, but only after being routed through the systems of record at the foundation of the ecosystem.

In our vision for the Open Employment Ecosystem, all of these applications and systems of record will benefit from bidirectional integrations with one another. Any time an employer makes a change in one application, that information will be seamlessly and automatically relayed back to the system of record, which will in turn push that change out across the rest of the applications in the employer’s tech stack.

The promise of the Open Employment Ecosystem

More than 150 million employment records are exchanged via CSV upload, SFTP, and manual operations every year. While the world has advanced technologically, the employment sector is still reliant on antiquated, cumbersome, error-prone processes, because until now, there’s been no alternative. 

What the ecosystem lacks is a shared infrastructure: a means for quickly, securely, and automatically sharing data across disparate systems. As a result, innovation is stifled, and HR departments are bogged down with unavoidable administrative work: 64% of HR leaders report wasting up to nine hours on manual data entry each week, where the average cost of a single point of data entry is $4.78.

At Finch, we’re building the foundational infrastructure that has evaded the employment industry for decades. Our unified API bridges the gap between systems of record and applications on behalf of employers. We’ve built integrations with hundreds of HRIS and payroll systems that use data standardization and clear rules of engagement for seamless syncing, so employee data is securely delivered to applications in a standardized format, regardless of its origin system.

Similar to the way Plaid introduced the era of Open Finance through its financial API, Finch aims to create the Open Employment Ecosystem through our Unified Employment API. Our mission is to empower innovators with democratized access to global employment systems. With security and compliance as the backbone of our infrastructure, Finch will ultimately build the connection between all of these platforms and empower a new wave of innovators to create a better future of work—one that benefits systems of record, applications, and employers in equal measure. 

Download the market map, or learn more about Finch’s vision for the Open Employment Ecosystem.

We’re excited to announce several upgrades to Finch’s connection health monitoring tools. These improvements offer deeper insights into each employer’s connection status at a glance so you can ensure each integration is running smoothly.

What are connections?

Connections are a critical concept at Finch. Simply put, a connection is created when a single user (in this case, the employer) links their HRIS or payroll system through Finch Connect. The connection is 1:1:1, meaning a single employer and a single provider are linked through one authentication token. (Note: This concept becomes slightly more complicated if the employer has multiple Employer Identification Numbers (EINs), but this definition applies in most situations.)

Once a connection is established, data can flow between the employer’s system of record and your application through Finch’s API. 

Connection health monitoring: what’s new?

Keeping the connections between the employer’s HRIS/payroll system and your application healthy is essential to maintaining data flow between the platforms. That’s why Finch’s dashboard includes connection monitoring tools. 

The latest improvements to connection health monitoring include:

• A new, more detailed Connection Status field
• Granular filters to help you triage issues and identify stale connections
• A new way to monitor setup status for assisted integrations

Detailed Connection Status field

Previously, unhealthy connections were only identified in the dashboard as “Needs Attention.” Developers had to click into each individual connection’s page to see more detail. 

Now, the main dashboard page will display more granular detail about the status of each connection, making it easier to see, at a glance, what is impeding data flow. 

The new statuses are:

• Reauthentication needed: The employer needs to reauthenticate Finch as a user to enable data access.
• No account set up: The employer has not created an administrator account for Finch.
• Insufficient permissions: The employer has authenticated Finch as a user, but has not permissioned Finch to access the necessary data. 
• Multiple errors: This will appear if two or more of the above statuses apply. 

Filters for triaging issues and identifying stale connections

Two new filters have been applied to the main dashboard page, allowing you to filter connections by status and by last sync time.

With the new granularity of the connection status field, you can filter connections by the action item required—reauthentication, no account set up, insufficient permissions, or multiple errors. 

We’ve also added a new column to the dashboard called Last Synced; previously, this information was only available on the connection detail page. The addition of this column means you can now sort by this detail as well—set your timeframe (in hours, days, weeks, or months) and the filter will display all connections that last synced within or outside of that timeframe.

Assisted integration setup status

Finch supports both automated and assisted integrations. Assisted integrations are supported for our Scale plan customers through a feature called Finch Assist. These integrations require an employer to add Finch as a third-party administrator in their HRIS or payroll system.

Because the workflow for connecting employers to an assisted integration is slightly different than with automated connections, we’ve added a timeline on the connection detail page that allows you to see when each step of the process was completed and which are still pending. 

The milestones on the assisted setup timeline are:

• Token Created: The employer has completed the Finch Connect flow and a token has been sent to you, the application.
• Account Invitation Accepted: Finch has accepted an invitation from the employer to access the payroll system and has begun to set up the account.
• Permission Verified: Finch has verified that the employer has granted proper access to the system. At this point, the connection can now be configured.

This additional information makes it easier for developers, product managers, and operations teams to understand the status of assisted connections, and help walk through employers through any troubleshooting steps if needed.

Get started with Finch

Offer your customers integrations to hundreds of HRIS and payroll systems all through a single integration with Finch’s Unified Employment API. To learn more about the systems we support, visit our Integrations page or explore our developer docs.

Today, the employment ecosystem is very fragmented and siloed, and developers across HR tech, employee benefits, and fintech face significant hurdles when it comes to building integrations. As the #1 Unified Employment API, Finch’s mission is to create a more accessible and connected infrastructure that will allow all of these systems to share data seamlessly, similar to the way Open Finance has unleashed a new era of innovation in fintech. We call this the Open Employment Ecosystem.

On May 9th, Finch hosted a webinar with two employment technology leaders: our CEO Jeremy Zhang and Nimrod Hoofien, former Head of Engineering at Gusto. The conversation centered around the need for greater connectivity between technologies in the employment sector, the challenges these software providers face in building those integrations, and the new solutions that are emerging to create a more unified, accessible future of employment data.

Watch the fireside chat on-demand now, or read the recap below!

Webinar recap: A Q&A with Jeremy Zhang and Nimrod Hoofien

How has the employment industry evolved in terms of connectivity and related technologies over the years?

Nimrod: The world's getting more complex. Earlier, everything revolved around one big HRIS like Workday and applications were built around that one product. But that kind of old-school monolithic approach just doesn't cut it anymore.

First of all, offering a best-in-class product today requires high levels of customization and capabilities to support different and unique use cases. Flexibility is key; staying ahead means being able to listen to the market and constantly add to the capabilities. 

In addition, the days of connecting systems through hefty databases are gone. Now, different systems hold different data, each crucial to supporting specific use cases. This means being able to work with API connectivity and integrations is no longer optional. It’s a must.

Jeremy: In the last few years, connectivity has taken the central stage in sectors like fintech. In employment tech, while many providers agree that greater connectivity would benefit everyone involved, most don’t know how to build integrations using APIs. That’s where we at Finch saw a need for a unified employment API: something that makes life easier for providers by simplifying API integrations and helping them easily share data with the other point solutions that employers use for employee benefits, engagement, financial planning, and so on.

How can APIs help address scalability issues in connectivity?

Jeremy: The problem with scaling API connections is twofold: the employment tech market is highly fragmented with tens of thousands of providers, including payroll, HRIS, time and attendance, benefits administration, and more. Here, hundreds of millions of dollars move each year through CSV uploads, SFTP, and EDI file feeds, or simply by manual operations. Plus, the cost of setting up SFTP, downloading and verifying data files is quite high. With APIs, we can bring these costs down to make the process more efficient and encourage innovation. Having standardization or a unified API allows developers to build API integrations without dealing with different data models from thousands of providers.

Nimrod: Jeremy is spot on. APIs are complex, and the specialization needed to build highly personalized use cases takes time. A good developer knows that they cannot build for everyone and serve all the tens of thousands of different use cases possible. As a result, they’re forced to rely on other people’s products to offer all the capabilities without draining in-house resources. 

How do providers use APIs in this space? How did embracing integrations help Gusto to grow?

Nimrod: For providers, three kinds of API matter the most. First, they need to access functionalities from other systems to expand their offerings without building themselves. Gusto used integrations to build capabilities that they didn’t want to build in-house like time-tracking, 401(k), and more. Even when you want to eventually build those capabilities yourself, using integrations can give you a time-to-market advantage. 

Another advantage of integrations is when you want to add long-tail offerings that are too small to scale. However, there are some applications that want to serve these niche use cases. You need to allow these developers to use your capabilities to build their own products with a low touch from you. That was the basis of Gusto’s extensive partner program. 

And lastly, you can benefit from integrations by taking your core offering and making it available to other big providers who don’t want to build everything themselves. That’s how Gusto’s embedded payroll offering came to be. 

There’s a huge benefit to being able to build with other people’s APIs and allow others to use yours. This enabled Gusto to offer 401(k) products they would’ve never been able to build from scratch. Allowing others to use its payroll API also allowed Gusto to serve edge cases across industries. 

What’s preventing the wider adoption of APIs in the payroll space? 

Jeremy: There are two issues here. The first is that there’s a widely accepted status quo in this industry when it comes to sending files. Most applications still use emails or SFTP, even when they aren’t secure enough to send PII data. But payroll is a highly regulated industry, and it has a complex infrastructure—so unless something absolutely needs to change, people don’t want to mess around with what’s working underneath. 

The other factor is that adopting an API strategy requires a huge technical lift, especially when you haven’t built your backend infrastructure to support this. 

Nimrod: Absolutely! The technical difficulties of building API integrations are huge. You need to be careful about who gets access to your data and test their reliability and performance because the security risks and the cost of slip-ups are high in this space. 

For example, if you allow an application to make changes to your census data, you need to trust that it’s going to be correct. In short, you need to carefully design your APIs and create clear support guidelines in case an issue arises. Tools like Finch are great in this context because they take much of these considerations away from providers. 

What are some of the emerging technologies that are making connectivity easier?

Jeremy: When we consider new technologies, we need to first acknowledge the need for standardization across the employment industry. Finch is primed to solve this. We standardize the data from hundreds of different systems into common fields so applications can use a single data model. We understand the complexities and regulations within the industry and have created an infrastructure that allows applications to build products without worrying about the details. 

We’re also building a strong partnership network with top providers to offer instant access to application developers. We offer extensive documentation, a sandbox environment, and developer experience tools to make it easy for developers to build with Finch. We also add a strong authentication layer to make it easier for employers to grant granular access to applications so data is protected and safe. 

For partners, we meet them where they are. We work hand-in-hand with these providers to help them structure and release their APIs, or if they aren’t ready to build APIs, we connect to their SFTP and EDI file feeds and convert the data into a standard format to make sure the entire industry is moving towards this API connectivity. 

Nimrod: Spot on! APIs are pretty nuanced, and data standardization is key. Banking used to have the same problem, and Plaid helped them use a common universal language. Finch is doing the same for payroll. They’re reducing the effort to normalize data from various systems.

How does the Open Employment Ecosystem benefit systems of record, third-party applications, and employers?

Nimrod: It’s a win-win-win for all parties involved. 

The best developers are the laziest. They focus on tasks that add value to the product and avoid work that doesn’t. Reproducing what other people have already done and reinventing the wheel is just useless for them. So, for developers, API connectivity offered by the Open Employment Ecosystem is a clear win.

For partners, one of the biggest challenges is to assess the effectiveness of a partnership deal in the beginning. There’s no way we can predict which partnerships will succeed and which won’t. The resistance to invest heavily in partnerships is low due to risk aversion. If you can lower the integration cost to close to zero, you can integrate more partners at a much lower risk. 

For employers, the Open Employment Ecosystem will bring more options to choose the best tools for their needs. An open market will benefit the players that offer the most value, make the employment market more efficient, and allow all players to access equal information.

Jeremy: Yeah, Nimrod explained it perfectly. I’d only add that in the future, there will be even more parties that stand to benefit from the Open Employment Ecosystem, from healthcare providers to local governments that want to understand how the state of employment is shifting over time. 

There are so many ways that democratized access to employee data can benefit not just the employment industry, but all of us—everyone who is employed.

At a time when nearly half of the American households have no retirement savings, we can no longer rely on plan practices that were introduced 40 years ago. Today’s service providers are increasingly becoming aware that participation in retirement plans hinges on how easy it is to access and manage those plans—especially for small to midsize business (SMB) sponsors. This makes the 401(k) plan sponsor and participant experience vital for recordkeepers, third-party administrators (TPAs), and advisors.

A seamless user experience spans from sponsor onboarding to day-to-day plan management.  Poor user experience often stems from cumbersome data access methods, largely because they slow everything down and make more work for everyone involved. Manual processes like SFTP have long burdened sponsors with unavoidable admin tasks, increased compliance risks, and dampened employee participation. 

But change is on the horizon. Employer expectations are shifting rapidly. Plus, with SECURE 2.0 fueling the rise of SMB sponsors, recordkeepers are at a junction to redefine and automate operations to lighten the administrative burden on sponsors.

Why the 401(k) plan sponsor experience is more important than ever

Delivering a top-notch 401(k) user experience is crucial. But to truly nail it, you need to understand what’s shaping plan sponsors’ expectations of their digital retirement service providers. These include:

• New regulations like SECURE 2.0 and state mandates 
• Surge in new, first-time SMB sponsors
• Increasing need for connectivity
• Mounting complexity of staying compliant

New legislative updates

SECURE Act 2.0 shook up the retirement game for sponsors, participants, and service providers alike. SECURE 2.0 aims to boost accessibility, bridge coverage gaps, and amp up individual retirement savings. With perks like auto-enrollment and expanded eligibility criteria, it's leveling up employer-sponsored plans. SECURE 2.0 also rolled out new plan types, like Pooled Employer Plans (PEPs), offering more options and coverage than ever before. 

Recordkeepers who simplify auto-enrollment and contribution escalation and support new plans like PEPs are poised to attract more clients. Without these features, sponsors face the headache of manually enrolling employees and adjusting contributions every year. Any slip-up here can result in fines and penalties—which greatly reduces the user experience. Sponsors now want hassle-free plan setups and seek to be minimally involved in plan management. Recordkeepers that meet these demands will succeed in customer acquisition and retention in the long haul.

The influx of new SMB sponsors 

Federal incentives like startup tax credits and state mandates are pulling in a flood of new SMB sponsors to the retirement scene. Unlike big corporations with hefty HR departments, these smaller employers need more support from their recordkeepers and TPAs. Employees at these companies wear a lot of hats, so they have limited bandwidth to administer the plans, meaning they're eyeing recordkeepers who can lighten their load—especially with tasks like SFTP setups or payroll file uploads. 

Plus, SMB sponsors are cost-sensitive, meaning they want top-notch service on a budget. To remain competitive and profitable, recordkeepers need to trim down their operational overheads while outsourcing much of the administrative work of these sponsors.

Related reading: Challenges of Managing Small Business Retirement Plans 

Increased need for connectivity

Today, an average organization has more than 16 HR solutions in its tech arsenal. As the tool count climbs, employers are prioritizing integrations more than ever. In a recent survey of over 1,000 HR professionals, a whopping 97% said they want their systems to work seamlessly with others, and 51% confessed that juggling multiple employment systems throughout the day leaves them feeling overwhelmed, frustrated, or stressed. Today’s sponsors know that integrations can help them improve the employee experience as well as boost plan participation.

Increasing difficulty of compliance

Streamlined compliance is crucial to keep 401(k) plan users happy. But manual processes, heavy workloads, and tricky regulations make it tough for sponsors and recordkeepers to stay compliant. Old-school methods like SFTP and manual file transfer don’t work in real-time. Both make compliance difficult by causing delays in data exchange, and manual methods like sharing data via email or tools like Dropbox are both insecure and increase the likelihood of typos and errors. 

Compliance is even trickier under SECURE 2.0, with its complex plan designs and nuanced eligibility rules. Plus, retirement regulations are always changing, requiring constant monitoring and adaptation from recordkeepers. Any mistake, delay, or oversight can result in heavy penalties for sponsors and diminish their experience as users. It’s safe to say that recordkeepers need efficient, automated ways to minimize risk and manual tasks when sharing vital employment data.

How recordkeepers can use API integrations to optimize the 401(k) plan sponsor experience

Easier access to payroll data can solve nearly all of the challenges associated with plan management and enable recordkeepers to optimize the user experience.

Many forward-thinking recordkeepers are changing the game with API-based payroll integrations. These integrations let recordkeepers fetch data straight from sponsors' payroll systems, skipping all the manual steps. 

API integrations have several advantages when it comes to improving 401(k) sponsor and participant experience. They can help recordkeepers:

• Simplify sponsor onboarding and auto-enrollment
• Reduce administrative hassle for sponsors
• Make compliance easier
• Automate routine tasks 

Simplify sponsor onboarding 

To craft a winning user experience, recordkeepers need to start by simplifying the onboarding journey for sponsors. But it's no walk in the park. With employee census and payroll data locked away in their HR and payroll systems, recordkeepers either need to collaborate with both the sponsor and their payroll provider to establish an SFTP connection, or they need to rely on the sponsor to routinely download data from the payroll system and share the files in a timely manner. 

Building SFTP connections can drag on for months, and manual file transfers are prone to delays and bad data. Recordkeepers need to implement a simple, more efficient way to make it easy for sponsors to authorize access to their employment data. A smooth onboarding process builds trust with sponsors from the get-go and paves the way for an exceptional user experience.

Related reading: How to Simplify 401(k) Sponsor Onboarding 

Reduce administrative burden for sponsors

Sponsors are over the manual grunt work that comes with managing a 401(k) plan, like data entry and creating CSV files to share with recordkeepers. Replacing antiquated data-sharing methods like SFTP with payroll API integrations enables recordkeepers to ease sponsors' workload, cutting down on admin tasks, eliminating constant back-and-forth, and streamlining data transfer.

By granting secure and direct access to their HRIS and payroll data through direct integrations, sponsors arm recordkeepers with the accurate and timely information they need to run the show efficiently. Better yet, API integrations are a one-time task for sponsors—once they’re granted access to the payroll system, the recordkeeper can pull all the data they need without ongoing involvement from sponsors.

Increase participation with auto-enrollment

Since SECURE 2.0’s passage, the 401(k) sponsor experience has become closely tied to how efficiently employees can be automatically enrolled into specific plans upon eligibility. This is also critical for increasing plan participation and engagement. Vanguard plans with automatic enrollment features had a 93% participation rate, compared to 70% for plans with voluntary enrollment. 

But without payroll integrations, auto-enrollment gets dicey and cumbersome. New eligibility criteria for part-time and older employees introduced in SECURE 2.0 make this situation even trickier for recordkeepers that follow a manual approach. But with direct access to sponsors' data, recordkeepers can program their systems to spot when employees are eligible to join the employer's plan as well as send out automated notifications—further boosting the user experience of 401(k) sponsors and participants.

Make compliance easier

Even when the recordkeeper isn’t to blame, compliance penalties can have a harsh negative impact on the sponsor’s opinion of their provider. Manual data-sharing methods are rife with typos and errors; plus, the recordkeeper rarely has control over when they receive the data from the sponsor, which can adversely impact when contributions are made. 

API integrations give recordkeepers the power to fetch all required data in real time, ensuring no eligible employee is overlooked and that their investment contributions are correct and made on time. With a 360° payroll integration, recordkeepers can even update deduction changes directly within the sponsor’s payroll system, reducing the risk of compliance slip-ups.

Automate routine tasks

As user experience becomes a top priority in 401(k) plan management, recordkeepers must focus their efforts on delivering a standout digital experience. To do this, they need to first free up their operational and engineering bandwidth that is currently spent on inefficient manual processes and building technical bridges between systems. API integrations streamline regular data pulls from sponsors' HR and payroll systems. That way, the recordkeeper avoids otherwise manual tasks, including tracking down files, data validation, eligibility verification, enrollment, investment calculations, and so on. 

Improve 401(k) user experience with payroll API integrations

Bottom line, integrating with sponsors' HRIS and payroll systems is no longer a choice, but a must for recordkeepers to operate faster and better. 

However, building and maintaining API integrations with multiple payroll systems is costly, resource-heavy, and often not scalable. This limits recordkeepers’ ability to automate processes. Using integration tools like unified APIs to scale payroll integrations can help recordkeepers access data from hundreds of payroll systems with a single integration, reducing the time and cost associated with integration builds. 

Unified APIs also help recordkeepers save further operational bandwidth by standardizing fetched data into a common, more manageable format that’s easier to work with. These benefits are ultimately paid forward to the users, creating a best-in-class experience for sponsors and participants alike.

Check out our latest whitepaper, "The Changing Retirement Landscape," to dive deeper into these industry trends and discover how recordkeepers can adapt and thrive in the era of SECURE 2.0.

‍

Since its debut in 1978, the 401(k) plan has become a prized perk for big corporations to attract top talent. However, the steep setup and upkeep costs, administrative issues, and the lack of suitable small business retirement plans have since limited small and mid-sized business (SMB) employers’ ability to offer such plans. Today, while more than 90% of employers with 500+ employees offer a 401(k), the opposite holds true for those with fewer than 100 employees. Only a third of these companies offer their employees a 401(k) option.

Fortunately, the tides are turning. Recent legislative updates like SECURE 1.0 and 2.0 introduced several initiatives for SMB sponsors like Pooled Employer Plans (PEPs) and start-up tax credits. This sparked a wave of new SMB employers entering the retirement market, increasing the demand for personalized small business retirement plans.

While the influx of new sponsors is a positive development for retirement service providers like recordkeepers, third-party administrators (TPAs), and plan advisors, it also presents its own challenges. SMB sponsors often need extra support and watch their costs closely. Managing numerous small business retirement plans also adds to the workload of recordkeepers. 

To succeed in this changing landscape, recordkeepers need to find innovative solutions and build efficient automated workflows to handle the increasing demands while maintaining profitability and steady growth. In this article, we'll explore the challenges of serving first-time SMB sponsors as a retirement service provider and how recordkeepers can serve them efficiently.

Common challenges of serving new, first-time SMB 401(k) sponsors

To reduce the coverage gap and manage small business retirement plans better, it’s crucial for recordkeepers and TPAs to understand what makes some small firms offer a 401(k) plan while others don’t. This involves considering factors like revenue stability, business size, 401(k) plan costs, and how much administrative work it takes to manage the plans. 

Managing 401(k) plans for new small and medium-sized business (SMB) sponsors poses several challenges for recordkeepers, including:

• SMB sponsor’s limited awareness of retirement plans and available incentives 
• Increased need for ongoing customer support
• Cost sensitivity among SMB sponsors
• Higher demand for customization
• Difficulty accessing data from SMB payroll systems
• Increasing operational workload with more SMB clients

Challenge 1: SMB sponsors lack awareness of retirement plans and available incentives

Many small firms aren't familiar with the range of retirement plan options available to ease their cost and administrative burdens. While most know about 401(k)s, few are acquainted with SIMPLE, SEP, and MEP/PEP plans, and 72% reported being unaware of tax credits that could help offset the startup costs of launching a new plan. They also tend to overestimate the financial and time commitments needed to offer a plan.

Lack of awareness and misconceptions about retirement plans make SMB employers hesitant to start their own retirement plans. Although SECURE 2.0 aims to increase the number of SMB employers offering 401(k) plans, recordkeepers will need to put in significant effort to overcome the inertia in the untapped SMB market.

Challenge 2: SMB sponsors need more ongoing customer support

SMB sponsors often lack the know-how and resources needed to effectively support a retirement plan. From selecting the right plan to handling ongoing management, the prospect of starting a plan can overwhelm already busy business owners and small HR teams. In fact, 63% of SMB employers not offering retirement plans cite resource constraints as the reason.

Under this scenario, recordkeepers stepping in to assist small businesses must simplify routine activities like plan enrollment, compliance testing, contribution investment, and deduction management. They should also provide ongoing support to help sponsors navigate the complexities of 401(k) plans and stay abreast of regulatory changes with the necessary resources.

Challenge 3: SMB sponsors are cost-sensitive

Small businesses are usually hyper-focused on costs. A lot of owners and HR managers assume that traditional retirement plans are too pricey and involve additional fees and hidden costs. In fact, about half of small businesses with 99 or fewer employees say they find it hard to afford retirement plans. Their cost sensitivity is further amplified due to the volatile cash flow of small businesses.

Recordkeepers aiming to help them out need to support modern plan options like PEPs to help new sponsors cut down administrative costs of setting up a plan. They also need to figure out better pricing models, innovative solutions, and operational strategies that balance making a profit with offering competitive rates and top-notch services.

Challenge 4: SMB sponsors need greater customization 

Similar to big companies, small and mid-sized businesses (SMBs) have diverse employee demographics with varied financial goals. This leads SMB employers to seek personalized retirement plans akin to larger organizations. However, because of limited resources and budget constraints, achieving enterprise-level customization is often challenging for them.

To win more SMB businesses, recordkeepers need to tailor their services to suit these diverse needs and preferences. They need to adopt ingenious approaches, flexible systems, and automated processes that can accommodate a wide range of unique client needs at a lower cost.

Challenge 5: Difficulty accessing data from SMB payroll systems

As a whole, the retirement industry is still heavily reliant on outdated data-sharing methods for accessing sponsor payroll data. Currently, the most common method recordkeepers use is SFTP, which is manual and inflexible, like any file-based data-sharing method. This hands-on method adds more stress to sponsors who already lack the bandwidth to manage a plan. With SFTP, sponsors often need to routinely create, update, and share data files with recordkeepers to keep everything running smoothly. 

On top of that, setting up SFTP connections is time-consuming and resource-intensive, which further burdens recordkeepers with manual tasks and extensive back-and-forth communication.

In this scenario, automated solutions like API integrations can be a superior alternative for recordkeepers to seamlessly access sponsor data from their payroll systems. However, the SMB payroll market in the U.S. is highly fragmented, with nearly 6,000 payroll providers, and only a few of them allow other applications to integrate directly. In fact, the vast majority of payroll providers either have a gated API or no API at all—adding to the pain of accessing payroll data.

Challenge 6: More SMB sponsors means a greater operational burden 

With more SMB employers offering retirement benefits, the daily workload for recordkeepers’ Operations, Engineering, and Client Success teams is set to skyrocket. Balancing this surge in workload while maintaining service quality becomes paramount for recordkeepers striving to meet their clients' needs effectively. The current industry norm relies heavily on manual processes, from validating sponsor data to managing fund investments—adding friction to each step of plan administration. This leaves recordkeepers facing a crucial decision: substantially grow their Operations headcount or seek more efficient solutions.

How 401(k) recordkeepers can streamline small business retirement plan management

To enhance their service delivery and better meet the needs of SMB sponsors, recordkeepers can take several steps. They can:

• Automate processes to improve operational efficiency
• Simplify data access to develop smoother and faster workflows
• Leverage modern technology to offer best-in-class customer support

Automate processes to improve operational efficiency

First and foremost, to effectively handle the growing workload, recordkeepers should prioritize automating tasks that are currently done manually: automatically enrolling employees based on eligibility, quickly determining what dollar amount to invest, and pushing changes directly back to the payroll system. This allows recordkeepers to reallocate Operations headcount to other teams and invest more resources into strategic initiatives like attracting new customers and improving their product offerings. Read our latest whitepaper to delve deeper into how recordkeepers can streamline the processes involved in managing 401(k) plans through automation.

Simplify data access

Much of the manual labor involved in managing 401(k) plans revolves around creating and sharing data files with each pay period. To truly automate plan management, it's crucial to leverage innovative solutions that streamline data access. Recordkeepers can greatly benefit from using integration tools like unified APIs, which offer quick and reliable access to multiple payroll systems through a single integration.

Unified APIs also standardize data from various providers into a common format, making it easier to work with. Take Finch’s Unified API for instance, which integrates with multiple payroll providers, including niche, long-tail platforms tailored to serve small and mid-sized businesses. Automated integrations enable recordkeepers to automatically fetch income and deferral rates each pay cycle and seamlessly update deduction changes back to the payroll system without involving the sponsor—while significantly reducing engineering costs. Such efficiency greatly eases the burden on the recordkeeper’s Operations team and ensures a smooth user experience.

Offer best-in-class customer-support

As mentioned earlier, many SMB sponsors don’t offer retirement plans because they aren’t familiar with the available options, incentives, and fiduciary responsibilities. Recordkeepers who can offer a better user experience, simplify plan setup and management, and reduce the administrative burden of already overworked HR teams will emerge as the most employer-friendly solutions and win the long game of customer retention and loyalty in an increasingly competitive U.S. retirement market.

Unlock access to hundreds of payroll and HRIS systems with Finch

Finch’s Unified Employment API streamlines operations for retirement and benefits providers by eliminating the need for manual data processing. It helps you spend less time building technical bridges and more time tailoring your product and services to better serve SMB sponsors. With access to over 200 payroll and HRIS systems powered through a single integration, Finch offers the widest and deepest coverage available—4x more than any other unified API. Schedule a call with our sales team to learn more, or try it yourself for free.

The retirement landscape in the U.S. is evolving rapidly. While an aging population is grappling with the possibility of outliving their savings, the average household retirement funds are falling significantly short of creating a safety net for future retirees. At the same time, the influx of tech-savvy Gen Z employees and legislation updates are changing sponsor expectations, highlighting the need for smooth digital experiences. Together, these shifts are driving the defining retirement industry trends of the moment.

We anticipate four key trends will shape the future of retirement for the next decade:

• There will be a greater emphasis on better connectivity that’ll make it easier for sponsors, plan administrators, and participants to share information in real time. 
• Automation is set to become a bigger part of operations for plan administrators, allowing them to streamline processes, reduce manual tasks, and boost overall efficiency. 
• Recordkeepers and TPAs will prioritize improving user experiences to win in an increasingly competitive market. 
• Lastly, staying on top of changing regulations will get trickier, demanding proactive strategies and innovative solutions to stay compliant and reduce risks.
  

In this article, we'll explore these key retirement industry trends, their drivers, and what lies ahead for retirement service providers in 2024 and beyond.  

What’s driving the shift in the retirement industry

Before diving into the top retirement trends, let's explore the key drivers behind this transformative shift:

• The looming retirement crisis in the U.S.
• Recent legislative changes
• Evolving sponsor expectations

The looming retirement crisis in the U.S.

The retirement crisis in the U.S. is starkly evident. In 2023, surveys showed that Americans feel they'll need around $1.27 million to retire comfortably. However, half of American households have no retirement savings at all. Among those who do, the savings are often insufficient, with less than $90,000 in retirement accounts on average. Over half of small to mid-sized business (SMB) employees lack access to a 401(k) plan, making it difficult to save for retirement through automatic payroll deductions. What’s more, 64% baby boomers today report moderate to high levels of stress about their retirement savings.

If not addressed soon, this crisis could result in a future in which many retirees heavily rely on government assistance programs. This strain on public resources could lead to increased taxes and budget deficits in the years to come.

Recent legislative changes

To combat the impending retirement crisis, the federal government introduced several new pieces of legislation in recent years, including the Setting Every Community Up for Retirement Enhancement (SECURE) Acts 1.0 and 2.0. Some states have augmented the SECURE Acts with state-mandated retirement plans. 

As these new laws aim to expand access to workplace retirement plans and boost individual retirement savings, they’ve introduced a host of new rules that affect plan eligibility, compliance standards, and plan designs. This is driving plan administrators to quickly adapt to the changing protocols and revamp their operations to stay compliant and profitable. 

Shifting sponsor expectations

To reduce the coverage gap, SECURE 2.0 encourages SMB employers to start new 401(k) plans by offering several incentives like tax credits and Pooled Employer Plans (PEP). Naturally, these initiatives have led to a surge in first-time SMB sponsors looking to set up retirement plans. But unlike larger enterprise organizations, they don’t have dedicated HR teams to execute these plans. As a result, SMB employers are searching for plan administrators that make sponsoring a plan as easy as possible. They are on the lookout for retirement solutions that can handle admin tasks and work seamlessly with their existing payroll tools—payroll integrations are the primary motivator for one-third of plan sponsors seeking to work with a digital recordkeeper.

In addition to painless administration, today’s sponsors have greater expectations when it comes to their 401(k) plans—they expect greater personalization in their retirement plans as well as a tailored and targeted experience for their employees throughout the life of the plan. This demand is likely to grow as tech-savvy Gen Z participants account for a larger and larger share of the workforce.

Key retirement industry trends to watch out for 

To effectively respond to the needs of the hour, plan administrators need to watch out the four major retirement industry trends we previously mentioned, which impact compliance, sponsor experience, automation, and connectivity. 

Trend 1: Compliance is going to be difficult

The first major trend that will affect plan administrators in the next few months is the increasing difficulty to stay compliant, owing mainly to SECURE 2.0.

SECURE 2.0’s focus on participant eligibility will push administrators to rethink how they handle compliance. For example, Section 101 of SECURE 2.0 mandates automatic enrollment for all participants, while Sections 125 and 603 introduce new criteria for part-time employees and catch-up contributions—making eligibility checks more critical and complex. 

This means more data will be shared between sponsors and administrators than ever before. Recordkeepers need to stay sharp on eligibility changes and set up automated workflows to quickly enroll participants to avoid falling out of compliance by accidentally leaving out newly eligible employees.

Note: Read our latest whitepaper to learn how plan administrators can use automation to improve compliance under SECURE 2.0.

Trend 2: Sponsor experience will be a top priority for recordkeepers and TPAs

The proliferation of SMB sponsors, coupled with the changing expectations of sponsors of all sizes, are driving a greater focus on customer-friendly retirement services and technology to gain a competitive edge in the rapidly growing retirement market.

Employers are going to pick retirement service providers based on the types of plan they support and how much of the administrative work they can outsource. Plan features like automatic enrollment, self-service tools, faster onboarding, payroll integrations, and on-demand customer support are going to be top priorities for sponsors.

Needless to say, recordkeepers and third-party administrators (TPAs) that offer significantly better service to their clients will win the long race of new customer acquisition and increased customer loyalty. However, this is likely to put a strain on the plan administrator’s Operations, Engineering, and Customer Success teams to improve user experience and operational efficiency. 

Trend 3: Automation will become key to efficient 401(k) plan administration

Under these circumstances, all plan administrators need to quickly scale their operations to keep up with the compliance changes and shifting sponsor expectations. They will be required to move on from the status quo of manual admin work and automate much of the day-to-day operations, from validating sponsor data and automatic enrollment to investing funds and automated deduction updates. In fact, studies show that 93% of advisors agree working with a tech-forward recordkeeper will make it easier to manage their plans.

Hiring to keep up with an increasing workload isn’t scalable or sustainable, so plan administrators will be driven to invest in technologies like API-based payroll integrations to operate more efficiently. The need for tools that provide reliable, accurate, and automatic access to participant and deferral data will continue to rise as manual data-gathering methods like SFTP fail to keep up with the rising automation needs of plan administrators.

Trend 4: Robust connectivity will play a crucial role

The U.S. retirement industry is witnessing a growing demand for better connectivity. Today, employers, as users, demand greater connectivity between the tools in their technology stack, including retirement systems. Our 2023 survey of over 1,000 HR professionals found that 97% expect their systems to integrate with other tools, and half of them feel stressed by switching between tools all day. 

Moreover, as technology evolves and new regulations like SECURE 2.0 focus more on participant engagement, it’s becoming increasingly important for sponsors, their payroll providers, and plan administrators to easily connect and share data in real time to simplify enrollment, investment monitoring, and drive engagement. 

These new demands will continue to push plan administrators to adopt new technologies that offer increased connectivity and streamline the user experience, even within a highly fragmented U.S. payroll market.

What’s next

SECURE 2.0 is only the beginning of a wave of legislative changes headed our way. According to predictions at this year's NAPA Summit, we can expect more significant legislation like the Automatic IRA Act of 2024 that’ll continue to shape plan requirements and eligibility criteria over the next decade, impacting everyone involved—from advisors and sponsors to TPAs and recordkeepers. 

It's a dynamic time for the industry, and staying informed and adaptable will be key for all stakeholders. Investing in new technology is the number one way for recordkeepers—and really, any business offering retirement services—to thrive in this evolving landscape. To learn more about these trends and get actionable tips on how to adapt, check out Finch’s latest whitepaper: The Changing Retirement Landscape: How 401(k) Recordkeepers Can Thrive Under SECURE Act 2.0.

Sponsor onboarding is one of the most critical touch points between a 401(k) recordkeeper and its customers because it sets the tone for the rest of the relationship. A frustrating onboarding experience can erode trust, leave customers dissatisfied, and in the worst cases, cause them to take their business elsewhere. Ideally, the sponsor onboarding process should be simple and fast, with minimal work required from the sponsor.

Yet most 401(k) sponsor onboarding processes are riddled with heavy paperwork, complex data-gathering requirements, and complicated workflows that spread across disparate teams and systems. File-based data sharing methods like SFTP add to the pain of onboarding sponsors due to their complicated setup process. API-powered payroll integrations offer a much more streamlined alternative, but they’re difficult to build and scale quickly, especially with limited resources. 

As a result, integration tools like unified APIs are gaining traction among recordkeepers as a go-to solution for scaling API integrations and optimizing the sponsor experience during and after onboarding. With streamlined onboarding, recordkeepers can ditch the lengthy approval processes, reduce sponsors' administrative load, and improve retention rates, strengthening their reputation as an employer-friendly solution.

As Drew Obston, Manager of Product Operations at Human Interest put it, “Sponsors shouldn’t have to get on more than five phone calls with their 401(k) recordkeeper and payroll provider just to set up a plan.”

In this article, we’ll explore how recordkeepers can overcome common onboarding challenges with unified APIs to offer a better experience to 401(k) sponsors.  

What does a 401(k) sponsor onboarding process look like?

Despite being manual and inflexible, many recordkeepers still rely heavily on SFTP to access employment data. Setting up the SFTP connection is a lengthy, expensive process with lots of back-and-forth between multiple parties. 

• Step 1: Request data access: Onboarding typically begins with recordkeepers requesting access to sponsor census and participant eligibility details housed in the sponsor’s payroll system. To access data files, they can either leverage a 1:1 API integration or set up a recurring SFTP connection with the sponsor’s payroll provider. When using an existing payroll integration, this is the first and last step; but setting up an SFTP connection involves several more.

• Step 2: Exchange details: Setting up a file-sharing process with SFTP involves several back-and-forth exchanges between recordkeepers, sponsors, and their payroll providers to share necessary details like data formats, PDI files, encryption details, and authentication methods. 

• Step 3: Involve the sponsor: In the traditional approach, sponsors are heavily involved during onboarding. First, they need to get approval from the payroll provider to authorize recordkeepers to access their employment data, which can cost them an additional SFTP setup fee of up to $20,000. Sponsors may also have to test and verify data files for mapping and formatting errors each time a file is shared during and after onboarding. 

• Step 4: Involve the whole team: Each onboarding step also involves dedicated resources from various departments within these stakeholders—Operations, Client Success, and Engineering. Normally, the Operations team initiates communication with the payroll provider and sponsor to handle the paperwork needed to authorize the connection. Once approved, the Engineering team builds and tests the SFTP connection, while the Operations and Client Success teams assist the sponsor in completing the remaining onboarding steps to finalize the process and enroll eligible participants.

All in all, onboarding that involves setting up an SFTP connection can take recordkeepers 4 to 16 weeks, depending on the complexity of the data and connection. 

Clearly, sponsor onboarding isn’t straightforward. When it comes to onboarding, recordkeepers are often at the mercy of the payroll provider. Recordkeepers are essentially helpless when it comes to expediting the process. Each step involves considerable manual effort and strong collaborations with outside parties—the payroll provider and sponsor. Recordkeepers need to rely on them to share approvals, data files, and technical support.

This over-reliance on outside parties can have hefty consequences for recordkeepers, from delays in revenue realization and a subpar user experience to the loss of valuable customers. Long, manual onboarding also frustrates sponsors, as it delays their ability to offer retirement benefits to their employees.

The importance of onboarding sponsors well

The importance of ensuring a fast and smooth sponsor onboarding experience cannot be overstated. It can help recordkeepers to:

• Fetch accurate data for the life of the retirement plan — A streamlined onboarding process with minimal manual steps and a user-friendly interface lets sponsors easily provide recordkeepers with reliable, continuous access to their payroll systems, ensuring the recordkeeper can pull accurate, timely data throughout the life of the plan. This also enables recordkeepers to enroll participants swiftly, comply with plan guidelines, complete investments on time, and meet Service Level Agreements (SLAs).
• Improve operational efficiency — Faster onboarding saves recordkeepers weeks of operational bandwidth and sets the Operations team up for smoother workflows down the road with minimal administrative overhead.
• Reduce Time-to-Revenue (TTR) — With a smoother onboarding workflow, recordkeepers can speed up plan setup and contribution processing. This ensures faster plan activation and revenue realization, ultimately benefiting both recordkeepers and sponsors. Accelerated onboarding also improves recordkeepers’ ability to compete for new businesses, which further boosts their revenue pipeline. 
• Strengthen relationship with sponsors — Self-service onboarding gives sponsors better control over access authorization and minimizes the need for manual intervention. It also helps recordkeepers make a positive first impression, improving user experience and boosting the chances of plan renewal.

Challenges of sponsor onboarding and how to overcome them

Despite the clear benefits of automated sponsor onboarding, many recordkeepers are still entrenched in the status quo. To truly amp up onboarding efficiency, they first need to address the key challenges that continue to affect the sponsor experience, such as:

• Data access complexities— Recordkeepers must overcome hurdles to access sponsor census and participant eligibility data, which is made all the more difficult by the disparities between different systems of record used by individual sponsors.
• Lengthy integration processes — Each time a new sponsor is onboarded, recordkeepers have to custom-build a new SFTP connection, which requires them to learn the process for a new system and takes months to get the connection up and runing.
• Over-reliance on third parties — Setting up an SFTP connection requires active engagement from the payroll provider and puts a huge administrative burden on the sponsor, both of which take control out of the recordkeeper’s hands.
  

The silver lining — Despite the critical challenges, there’s a silver lining for recordkeepers. In recent years, the emergence of integration tools like unified APIs has helped recordkeepers build and maintain direct API integrations at a significantly lower engineering cost. Unified APIs allow them to access data stored in multiple payroll systems through a single integration, meaning recordkeepers can onboard sponsors faster, without hefty administrative burden. 

That said, let’s look at the onboarding challenges and how recordkeepers can use unified APIs to overcome them. 

Data access complexities

As part of the onboarding activities, sponsors need to authorize access to their payroll system for the recordkeeper. However, accessing data from the employment system is harder than it seems. 

For instance, as of 2023, there are nearly 6,000 payroll providers in the U.S. Each provider has its own rules for storing and sharing data. Recordkeepers need to quickly grasp the data and security protocols of these providers and build the file formats—all within the onboarding period—to effectively access and share data with them. This takes technical expertise and can delay the onboarding process. 

Unified APIs, especially those specializing in payroll and HRIS APIs like Finch, offer a vast catalog of popular and long-tail payroll integrations. That means that recordkeepers can access data from any sponsor, regardless of the payroll system they use, automatically and in a standardized format—completely eliminating the need to build an SFTP connection. Automated integrations sync the data between the sponsor’s payroll and the recordkeeper’s system without any manual intervention.  Plus, unified APIs can standardize the data format across providers into a common model, so it always arrives in the recordkeeper’s system in their chosen format, regardless of the payroll provider’s preferences or standards.

Lengthy integration processes

Due to the complexity of accessing sponsors’ payroll data, building the file format to be shared via SFTP is a cumbersome process, requiring attention to detail and involvement from three distinct parties. Getting it right is critical, but it can also take up to four months—time that the sponsor could otherwise spend investing its employees’ assets (and time that the recordkeeper could be billing for its services).

When the recordkeeper has access to a pre-built API integration with the sponsor’s payroll provider, onboarding time can be reduced from months to minutes. Unlike SFTP connections, which need to be custom-configured for each sponsor, payroll integrations can be used by any sponsor using that payroll provider. All the sponsor needs to do is grant access permission to the recordkeeper, and voilá—the data can start flowing between the two systems. 

Over-reliance on third-parties

The standard onboarding workflow involves multiple parties, including the sponsor and their payroll providers. Collaborating across companies introduces the potential for delays and complications that are beyond the recordkeeper’s control.

Each payroll provider has their own protocols, standards, and requirements for establishing a data connection, which can make sponsor onboarding even more labor-intensive. And it’s not just the recordkeeper that has to manage these details—the sponsor is also heavily involved, adding unnecessary friction to their onboarding experience.

But when the recordkeeper outsources these connections to a unified API provider—especially one with formal partnerships with the payroll systems—there’s no need to go back and forth with the payroll provider. The technical bridge has already been built, meaning the recordkeepers have more control over the sponsor onboarding experience, and the sponsor’s involvement is minimal.

Simplify 401(k) sponsor onboarding with unified APIs

Establishing credibility as a recordkeeper begins with effectively onboarding plan sponsors. But let's be honest—onboarding sponsors is challenging. Simply put, if your integration process is inefficient and comes with high engineering and operational costs, speeding up sponsor onboarding becomes nearly impossible.

This is where integration tools like unified APIs come into play. Unified APIs provide the benefits of API integrations while substantially cutting down the time and cost required to build and maintain these integrations. Recordkeepers can simply leverage pre-built integrations provided by the unified API provider and onboard new sponsors faster

Take onboarding one step further with Finch

Finch provides a specialized unified API tailored for the employment sector. This means Finch understands the intricacies of employment data, provides granular access to payroll data, employs subject matter experts (SMEs) specializing in retirement and payroll solutions, and partners with leading payroll providers to further simplify the onboarding process for recordkeepers. 

With Finch Connect, an embeddable user interface (UI), sponsors can seamlessly connect their payroll systems in a few simple steps. Recordkeepers can initiate Finch Connect during the onboarding process, enabling sponsors to choose their provider, confirm permissions, and authenticate access in minutes—all within a user-friendly window.

‍

‍

Once authentication is complete and the connection is established, recordkeepers can synchronize data with the sponsor's payroll system as needed without involving the sponsor. This removes the friction typically associated with traditional onboarding processes, speeds up the onboarding cycle, and enhances the sponsor experience. 

With this streamlined approach, recordkeepers can utilize their operational resources to focus on core onboarding activities, such as gathering additional information or providing product tutorials. 

There's more to what recordkeepers can unlock with Finch's Unified Employment API. In addition to faster onboarding, they can automate deduction updates and receive tailored support for specific use cases. Contact us to learn more. 

At Finch, we categorize our B2B software integrations into two buckets: automated and assisted. Both are tools that allow software applications to share data directly. The difference between the two is the path the data takes to get from one system to another: while automated integrations facilitate automatic data flow from app to app, assisted integrations require a few additional steps behind the scenes.

Assisted integrations serve an important purpose. Fully automated integrations are the gold standard in software connectivity, but they only work when the underlying data provider has an accessible API. In the employment industry, where most systems of record either lack APIs or keep them under lock and key, assisted integrations empower employers to share their data to whatever application needs it automatically.

They aren’t suitable for every use case; but in many situations, assisted integrations are a valuable tool that significantly expands system coverage. Finch supports both automated and assisted integrations in order to provide access to as many HRIS and payroll systems as possible, furthering our goal of democratizing access to the infrastructure that underpins the employment ecosystem. 

What are assisted integrations?

Assisted integrations are secure connections between two software systems that offer many of the same benefits as automated integrations: data is shared between the two platforms in a standardized format. The difference is how the data gets there. Finch provides access to our assisted integrations through a feature called Finch Assist, which supports integrations with hundreds of HRIS and payroll systems.

Here’s how Finch Assist works: The end-user (the employer) adds Finch as a permissioned, third-party user to their HRIS or payroll system using Finch Connect. Finch’s Product Operations team then works behind the scenes, leveraging scripts that pull the relevant data, standardize its format, and make it available via the Finch API.

Like automated integrations, this data is standardized and made available by API request. Developers can also be notified when data has changed—like when a new employee joins or leaves. The most significant difference is that data is refreshed every 7 days (rather than daily).

While assisted integrations require an extra step, they’re a vast improvement over manual data entry, which is the only alternative when a system has a limited API or no API at all. Employers or HR admins aren’t downloading data as a flat file and uploading it to another system—technology is still retrieving and standardizing the data on their behalf. Day-to-day, there is no extra effort required of the system of record, third-party application, or the end-user; Finch handles the syncing process.

Automated vs. assisted integrations

Aside from their workflows, the biggest differences between assisted and automated integrations are the configuration period (how long it takes to activate the integration), how often the data is refreshed, and how many providers are supported through each. 

• Automated integrations — These integrations are pre-built and fully automated, meaning there is no configuration period and data syncs automatically every 24 hours. Users can also run syncs on demand at more frequent intervals if needed. Finch currently supports automated integrations for more than 30 of the most popular providers (by market share).
• Assisted integrations — The configuration period for assisted integrations is 1-2 weeks, and the data is refreshed weekly. Finch’s assisted integrations can support Organization data coverage from any HRIS or payroll system in the US market and double the Payroll data coverage of our automated integrations.

Both automated and assisted integrations are supported by connection monitoring, meaning you can monitor the status of an assisted integration just as you would an automated integration. Both types also allow users to set up webhooks.

Benefits of assisted integrations

Finch created assisted integrations in response to the number of retirement and benefits providers that were building manual data processing in-house—a cumbersome and inefficient workaround necessitated by the lack of open APIs in the employment ecosystem. By leveraging assisted integrations, Finch is able to offer the widest (and deepest) coverage of employment systems available—4x more than any other unified API on the market.

Expand coverage

Integrations are becoming increasingly table stakes for employers; but too few systems of record allow other applications to integrate directly. Since Finch was founded, we’ve found that 99% of payroll providers either have a gated API or no API at all. HR systems are generally more accessible, but the problem still persists here on a smaller scale. 

Relying solely on automated integrations puts thousands of HR and payroll systems out of reach. Some unified APIs don’t support assisted integrations, but this significantly reduces their data coverage, especially among niche or “long-tail” providers that have only a small market share. And it’s worth noting that in payroll, that’s no small number of exclusions—there are more than 5,700 payroll providers in the US alone, and the top 10 competitors only account for 54.8% of the entire market. In other words, using automated integrations alone leaves nearly half of the total addressable market on the table.

Finch’s assisted integrations serve as a supplement to our automated integrations. With assisted integrations, we’re able to support 2x more payroll integrations and 7x more 360° integrations, which allow the two-way flow of data (read and write capabilities).

Write back to payroll systems

While payroll systems are behind the curve on API accessibility, it’s still a crucial source of truth for employment data—especially when it comes to employee benefits. Employer-sponsored benefits must be able to create and manage payroll deductions on behalf of enrolled participants, which requires writing changes to payroll systems.

As a result, benefits providers have been forced to use Secure File Transfer Protocol (SFTP), manual file sharing, or even email to communicate those changes to either the employer or the payroll provider, who then must manually update the payroll system. 

Assisted integrations improve this workflow by allowing the benefits provider to automate deductions by pushing changes directly back to the payroll system via the Finch API—no involvement from the employer or payroll provider required. 

Eliminate manual data processing

Without an open API to build to, the only alternative to assisted integrations is manual data transfer. This poses several challenges: 

1. It creates significant friction for the employer, elongating their onboarding process and delaying the point at which they begin realizing value from your solution. 
2. It puts the onus of standardizing data on your operations team–or worse, the employer. 
3. It introduces more opportunity for human error.

Assisted integrations take the work of your customer’s plate so they can start realizing the ROI of your solution faster. They also offer automated data standardization, and because the integration is powered by scripts—not manual downloads and uploads—there’s a reduced risk of inaccuracies or missed fields. 

Who should use assisted integrations?

Because the data is refreshed weekly, assisted integrations aren’t a fit for every use case. For time-sensitive tasks, like deprovisioning employee access upon termination, the weeklong period between data refreshes is too long. 

But for processes that require access to data that coincides with payroll cycles (like retirement deductions) or data that rarely changes (like employee birthday or anniversary rewards), assisted integrations can provide the same benefits as their automated counterparts.

Here are a few examples to give you an idea of the kind of use cases that can be powered by assisted integrations:

• Employee engagement and recognition — Use organization data like start date, birthday, or title changes to engage and reward employees automatically when they reach milestones.
• 401(k) retirement benefits — Automatically pull income and deferral rate each pay cycle, then write deductions changes back to the payroll system without involving the sponsor. 
• Compensation/equity management — Pull all employee salary, benefits, and equity data automatically to create a holistic view for accounting and headcount management purposes. 
• Professional development/training — Use employee directory data to assign trainings and professional development courses based on title, department, tenure, and so on.
• People/HR analytics — Access the employer’s HRIS to provide a snapshot of company demographics and track KPIs like employee retention and mobility.

Are assisted integrations secure?

When supported by a reliable provider, assisted integrations are just as secure as API integrations. 

Finch is SOC 2, CCPA, GDPR, and HIPAA compliant—meaning we engage in annual audits and maintain strict internal protocols to safeguard the security of sensitive data. We also use data classification to control who is able to access what data and use encryption at rest, in transit, and on the application level to prevent data from being accessed by unauthorized users and bad actors. 

The data that flows through our assisted integrations is subject to strict access controls and monitored by audit logs so we’re always able to account for changes, track who accessed the system and when, and ensure personally identifiable information (PII) and other sensitive data is kept private. 

Why Finch supports assisted integrations

Our company mission is to democratize access to employment infrastructure in order to facilitate faster, more transformative innovation in employment tech. The way we see it, the more systems of record we can provide integrations to, the closer we are to realizing that goal. 

The truth is that assisted integrations aren’t the solution for every company and every use case; but when it’s a choice between assisted integrations and no API support at all, the choice is clear. Assisted integrations are secure and more efficient than manual processes, which put an administrative burden on the employer. 

Our goal is to eventually offer automated integrations to most, if not all, of the systems of record that underpin the infrastructure of employment tech, but with nearly 6,000 of these systems in the US alone, realizing that goal will take time. In the interim, assisted integrations provide a much-needed solution that is bridging the gap between systems of record with closed APIs and the third-party software applications that need access to the data they hold. 

Unlock access to hundreds of HRIS and payroll systems with Finch

Finch’s Unified Employment API powers connections to 200+ systems of record through a single integration, so you can spend less time building technical bridges and more time focused on product innovations. Schedule a call with our sales team to learn more, or try it yourself for free.

Sean Kelly is a seasoned retirement executive with more than 25 years of experience in the industry. Throughout his career, Sean has influenced every angle of 401(k) management, from plan administration to contribution oversight. He has served as VP, Head of Sales at Goldman Sachs Advisor Services, VP of Retirement Services at Fulton Bank, and Director of Retirement Solutions at WisdomTree. Today, Sean is a Senior Growth Partner for the Pension Resource Institute and a retirement industry consultant. 

‍

The biggest retirement advisors conference of the year took over Nashville last week, with more than 2,500 industry insiders descending on the Music City for three days of learning and networking. 

I joined the Finch team at the NAPA 401(k) Summit this year, where we met with dozens of advisors and sat in on the sessions and workshops they attended. We brought back plenty of insights and anecdotes about what advisors are worried about, what they’re looking for in the recordkeepers they work with, and how they’re thinking about the future of retirement. 

Here are my three biggest takeaways from NAPA 2024.

1. SECURE 2.0 is just the beginning: more legislation is on the way

It’s no surprise that the latest federal legislation affecting the retirement industry was front and center at NAPA this year—after all, SECURE 2.0 takes full effect in a few weeks. But it was also clear that SECURE was only the beginning. 

New legislation that would amend SECURE 2.0 is already in the works—both to close the loophole that could have eliminated catch-up contributions and to expand startup tax credits to employers joining existing plans. On top of that, the Automatic IRA Act of 2024, introduced as a bill in February, would require employers with 10 or more employees that don’t sponsor a retirement plan to automatically enroll employees in IRAs or other automatic contribution plans.

The bottom line is that we’re poised to see continued changes to plan requirements over the next several years that have the potential to impact compliance and eligibility rules, affecting not just advisors, but recordkeepers and TPAs as well. All retirement stakeholders need to ensure they’re prepared to adapt—not just to adhere to SECURE 2.0, but to navigate a period of continuous change over the next decade. 

2. PEPs and small employer plans are a volume play

Several of the sessions at this year’s conference focused on Pooled Employer Plans (PEPs), the new plan structure introduced by SECURE Act 2.0. Across the board, attendees seemed to agree on two things: 

1. Micro- and small-business plans are poised to flood the retirement industry in the coming years, and 
2. Figuring out how advisors can maintain margin from these plans is a top priority. 

PEPs were created to encourage small and mid-sized businesses to offer retirement benefits by allowing them to pool their plans, offsetting the plan administration costs; but with smaller asset pools to manage, advisors voiced concerns about how best to charge sponsors.

At least one session panelist offered a new perspective to advisors struggling with small-sponsor plans: it’s a volume play. He suggested that advisors look not at the incremental gains from each plan, but rather the benefits of amassing a large portfolio of small plans, and encouraged the audience to “do your part” to keep the retirement industry private. 

So, how does this matter to recordkeepers? In order to take on a large number of PEPs and other small plans, advisors will seek to minimize their management responsibilities with these plans. That means they’ll prefer to work with recordkeepers that reduce the advisor’s involvement—both by easing the burden on the sponsor and by providing hassle-free access to sponsors’ data. 

Simply put, as advisors look for ways to profit off of small plans, they’ll increasingly begin referring sponsors to recordkeepers that automate more of the work of plan administration.

3. Advisors are hungry for payroll integrations

The need for better payroll integrations was a common theme I heard across the exhibition floor and in breakout sessions throughout the conference. All of these conversations boiled down to one of two key needs among advisors:

1. The need for better access to sponsor data from recordkeepers — It was the gripe heard ‘round the Music City Center: advisors are tired of struggling to get the data they need from recordkeepers. 

Most of the time, it’s not the recordkeeper holding critical information behind lock and key, but rather a compounding problem—the recordkeepers are also struggling to collect the data they need from sponsors. Without reliable payroll integrations, recordkeepers spend countless hours going back and forth with the sponsors and validating and standardizing data, which makes it difficult to share clean, timely data with advisors. 

2. The drive to offer a better sponsor experience — At the end of the day, the advisor is an advocate for the sponsor—so improving their sponsors’ experience was a core goal for many of the advisors at NAPA. 

The advisors I spoke with shared that one of their biggest challenges is finding recordkeepers that integrate with their sponsors’ existing payroll providers, since sponsors are typically adamant about keeping their existing payroll solution. 

Advisors seemed agnostic to the nuts and bolts of how the payroll integrations worked or whether they were built in-house or powered by a third party, as long as the flow of data from sponsor to recordkeeper was fast and accurate. 

NAPA 401(k) and the 2024 state of retirement

This year’s conference focused heavily on the three major trends shaping the future of retirement, all of which are primarily being driven by new legislation: changes to compliance regulations, a renewed focus on the sponsor experience, and the increasing adoption of automation. 

Finch dives into each of these trends—and offers tips for how recordkeepers can best adapt—in its latest white paper, The Changing Retirement Landscape: How 401(k) Recordkeepers Can Thrive Under SECURE Act 2.0. 

And if you’re attending the Broadridge 360 Advisor Conference May 19-21, come see me! Find me ahead of time on Linkedin. 

Unlock 360° payroll integrations with Finch

Finch's Unified Employment API allows 401(k) recordkeepers to integrate with hundreds of payroll providers, enabling streamlined sponsor onboarding, automated enrollment, and seamless deductions management. Learn more about our solutions for retirement administrators.

For recordkeepers and TPAs, handling annual 401(k) compliance testing is like steering through a maze of IRS and DOL rules. As stewards of these plans, they need to keep up with regulatory changes, employee census updates, and payroll deductions and accurately process large volumes of participant data without missing critical deadlines. 

This is as complex as it sounds, particularly when accessing employee data isn’t straightforward. Think of it like juggling multiple balls—you've got to be on your game to keep all the balls in the air and avoid any penalties along the way. The challenge is further amplified for plans with complex designs, like profit sharing or multiple investment options. As if that weren’t enough, recordkeepers and TPAs have to deal with the frustration of slow and error-prone manual data sharing methods. 

Traditional ways of handling employment data have long proved to be a hassle for plan service providers that slows down the efficiency of plan management including compliance testing. This has prompted recordkeepers and TPAs to actively seek new technologies, leading to the recent popularity of API-based payroll integrations.

APIs provide TPAs and recordkeepers with direct and immediate access to sponsors' payroll data. This not only simplifies compliance testing but also minimizes sponsor involvement in retirement plan management—enabling them to create a winning customer experience.

In this article, we’ll explore the concept of compliance testing, the limitations of traditional data sharing methods for effective testing, and how recordkeepers and TPAs can leverage payroll integrations to streamline the testing process.

Understanding 401(k) compliance testing

Sponsors have a fiduciary responsibility to guarantee fair and equitable benefits for all participants in the 401k plan. Each plan must pass four key compliance tests to ensure the plan doesn't favor higher-income individuals like business owners and top executives. The four tests are:

• Coverage test
• Actual Deferral Percentage (ADP) test
• Actual Contribution Percentage (ACP) test
• Top-heavy tests
  

The coverage and nondiscrimination tests (ADP and ACP) are annual assessments focused solely on contributions made within a specific year, while the top-heavy rules are evaluations based on the cumulative benefits accrued over time.

• Coverage testing ensures that a broad spectrum of employees benefit from the plan. It verifies that the retirement plan sufficiently covers non-highly compensated employees (NHCEs) in comparison to highly compensated employees (HCEs) and key employees. For plan administrators, this involves accurately assessing whether NHCEs are adequately included in 401(k) plans.
• Actual Deferral Percentage (ADP) testing checks if HCEs contribute within defined limits relative to NHCEs. 
• Actual Contribution Percentage (ACP) testing evaluates employer-matching contributions and voluntary after-tax contributions. The purpose of the ACP test is to confirm that the plan feature is actually used widely and not only by HCEs. 
• Top-heavy testing confirms that plans do not excessively favor key employees. Plan administrators must keep an eye on the plan’s overall structure to verify that the plan benefits all employees proportionally.
  

All plan sponsors are obligated to complete compliance testing unless their plan qualifies for the Safe Harbor exception. The success of a 401(k) plan in these tests hinges on the spread between compared groups falling within the specified range. If a significant discrepancy is detected, the employer must take corrective actions as outlined by the IRS in the 401(k) Plan Fix-It Guide. 

Common 401(k) compliance testing challenges

For third-party plan administrators and recordkeepers, compliance testing involves deep analysis and meticulous scrutiny of the plan and participant data. Delays or errors in these calculations can result in hefty penalties and additional matching requirements for plan sponsors. If you’re a recordkeeper or TPA, this is definitely not the sponsor experience you’d want to create for your customers.

Ensuring the data is accurate and received on time is a considerable challenge for recordkeepers and TPAs, primarily because they’ve traditionally been reliant on the sponsors or their payroll providers to send the data manually or through file-sharing methods like SFTP.

Exchanging data this way can present a slew of challenges, like: 

• Outdated employee details
• Incorrect employment data
• Lack of standardization across systems

Outdated employee details

Manual methods like SFTP can cause unnecessary delays in accessing required data. By the time a file is uploaded on the server, it’s theoretically out of date. Any changes that are made in the payroll system in between data dumps (which typically happen once following each pay period) are unknown to the recordkeeper or TPA until they receive the next batch of data. This delay may result in TPAs and recordkeepers missing important eligibility information or deferral updates and miscalculating the participation rate and contribution percentages of HCEs, NHCEs, and key employees, leading to inaccurate reporting.

Incorrect employment data

SFTP and other file-based systems often require ongoing manual intervention: if the sponsor is in charge of sharing data with the recordkeeper, they need to download data from their payroll system, format it appropriately, then upload that file onto a shared server. That much human intervention creates ample opportunity for errors like typos, mislabeled fields, and improper formatting. Since the quality of 401(k) compliance testing relies on the accuracy of this data, even small inaccuracies can lead to bad test results, resulting in fines, penalties, and extra work to fix mistakes. It also hurts the recordkeeper’s or TPA’s reputation and credibility.

Lacking data standardization

File-based data sharing methods don’t account for the lack of standardization across payroll providers, forcing recordkeepers and TPAs to spend resources extracting and standardizing the data before it can be used in compliance testing. In the diverse U.S. payroll market, where nearly 6,000 providers—each with their own unique data formats and fields—cater to small and mid-sized businesses (SMBs), standardization is key. This complexity leaves further room for error and draws out the testing process, risking missed deadlines.

Simply put, ensuring data quality and consistency can be challenging, time-intensive, and inefficient, especially when working with a year’s worth of sponsor data. Recordkeepers and TPAs need a better way of collecting this data at compliance testing time. This drives them to seek out more automated solutions like API integrations.

How API integrations improve 401(k) compliance testing

Application programming interfaces, or APIs, are tools that allow software applications to communicate and interact with each other. With API-based payroll integrations, data can automatically flow from the sponsor’s sources of truth directly to the recordkeeper or TPA—for each pay run.  

There are two types of payroll integrations: 180° and 360°. While 180° integrations only transmit data in one direction—say, from the payroll system to the recordkeeper—360° integrations facilitate data exchange in both directions. This means recordkeepers can update deductions directly in the payroll system without involving the sponsor.

360° payroll integrations offer several advantages in compliance testing. It helps recordkeepers and TPAs to: 

• Seamlessly sync employee census data throughout the year
• Keep track of employee deferrals
• Collect YTD data for end-of-year audits
• Improve the sponsor experience

Seamlessly synchronize employee census data throughout the plan year

Sponsors’ census data is changing all the time. Payroll integrations ensure that the recordkeeper or TPA is always holding the most recent employee information. Whenever employees are on- or off-boarded, receive promotions and raises, or change roles, that information is synced between the payroll system and the recordkeeper and TPA’s database.

This allows them to track HCE and NHCE contributions throughout the year and make necessary adjustments to ensure the plan will pass compliance tests.

Keep track of employee deferrals

In many plans, participants can change deferral rates at any time, which means the recordkeeper has to notify the sponsor so they can make the necessary adjustments within the payroll system. But with 360° integrations, the recordkeeper can automatically push deferral changes back to the payroll system without involving the sponsor at all. This ensures the changes are made before the next payroll and that the recordkeeper has the most up-to-date information regarding the employee’s deferral and potential matching contribution. 

Collect YTD data for end-of-year audits

Using API integrations, recordkeepers and TPAs can efficiently retrieve year-to-date (YTD) data from sponsors for end-of-year audits. This allows them to check the accuracy and completeness of data pulled throughout the year and make any necessary adjustments before the year’s end. Accessing YTD data through APIs simplifies 401(k) compliance testing by giving immediate insights into the year-long participant contributions and plan activities, which improves the accuracy of testing and regulatory reporting.

Improve sponsor experience

360° API integrations enable recordkeepers to enhance the sponsor's experience by reducing their day-to-day involvement in 401(k) plan management, minimizing administrative responsibilities, and eliminating constant back-and-forth through automated data transfer. Moreover, more automation leads to higher operational efficiency for the recordkeepers. 

Note: For a detailed understanding of how payroll integrations can streamline 401(k) plan administration, including compliance testing, read our article "Why Recordkeepers are Increasingly Turning to Payroll Integrations." 

Best practices for streamlining 401(k) compliance testing with 360° API integrations

For a 401(k) plan to pass compliance testing, it must be non-discriminatory and avoid being top-heavy. As a 3(16) fiduciary, recordkeepers and TPAs bear the responsibility of upholding the plan's financial integrity, meeting regulatory standards, and ensuring participants have a secure retirement savings experience. Proactive maintenance and regular updates of plan records mitigate the risk of test failure and eliminate the need for major adjustments at year-end.

To streamline compliance testing, recordkeepers can implement the following strategies that involve maintaining current data, conducting timely testing, and continuously monitoring the plan's performance:

• Use API integrations for seamless and secure data exchange
• Implement automatic enrollment 
• Regularly review plan participation and contribution data
• Adopt integration tools to scale payroll integrations

Use API integrations for seamless and secure data exchange between systems

Traditional file-based data sharing methods are manual, error-prone, and may require sponsors to perform routine work. API integrations, on the other hand, allow recordkeepers to access employment data in a fast, secure, and programmable manner—ensuring they always have all the data required for compliance tests.

Implement automatic enrollment to make it easy for employees to join 401(k) plans

With automatic enrollment, eligible employees are enrolled by default, shifting participation from opt-in to opt-out. Payroll integrations keep plan records up to date by enrolling employees as soon as they become eligible and boosting overall NHCE contributions, which increases the likelihood of passing non-discrimination tests (NDTs). Moreover, automatic enrollment helps administrators and sponsors comply with Section 101 of the SECURE Act 2.0 that mandates automatic enrollment in retirement plans.

Regularly review plan participation and contribution data

Recordkeepers and TPAs should regularly review sponsors’ data for accuracy to catch potential issues with the ADP and ACP tests early. While API integrations guarantee that they are receiving the data exactly as it appears in the payroll system, mistakes can still happen—the sponsor may have inadvertently added a typo or input data into the wrong field. 

But when recordkeepers and TPAs have access to all of a sponsor’s data—historical and present—at all times, it’s easy to perform routine checks to ensure the data is clean. That way, errors can be caught early and addressed before compliance testing deadlines roll around. They can also warn sponsors if the trend shows skewed contribution ratios at any time throughout the year.

Adopt integration tools for accessibility and scalability

While payroll integrations provide significant value, building and maintaining 1:1 integrations at scale can be challenging and costly. Payroll APIs are typically specific to each provider and may require in-depth knowledge of the application's functionality and API structure. This is why integration tools like unified APIs are gaining popularity among recordkeepers and TPAs. 

Unified employment APIs enable them to access data stored in multiple payroll systems through a single integration. Unlike their generalized counterparts, unified employment APIs are hyperfocused on the employment sector, which means they can offer more granular data access. For example, Finch’s Unified Employment API can fetch data as deep as individual pay statements. This level of detail makes it easy to check participant details such as earnings, tax information, and deductions.

It’s safe to say that relying on sponsors to manually share employee demographic, payroll, and plan contribution data over an SFTP server is neither efficient nor scalable for recordkeepers and TPAs that are looking to simplify compliance testing for 401(k) plans. As more employers seek integrated and technology-driven solutions, they are leaning heavily towards payroll integrations to automate critical steps in compliance testing—from automated data access and eligibility checks to boosting plan participation and managing deferral updates.

Simplify 401(k) compliance testing with Finch

Finch’s Unified Employment API can simplify compliance testing for recordkeepers and TPAs in several ways:

• Finch provides secure access to multiple payroll systems—covering 88% of the U.S. employer market—with a single integration. This helps recordkeepers and TPAs to effortlessly scale payroll integrations at a lower engineering cost.
• With direct integrations to the sponsor's system of record, TPAs and recordkeepers can speed up employer onboarding, auto-enroll newly eligible employees, and simplify deductions updates with minimal effort.
• Finch standardizes employment data across providers into a common data model that’s easy to understand and work with. 
  

There’s more to what Finch offers. If you're a retirement plan service provider managing compliance testing for multiple employers, consider adding Finch to your tech stack. Get in touch with us today to see how we can help.

‍

SECURE Act 2.0 is driving fundamental shifts in how retirement plan administrators operate. 

The most immediate impact of these laws on recordkeepers will be related to compliance, but the ripple effects will reach much further, putting recordkeepers under tremendous pressure to adapt—fast. 

Our whitepaper explores how recordkeepers can keep pace with the ever-changing landscape. Download today and learn: 

• How to maintain compliance in the era of SECURE Act 2.0 
• Strategies to enhance the sponsor experience 
• How automated integrations will empower recordkeepers to work faster and more efficiently

Human Interest is a full-service 401(k) provider on a mission to make it easier for businesses of all sizes to offer retirement plans to their employees. An early adopter of 401(k) payroll integrations, Human Interest needed a reliable way to expand their home-grown 360° integrations to more providers—especially those that were hard to build directly.

Integrations are “number one”

Human Interest was ahead of the API integration curve. The 401(k) recordkeeper’s leadership recognized early on that the benefits that seamless, 360° data flow payroll integrations could offer were critical to their success, both to offer a best-in-class user experience and to support the wide range of plan designs sponsors need.

“Integrations are often the number one thing when differentiating yourself,” said Drew Obston, Manager of Product Operations. “We’re always looking for an opportunity to improve our value offering. With integrations, we’re able to go above and beyond and say, ‘You don’t have to upload payroll data. You don’t have to be provisioning someone on our team to log in to your payroll.’” For small and midsize businesses, where HR admins wear a lot of hats, that kind of user experience is paramount.

Human Interest boasts more than 500 payroll integrations, many of which were built in-house. While there's inherent value in all types of integrations, the company's Product Operations team considers fully automated payroll integrations—those that require zero day-to-day manual work—their north star metric. Eliminating the need to download files, check date ranges, validate data, and more has a big impact on efficiency. Drew shared that fully automated integrations allow Human Interest to process payroll up to 4x faster and make it so the team is 3x more likely to hit their Service Level Agreements (SLAs), ensuring customers get the experience they expect.

“If we were 100% relying on manual work by our Operations team to process payroll data, we would not have a sustainable business,” Drew said. “We’re at nearly 100% of our SLA to invest participants’ contributions within five business days. Without automation, we’d be at about 30% because the Operations team would just be underwater.”

“If we were 100% relying on manual work by our Operations team to process payroll data, we would not have a sustainable business."

“Worst-case scenario”

Human Interest has built an impressive arsenal of integrations on their own, but found they weren’t able to build bi-directional connections to every payroll provider their customers use.

Before partnering with Finch, Human Interest was using another third-party vendor to access sponsor data from two commonly used payroll providers that proved challenging to integrate with directly. However, the team ran into issues with the outsourced connections, which forced them to route most of the work through the Operations team. 

“It’s the worst-case scenario,” Drew said, due to security concerns and inefficiency. “It’s not a tenable solution; it doesn’t scale. We don’t want to keep hiring people to keep up with revenue growth. We would rather take our resources and dedicate them to good customer management, troubleshooting, and exploring better opportunities.”

Human Interest needed a reliable solution that would take the menial day-to-day work off their plate without passing the buck to their customers.

Unlocking access to closed systems

In early 2022, Human Interest partnered with Finch to get better access to the data their Operations team had been manually collecting and validating. Since then, they’ve launched a second integration with Finch for a separate payroll provider, and have begun to explore write-back functionality that will allow them to achieve full automation for both integrations. 

“The ease and support Finch has provided is what laid the foundation for us to consider Finch for additional payroll connections,” Drew said. “Going deeper is our biggest priority. We don’t want to just roll an integration out to say we have an integration. We want it to actually provide true value, both to our internal teams and more importantly, to the end user.”

By going through Finch, Human Interest wasn’t just able to build previously inaccessible integrations—Drew also estimates that the time to build was cut by 66%, primarily because the discovery process was already complete. When a single integration normally occupies 25% of the internal development team, that time savings is significant. 

“So much of what you’re doing when building a new integration is just trying to find all the weird things hiding around corners that you don’t know about. Finch is eliminating that work and giving us a level of confidence that we’re going to get an integration that works,” Drew said. “With that time, there’s a whole lot of other things we’re able to do. We’re able to make the product better.”

Streamlined onboarding

Automation saves the Operations team time and resources, but it also goes a long way in providing a better user experience for sponsors—especially when it comes to onboarding. 

Human Interest’s mission is to make it easier for all employees to save for retirement. Traditionally, SMBs have seldom offered retirement plans because they’ve been expensive, complicated, and required lots of administrative work. To combat this, Human Interest strives to make onboarding and plan administration as easy as possible. 

Enabling more self-service onboarding is a big goal for Drew’s team and a major part of their plan to establish fully automated integrations through Finch. “Sponsors shouldn’t have to get on more than five phone calls with their 401(k) recordkeeper and payroll provider just to set up a plan,” Drew said.

With Finch Connect, Human Interest’s customers are able to grant access to their payroll system in minutes. Drew anticipates that in the coming months, Human Interest will leverage Finch to augment their in-house integrations to enable that same kind of seamless onboarding to more payroll providers. 

The way Drew sees it, Finch’s Unified Employment API is another tool in Human Interest’s arsenal. There hasn’t been a drive to replace Finch’s connections with direct, in-house integrations because Finch provides all the functionality they need.

“We’ve built hundreds of integrations ourselves and we’re comfortable doing it when needed; but when we’re deciding where to dedicate developer resources, we ask ourselves how our current solution is working. If we can use a third party that will take work off our plate and still deliver the same end-user experience, why wouldn’t we?” 

“We’ve built hundreds of integrations ourselves...[but] if we can use a third party that will take work off our plate and still deliver the same end-user experience, why wouldn’t we?” 

Up next: Scale, scale, scale

The retirement industry is poised to see massive growth in plans offered by SMBs, largely driven by SECURE Act 2.0 and new state mandates that require employers to offer a retirement plan. For Human Interest, that’s a great opportunity that makes payroll integrations—and their ability to scale—more important than ever. 

Drew noted that one of Finch’s most valuable traits is the scalability of its integrations. “We don’t have to revisit a Finch integration when it grows. We feel very confident in what’s already being provided to us.”

With nearly 6,000 payroll providers serving the SMB market, Drew sees plenty of opportunity to continue growing the number of providers Human Interest can support with Finch.

“With Finch, part of the win is that we feel like we’re actually along for the ride,” Drew said. “There’s an element of collaboration that I’ve loved—so I see that continuing.”

Sean Kelly is a seasoned retirement executive with more than 25 years of experience in the industry. Throughout his career, Sean has influenced every angle of 401(k) management, from plan administration to contribution oversight. He has served as the VP of Goldman Sachs RIA, VP of Retirement Services at Fulton Bank, and Director of Retirement Solutions at WisdomTree. Today, Sean is a Senior Growth Partner for the Pension Resource Institute and a retirement consultant. 

‍

It's no secret the retirement industry is undergoing a massive transformation. A series of concurrent factors—from SECURE 2.0 to the Millenial and growing Gen Z workforce—are pushing 401(k) recordkeepers to reconsider the ways they operate. Employers are also looking for a more integrated experience. They want retirement solutions that are tech-savvy and fit smoothly into their existing tech setup.

By now, you've probably heard of API integrations—the software connections that provide recordkeepers with direct, immediate access to sponsors' HRIS and payroll data. API-based payroll integrations are gaining popularity because they offer a faster and more scalable way to access employment data essential for seamless plan management. In the last few years, recordkeepers that have adopted API integrations over traditional data sharing methods like SFTP have minimized sponsor involvement in day-to-day administration and simplified the onboarding experience. Payroll APIs are fundamentally changing how recordkeepers operate. 

In this article, we’ll discuss API integrations, why they are becoming a preferred choice for recordkeepers to access payroll data, and last but not least, how you can get started building your own integrations. 

The role of payroll data in retirement

Needless to say, one of the core components of successful plan administration is ensuring that you’re working with complete and accurate payroll data. Payroll data is essential for plan administrators and recordkeepers to conduct participant eligibility checks and calculate deferral percentages and distributions.

Yet traditional methods of accessing sponsor’s payroll data, like Secure File Transfer Protocol (SFTP), are riddled with tedious and manual processes. It’s difficult for recordkeepers to get timely and accurate payroll and deduction data to run their operations smoothly. According to the IRS’s 401(k) Plan Fix-It Guide, most retirement plan errors result from inaccurate or incomplete payroll data made available to recordkeepers or plan administrators. And these errors have consequences. A simple mistake in recording plan contributions can lead to additional costs for sponsors like IRS/DOL penalties due to delayed or erroneous plan investments, along with additional time and resources needed to manually check and update the data. 

With the explosion of payroll technology in recent years—from thousands of payroll tools to global employment platforms to embedded payroll—accessing sponsors’ payroll data has only become more complex. SFTP is falling short as the industry status quo, leading recordkeepers to look for new solutions. 

Growing challenges for 401(k) recordkeepers

According to the Defined Contribution Recordkeeping Survey, recordkeepers currently administer services for over $10 trillion of defined contribution assets, with an increasing number of plans being added regularly. That equates to a massive volume of employee data handled by the industry.

Recordkeepers are starting to see that with new legislation driving larger and larger workloads for their Operations teams, SFTP is not the most optimal way to access mission-critical payroll data. As the industry evolves, SFTP will continue to fall short—but the impact on the recordkeepers that rely on it will only grow, making it far more difficult to:

• Support a large number of new sponsors, especially small and mid-sized businesses (SMBs) starting 401(k)s for the first time
• Streamline access to payroll data
• Maintain compliance
• Improve operational efficiency

Challenge 1: Supporting a large number of first-time SMB sponsors

Federal incentives under SECURE 2.0 and state mandates are driving a tidal wave of new SMB sponsors to the retirement market. These employers don’t have the robust HR departments of enterprise businesses to be involved with plan management. Recordkeepers that hope to earn their business must find ways to minimize sponsor involvement throughout the retirement plan cycle, reduce routine manual back-and-forth with the sponsor, and take more of the administrative duties off their customers’ plates. Using old-school methods like SFTP, where sponsors create and update payroll data files every pay cycle, will make it really difficult for 401(k) recordkeepers to handle a growing number of SMB sponsors.

Challenge 2: Streamlining access to payroll data

Traditionally, all payroll data has been locked in the sponsors’ HRIS and payroll systems. As more SMB sponsors start offering 401(k) plans thanks to SECURE 2.0, recordkeepers are finding themselves dealing with a larger pool of SMB payroll providers. It’s worth mentioning that the SMB payroll market is incredibly fragmented—there are nearly 6,000 providers in the US alone! On top of this, payroll data lacks standardization meaning each provider stores the same data in different formats under different fields. 

File-based data sharing methods like SFTP require ongoing intervention from the sponsors for manually updating and uploading data files to the server. Plus, SFTP doesn’t account for the lack of standardization, meaning recordkeepers need to extract and standardize all the incoming data from sponsors into a format that works best for them. This adds further complexity and resource requirements for recordkeepers.

Challenge 3: Maintaining compliance

Payroll and other employment data are subject to compliance regulations that determine how these personal and sensitive data are collected, used, and stored. SECURE 2.0’s Sections 101, 125, and 603 stipulate sweeping eligibility changes, including mandated automatic enrollment, new eligibility for part-time employees, and updated rules for catch-up contributions—all of which make maintaining compliance harder than ever before. 

Recordkeepers have to stay on top of employee eligibility data—when new employees can join plans, when existing employees can start making catch-up contributions, or when part-time workers reach the hours needed to join 401(k) and 403(b) plans. Any delay can cause recordkeepers to miss SLAs and face penalties.

Plus, the CSV or other flat files involved in SFTP are typically created by the sponsor on their end. This process is highly manual. When downloading, updating, and re-uploading data files, there are many opportunities for several Not in Good Order (NIGO) errors to be introduced to the system, such as improper data formatting and incorrect, missed, or delayed data entry. 

Challenge 4: Improving operational efficiency

Taking on the work involved with supporting many small business plans will put a massive strain on recordkeepers' Operations teams. Scaling teams to keep up with manual work is not the most cost-effective solution, meaning recordkeepers are under pressure to improve operational efficiency and automate routine tasks involved in plan management—from automatic eligibility checks to automated deductions.

Other reasons why SFTP could be troublesome for recordkeepers

Besides those challenges, file-based systems can also create other problems for both recordkeepers and sponsors.

• SFTP can cause unnecessary delays. In case of a failed connection, you’re required to restart the process manually—from the beginning! No checkpoint restart is available with SFTP to restart the process from where you left off. Not only do sponsors have to re-upload files and restart the data-sharing process manually, there isn’t any automatic way in SFTP to recover from any sync failure. You need to have an army of developers and customer success resources ready to keep the sponsor experience seamless. With the criticality of the timeliness of payroll data, recordkeepers need a system that is reliable and requires a less extensive turnaround in case an outage occurs.
• SFTP involves a long, expensive set-up process. Lastly, building custom SFTP integrations that offer greater flexibility and control is time-consuming and resource-extensive, making it difficult to scale. 

In short, SFTP is convenient for sharing a wide variety of files in large batches, but users are more likely to encounter errors related to the data’s formatting and accuracy. Plus, any file-based process like SFTP will still require a user to manually start the automation workflow, adding needless friction to the process. 

As a result, recordkeepers are increasingly abandoning manual methods and opting for API integrations to avoid data mishaps. This is a smarter move because APIs are a more reliable, automated, and secure solution than SFTP.

{{retirement-1}}

Why should recordkeepers care about payroll APIs?

Application programming interfaces, or APIs, are tools that allow software applications to communicate and interact with each other. Having a live and continuous connection means that when data is updated in one system, it automatically updates in another. So, you're always working with the latest, most accurate version of the data.

Recordkeepers who often need fresh payroll data can really benefit from using API integrations. 

• API integrations give recordkeepers instant and secure access to the employer's payroll systems in real time. This cuts down on errors and the amount of manual work both the sponsor and the recordkeeper have to do.
• Unlike manual processes involved in SFTP, APIs are more reliable because they directly fetch data from the employer’s source of truth—the HRIS and payroll tools they use.
• Unlike SFTP, APIs allow recordkeepers to request specific information they need instead of getting a huge load of data all at once. For example, with APIs, you can fetch the contribution information of a single employee instead of receiving the payroll details of the entire department or organization. 

How are payroll integrations used in the retirement space?

Today, employers, in general, are much more aware of the benefits of integrations. A recent survey by Finch found that out of more than 1,000 HR professionals, 97% expect their systems to integrate with other tools, including the tools they use to manage employee retirement plans. So, integrations are not only an operational need for the recordkeepers but also a competitive advantage as they prepare to serve under the updated regulations in a larger retirement market. 

To offer a more integrated sponsor experience, recordkeepers can connect their systems with the sponsors’ payroll tools through 180° or 360° integrations. While 180° integrations only send payroll data from the payroll system to the recordkeeper’s system, 360° integrations send data in both directions—meaning the recordkeeper can make direct changes to the payroll system without being forced to involve the sponsor. There are several benefits to using 360° payroll integrations as a recordkeeper, including:

• Simplified data access
• An improved sponsor experience
• The ability to automate routine tasks and more easily maintain compliance

Simplified data access 

Payroll API integrations simplify payroll data collection and validation for recordkeepers, making sure all relevant data—such as sources of contributions, census data integrity, eligibility calculations, ongoing loan activities, and vesting confirmations—are correct, up-to-date, and obtained directly from the employer’s payroll systems. 401(k) payroll integrations allow recordkeepers to automatically pull sponsor data at any time in a standardized format—significantly increasing the efficiency of the data sharing process.

Improved sponsor experience

Payroll integrations allow recordkeepers to create a winning customer experience by reducing the plan sponsor’s day-to-day involvement, limiting their administrative responsibility, and eliminating constant back-and-forth with automated data transfer. When a sponsor grants their recordkeeper access to their HRIS and payroll data through a direct integration, the recordkeeper has full access to the standardized, relevant data they need to execute the plan, eliminating the typical onboarding pains. There’s no weeks-long process of identifying necessary data fields, creating standard PDI files, or quality control testing, so sponsors can onboard in a matter of hours or days—not weeks or months.

Automated routine tasks and better compliance

With access to sponsors’ census, demographic, and payroll data, enabled by 360° payroll API integrations, recordkeepers can automate many routine operational tasks, such as: 

• Automatic enrollment of participants in plans as soon as they become eligible  
• Auto-calculate the investment amount for each participant based on their deferral percentage, employer match, and earnings
• Update deferral changes directly in the sponsor’s payroll system instead of sending data back to the sponsor for manual updates

The benefit of automation trickles down from operational efficiency to improved compliance. Payroll integrations make legal and fiduciary compliance easier to maintain with proper and timely transmission of 401(k) contributions, automated eligibility checks, and automated deduction updates for their employees.

The emergence of unified employment APIs

APIs can provide immense value. However, APIs are usually specific to each software application and may require detailed knowledge of the application's functionality and the API's structure. In other words, building API-powered payroll integrations can be difficult, time-intensive, and costly. Finch’s research found that a single payroll integration can cost upwards of $187,500, and that doesn’t even include the ongoing maintenance costs or required partnership resources. 

With the fragmentation of the SMB payroll market, it’s becoming increasingly harder for recordkeepers to build 1:1 integrations with each provider—rendering scaling integrations nearly impossible. 

This is where tools like unified employment APIs are gaining popularity among recordkeepers, as they allow them to bypass the challenges of integrating multiple disparate payroll APIs with their systems, saving time and resources for more strategic initiatives. 

In simple words, a unified employment API adds a layer of technical connectivity that enables 401(k) recordkeepers to access data stored in the multiple payroll and HRIS systems their sponsors use—all through a single integration. As unified employment APIs are hyper-focused on the employment sector, the connections they provide not only offer greater stability, longevity, and data standardization, but also granular access to employment data, as deep as individual pay statements of employees.

By leveraging a unified employment API, recordkeepers can pull all the data they would typically need the sponsor to send manually over an SFTP server in real time and write changes back to the payroll system in a secure and timely manner.

The road ahead

The retirement industry is experiencing a significant shift and 401(k) recordkeepers and plan administrators are under tremendous pressure to adopt new technologies and reinvent their operations for higher efficiency. Payroll API integrations offer a pathway for recordkeepers to securely automate a significant portion of their day-to-day operations—from automatic enrollment in 401(k) plans to automating deduction updates back to the sponsor’s payroll systems.

However, API integrations, while convenient, aren’t simple. Each integration requires significant upfront and ongoing time and resource investment. This highlights the need for integration tools like Unified APIs that offer seamless access to payroll data from multiple systems. Just as Plaid revolutionized fintech connectivity, Finch’s Unified Employment API is setting the stage for a connected employment ecosystem where payroll data access is fast, secure, and programmable. 

As we move toward a tech-forward retirement industry, API-based payroll integrations, along with tools like Finch, will become critical to shaping the future of plan administration. Learn more.

Like any regulated industry, the retirement field is thick with jargon and complicated nuance. Even pros that have been in the business for a long time have to keep up with ever-changing legislation and technology terms to stay ahead of the curve.

We've meticulously created this retirement glossary to be your go-to resource for mastering fundamental terms related to savings plans, compliance regulations, 401(k) payroll integrations, and beyond. Whether you need a quick refresher on common retirement terms or you're diving into the retirement industry for the first time, this guide will provide you with the knowledge you need to make informed decisions and strategic adjustments.

Let’s get started.

Fundamentals of Retirement

Plan Sponsor

Plan sponsors are entities, generally employers, that offer retirement plans to their employees.

Plan Participant

Employees contributing to and receiving benefits from retirement plans are plan participants. Beneficiaries or dependents who are nominated by the employee to receive benefits are also considered plan participants.

Plan Administrator

Plan administrators are the parties responsible for overseeing the day-to-day operations of 401(k) plans for participants and beneficiaries. While the employer could be the administrator, the work is often outsourced to a third party. Responsibilities of plan administrators include:

• Designing the plan
• Monitoring plan activities
• Compliance testing
• Providing customer support to plan participants (and, when outsourced, to sponsors)

Third-party Administrator (TPA)

Third-party administrators, or TPAs, are companies that provide qualified retirement plan administration services to employers. They typically oversee transactions, handle the documentation requirements and legal compliance of running a retirement plan, and offer guidance on the plan design. TPA responsibilities include: 

• Preparation of Form 5500
• Creating match and profit-sharing calculations
• Performing non-discrimination and other compliance testing
• Designing the plan and monitoring plan transactions
• Providing customer support to employers and employees

Recordkeeper

401(k) recordkeepers manage retirement plan records, including participant details, payroll data transfers (like employee deductions and employer matches), and notice distribution. They act as bookkeepers tracking funds, contributions, loan payments, tax deferrals, and rollovers. The recordkeeper is the employee-facing element of retirement plans, providing the website for participants to access their accounts. Recordkeeping services are offered either as standalone services or bundled with TPA services.

• Full-service recordkeepers (bundled) — Offer comprehensive 401(k) plan management, from design to administration to recordkeeping
• Recordkeeper only (unbundled) — Maintain plan records only, while other management services are handled by either the sponsor or other third-party advisors and administrators.

Custodian

The custodian for a 401(k) plan acts like a bank. They handle fund transfers, payments, and asset safekeeping in a 401(k) plan. They don't provide investment advice. While the plan administrator or a TPA monitors these transactions to keep compliant, the custodian is the entity that actually holds assets and invests the funds in a plan.

Key Employee

In 401(k) plans, key employees are crucial business figures with significant ownership or decision-making roles. According to the IRS, key employees must fulfill at least one of the following criteria:

• Ownership stake of 5% or more
• Ownership stake of 1% or more with annual compensation of $150,000
• Officer with annual compensation exceeding $215,000 in 2023

Highly Compensated Employee (HCE)

Retirement plan participants are divided into two buckets: highly and non-highly compensated employees. The IRS defines a highly compensated employee as any individual who either:

• Owned over 5% stake in the plan sponsor’s business at any time during the current or preceding year, regardless of compensation
• Ranked among the top 20% of highly paid employees in the company and received compensation exceeding specified dollar amounts in the previous year:some text
  • $155,000 for 2024
  • $150,000 for 2023
  • $135,000 for 2022

Businesses must identify HCEs for 401(k) plans to pass IRS-mandated non-discrimination tests and keep their deferrals within permissible limits. 

Additional Resources

What is a Highly Compensated Employee (HCE)?

Non-Highly Compensated Employee (NHCE)

A non-highly compensated employee or NHCE is any employee that doesn't meet the highly compensated employee (HCE) criteria required by non-discrimination testing.

Distribution

When plan participants withdraw funds from their retirement accounts, it's termed distribution. Most distributions are taxable by the IRS based on the participant's tax bracket. There are different types of distributions based on the type of retirement plan and the timing of the distribution. For example:

• Normal Distributions are withdrawals made by participants when they reach the retirement age specified by the plan, typically around 59.5 years.
• Required Minimum Distributions (RMDs) are withdrawals mandated from all employer-sponsored retirement plans and IRA-based plans when a participant reaches the age of 72. If the account holder doesn't withdraw the full RMD amount on time, they may be subjected to a 50% excise tax. However, SECURE 2.0 reduces this tax rate to 25%, and possibly even to 10% if the RMD is rectified within two years.
• Rollover Distributions are a special type where individuals withdraw funds from one retirement plan and deposit them into another. These are not subject to taxes.
• Periodic Distributions are regular payouts such as the monthly pension received by pension plan participants or beneficiaries.

Many rules govern retirement plan distributions, with financial penalties for noncompliance. For instance, withdrawing funds from a tax-advantaged retirement plan before reaching eligibility age often triggers penalties, except in select circumstances.

Rollover

A rollover occurs when plan participants transfer all or part of their 401(k) balance from a previous employer's plan to a new retirement plan or IRA within 60 days. Rollovers are typically tax-free unless the rollover is to a Roth plan. Typically, recordkeepers are responsible for overseeing rollovers in a retirement plan, making it simpler for employees to manage and track their retirement investments while offering greater control over assets. 

Vesting Schedule

While participants own their contributions immediately, employer contributions to qualified retirement plans often follow a vesting schedule defined in the plan document. This schedule determines when participants gain full non-forfeitable ownership rights to the plan assets. 

Employers implement vesting schedules to encourage employees to stay with the company longer. Typically, these schedules span three to five years, ensuring that all employees are fully vested by the time they reach normal retirement age or before the plan ends. 

Form 5500

Form 5500 is an annual document prepared by plan sponsors. It discloses sponsor details and organization data like participants’ legal names and employer identification numbers (EIN), and plan details like plan characteristics, assets, fees, and eligible employees to the IRS and Department of Labor. Sponsors usually hire TPAs for this job. Meeting this filing requirement is crucial to staying transparent and compliant with regulations.

Regulatory Frameworks

ERISA (Employee Retirement Income Security Act)

The Employee Retirement Income Security Act (ERISA), established in 1974, is a federal law that requires plan administrators to provide participants with information about the plan, comply with fiduciary responsibilities, offer legal protections, and more. The law mandates that plan providers uphold specific standards, such as:

• Clear communication of plan details to participants
• Minimum standards for participation, vesting, benefit accrual, and funding
• Procedures for participants to make claims and appeals to access their benefits
• Standards for fiduciaries managing plan assets to protect participants' interests
• Participants' right to legal recourse for breaches of fiduciary duty

Fiduciary Responsibility

Under ERISA, entities that are involved in retirement plan management—including plan sponsors, administrators, and investment advisors—must fulfill several fiduciary responsibilities:

• Acting solely for the benefit of plan participants and beneficiaries
• Carrying out duties with care, prudence, and diligence
• Diversifying plan investments and following plan documents 

Notably, fiduciary responsibilities only include the standards to be followed for carrying out the plan functions, not the results. For example, fiduciaries are not responsible for the degree of success of a plan investment as long as they ensure a well-diversified investment portfolio and follow a prudent process for documenting and communicating plan activities. 

Fiduciary

According to ERISA, a plan fiduciary is any entity that has discretionary authority and control over the management and administration of retirement plans and investments. Based on their roles, fiduciaries can fall into three categories:

• 3(16) fiduciary: A 3(16) fiduciary is a service provider hired by an employer to manage the day-to-day administrative work for a 401(k) plan. Any 401(k) service provider that elects to offer fiduciary administrative services can be labeled a 3(16) fiduciary. 
• 3(21) fiduciary: A 3(21) fiduciary provides advice about how the plan can invest its assets.
• 3(38) fiduciary: A 3(38) fiduciary has the authority to actually manage the investments.

SECURE Act

Setting Every Community Up for Retirement Enhancement (SECURE) Act, enacted in December 2019, aims to address Americans’ lack of retirement savings by making retirement savings plans accessible to more employees. 

Updated in December 2022, SECURE 2.0 introduced several new rules to encourage wider plan adoption and enhance retirement security. Some of the mandates with the biggest impacts on 401(k) plan administrators are:

• Section 101: Automatic Enrollment—The legislation requires that every 401(k) or 403(b) plan created after Dec. 29, 2022, automatically enroll eligible employees in the plan with a starting contribution rate of 3-10% of the employee’s pay. The contributions are then automatically increased by 1% each year until they reach a minimum of 10%, but not more than 15%, of the employee’s pay.
• Section 603: Catch-up contributions— Section 603 requires employees aged 50 or older who earn more than $145,000 yearly to make catch-up contributions on a Roth basis—in other words, after taxes. This helps them boost retirement earnings by making them eligible for tax-free withdrawals at retirement.
• Section 125: Long-term, part-time employees— The original SECURE Act required employers to let part-time employees who completed 1,000 hours of work in their first year, or 500 hours of service over three consecutive years, join their 401(k) plan. Section 125 of SECURE 2.0, effective for plans starting after December 31, 2024, lowers the second time frame to two years. It also guarantees that eligible long-term, part-time employees have access to 403(b) plans that are subject to ERISA. Employees that qualify for a plan under Section 125 are entitled to a year of vesting service for every 12-month period in which they work a minimum of 500 hours.

Additional Resources

SECURE 2.0 Overview for Plan Providers

SECURE Act 2.0 Timeline

Section 603 Implementation Plan

401(k) Recordkeeper’s Guide to SECURE Act 2.0 Start-up Tax Credits

Non-discrimination Testing

Non-discrimination testing, required by the IRS, assesses whether all employees have equal access to a retirement plan. It requires that key employees and highly compensated employees (HCEs) stay within a specific contribution rate, which is determined by the contribution rate of non-highly compensated employees (NHCEs). Non-discrimination testing involves several assessments:

• Actual Deferral Percentage (ADP) Test—The ADP test compares HCEs' and NHCEs' average salary deferral percentages to ensure fairness in contribution rates. The ADP of HCEs must not exceed the ADP of NHCEs by more than two percentage points.
• Actual Contribution Percentage (ACP) Test— The ACP test is similar to ADP, but instead of assessing employee deferrals, ACP focuses on the employer’s matching contributions or employees’ after-tax contributions. 
• Top-heavy determination—If key employees hold over 60% of the total plan assets, the plan is considered top-heavy. Under top-heavy plans, the employer is required to pay a minimum of 3% of non-key employees' compensation to their 401(k) accounts.
  

Additional Resources

Non-discrimination Testing: 401(k) Compliance

Types of Retirement Plans 

Employer-Sponsored Retirement Plan

Employer-sponsored retirement plans operate by automatically deducting a portion of an employee's earnings from each paycheck and placing it into a retirement fund. Employers can also pitch in, either matching a fraction of the employee's contributions or making a fixed contribution. There are different variations of employer-sponsored retirement plans like 401(k)s, defined benefit plans, simplified employee pension (SEP), etc. These often come at minimal or no cost to employees and provide significant tax benefits to employers.

Defined Benefit Plan (Pension)

A defined benefit plan, more commonly known as a pension, is an employer-sponsored retirement plan that guarantees a specified monthly payout for employees at retirement. This can be a fixed dollar amount or calculated based on factors like salary and years of service. Most defined benefit plans are protected by federal insurance from the Pension Benefit Guaranty Corporation (PBGC).

Defined Contribution Plan

Defined contribution plans are voluntary employer-sponsored retirement plans that allow tax-deferred contributions from employees and employers. Each pay period, a fixed percentage of the employee's pay goes into their retirement account, with these funds being invested on their behalf. 

However, unlike defined benefit plans, defined contribution plans do not promise a specific benefit, and the plan's value can fluctuate based on investment performance. Examples of defined contribution plans include 401(k), 403(b), employee stock ownership plans, and profit-sharing plans.

401(k) Plan

Among all the employer-sponsored defined contribution plans, 401(k) is the most popular. 401(k) plans enable employees to save for retirement through payroll deductions. Employees can choose to defer a portion of their salary (up to a set limit) into the plan before taxes, which is then invested on their behalf. Employers may also match employee contributions, making it a valuable retirement savings tool.

403(b) Plan

While 401(k) plans are available to employees of for-profit, private organizations, 403(b) plans, also dubbed tax-sheltered annuity plans, are a defined contribution option for eligible employees in public schools, churches, and tax-exempt organizations under Code Section 501(c)(3). Like 401(k) plans, 403(b) plans allow employees to defer money from their paychecks, with the added perk of potential employer matching contributions.

Savings Incentive Match Plan for Employees (SIMPLE) IRA

The SIMPLE IRA Plan (Savings Incentive Match Plan for Employees) is a tax-deferred retirement plan tailored for small businesses with fewer than 100 employees. Similar to 401(k) plans, employers have the option to match employee contributions that go into individual retirement accounts (IRAs) or annuities. However, SIMPLE IRA plans typically have lower contribution limits compared to larger employer-sponsored plans like 401(k).

Simplified Employee Pension (SEP) Plan

Simplified employee pension (SEP) plans offer employers of any size, including self-employed individuals, the opportunity to contribute to traditional IRAs set up for their employees. With lower start-up and operational costs than other workforce retirement plans, SEPs allow employers to contribute up to 25% of each employee's pay, up to a limit of $66,000 in 2023. Contributions are tax-deductible, and investments grow tax-deferred until retirement. Notably, SEPs only permit employer contributions.

Multiple Employer Plan (MEP)

A multiple employer plan (MEP) is a retirement savings arrangement where multiple employers participate in a single plan, typically sponsored by a professional employer organization (PEO) or an association. By sharing a common affiliation, such as membership in an association or engagement with a PEO, participating companies collectively enjoy several benefits, such as:

• Simplified reporting: MEP eliminates the requirement for individual Form 5500 filings
• Reduced audit requirements: MEP removes the need for annual plan audits
• ERISA bond protection is not necessary under MEP arrangements
• Lower costs due to outsourced administrative tasks

However, customization options are limited compared to single employer plans.

Pooled Employer Plan (PEP)

Introduced by SECURE Act 2.0, pooled employer plans (PEPs) are a variation of multiple employer plans (MEPs). In a PEP, participating employers delegate all administrative responsibilities to a designated pooled plan provider (PPP, or P3) acting as a 3(16) fiduciary. Unlike traditional MEPs, PEPs don't require participating employers to share a common affiliation.

Key Points:

• Shared resources and outsourced administration lead to cost savings
• Flexibility and customizability are limited compared to single employer plans
• Despite their potential benefits, PEPs are relatively new and face low awareness and adoption rates

Safe Harbor 401(k) Plan

A safe harbor 401(k) plan is a tax-advantaged retirement option that requires the employer to make tax-deductible contributions on their employees’ behalf, either through a match of the employee’s contributions or through a non-elective contribution. The funds must also be fully vested at the time of contribution. These plans help employers automatically pass the IRS-mandated non-discrimination tests and allow employees to contribute the maximum permissible amount to their 401(k) accounts. 

Roth 401(k)

The Roth 401(k) is an employer-sponsored retirement plan allowing contributions to be made after taxes. Contribution limits mirror those of traditional 401(k) plans, while qualified participants enjoy tax-free withdrawals upon retirement. 

Catch-up Contributions

Catch-up contributions, established by the Economic Growth and Tax Relief Reconciliation Act of 2001 (EGTRRA), enable individuals aged 50 or older to exceed the usual contribution limit as they approach retirement. In 2023, eligible employees could contribute an extra $7,500 annually to qualified retirement plans like a 401(k) or 403(b).

SECURE Act 2.0 introduced new rules for catch-up contributions:

• Starting in 2025, individuals aged 60 to 63 can contribute an additional $10,000 or 150% of the standard limit, whichever is greater.
• Section 603 requires participants earning over $145,000 annually to make catch-up contributions on a Roth basis for tax-free withdrawals in retirement.

Additional Resources

How to Prepare for Section 603 of Secure Act 2.0: An Implementation Plan

Process Optimization Terms

Automated Payroll Processing

Automated payroll processing uses technology to streamline payroll calculations, management, and payment distributions. This modern approach to payroll offers numerous advantages:

• Reducing errors from manual data entry
• Ensuring timely payment to employees by eliminating processing delays
• Automating payroll deductions and contributions management to increase compliance
• Enhancing recordkeeping for auditing purposes

Error Handling or Plan Error Correction

Inefficient data handling practices can lead to errors in eligibility checks, documentation, or contribution management—resulting in compliance issues and penalties. Error handling or plan error correction involves identifying and rectifying all the inconsistencies in employer-sponsored retirement plans. For information on common 401(k) mistakes, solutions, and prevention, check out the IRS's 401(k) Plan Fix-It Guide.

Automatic Enrollment

Automatic enrollment is a mandate stipulated under Section 101 of SECURE Act 2.0 that requires employers to enroll eligible employees in qualified retirement plans by a specified date unless they opt out. 

Section 101 is effective beginning January 1, 2025, which means that 401(k) and 403(b) providers must soon put in place and test the technology they will need to automatically enroll and increase the contributions of millions of participants. Failure to do so correctly and on time could result in noncompliance, stiff fines, and legal fees associated with disputing any penalties in court.

Additional Resources

What Retirement Plan Providers Need to Know about Secure Act 2.0 Section 101

Eligible Automatic Contribution Arrangement (EACA) 

Eligible automatic contribution arrangement (EACA) is a method for automatically enrolling employees in 401(k) plans. Unlike basic automatic enrollment, EACAs:

• Require employers to notify all employees before enacting the plan's default automatic contribution percentage
• Allow employees to withdraw automatic enrollment contributions (with earnings) based on the plan's terms

Payroll API Integration Terms

401(k) Payroll Integrations

401(k) payroll integrations allow recordkeepers or plan administrators to access the data held within the sponsor’s payroll system and facilitate seamless data exchange between systems. Integrating payroll systems with 401(k) plans streamlines plan management by:

• Allowing 360° or bi-directional data synchronization, so plan administrators can automatically fetch and push deferral updates within the sponsor’s payroll system
• Enhancing data accuracy and plan efficiency 
• Maximizing operational efficiency by reducing the need for data reconciliation efforts and increasing responsiveness throughout the retirement plan cycle
  

Additional Resources

Guide to 401(k) Payroll Integrations

Secure File Transfer Protocol (SFTP)

Secure File Transfer Protocol (SFTP) is a method that uses shell encryption to securely send and receive sensitive information, like employment data, between businesses using a shared server. SFTP involves preparing data in a flat file format (like CSV or JSON), encrypting it, and then transmitting the files through a secure connection between two platforms. While SFTP is the most commonly used data-sharing method in the retirement industry, it requires a long, expensive setup process, cannot facilitate real-time data exchange, and is prone to errors caused by human intervention.

Application Programming Interfaces (API)

APIs, short for Application Programming Interfaces, act as bridges that enable communication between two different applications. They create a standardized pathway for two softwares—such as a payroll system and a recordkeeping platform—to exchange data and information, regardless of the programming languages they're built on. API integrations offer the same security as SFTP as well as near-real-time data access, but eliminate the need for time-consuming manual processes.

Additional Resources

SFTP vs API: Which Integration Method is Best for Employment Data?

Payroll APIs

Payroll APIs are simply APIs that are specific to payroll systems. They offer:

• Accurate transfer of payroll data to retirement accounts
• Real-time updates on contributions and deductions
• Automated tracking of employee retirement savings and loan status
• Simplified administration and improved accessibility for plan administrators, participants, and sponsors

Unified APIs

Unified APIs are a technology layer that provides access to many different applications and systems through a single API integration. Unified API providers sell pre-built connections to a multitude of applications within a category of software, meaning that users need only build one integration to the unified API provider to access the data within all of the systems the unified API has connections to. Unified APIs are standardized, meaning that all the data that flows through the API arrives in the same format, regardless of its origin. They’re an alternative to building dozens or hundreds of integrations in-house, which require high upfront capital investment, lengthy building periods, and long-term maintenance.

Additional Resources

Build vs Buy: Leveraging Employment Data Via HRIS and Payroll Integrations

Employment Ecosystem

The employment ecosystem is the collection of B2B software providers that employers use to manage their workforce. The ecosystem is vast, but any system that touches employment data is part of the employment ecosystem. These companies fall into 2 main categories:

• Employment Systems of Record: Employment Systems of Record are centralized sources of truth for employment records, usually owned by HR. HRIS and payroll are the two primary systems of record. However, for some applications, Applicant Tracking Systems (candidate) and Benefits Administration Systems (election, dependents, etc.) may also contain employment data needed for their use case.
• Third-Party Applications: These are SaaS applications that rely on employment data to function but primarily focus on additional services that help with human resource planning, management, and retention. Some examples include HR technology like talent management tools, employee benefits solutions, and finance applications like expense management tools.

Unified Employment API

A unified employment API is a vertical-specific unified API focused on the employment ecosystem. Unlike generalized unified APIs, unified employment APIs offer targeted market coverage, deeply granular data sets, and both read and write functionality to developers that require expertise in the employment ecosystem—along with the typical features of a generalized unified API.

These APIs are best suited for B2B products where the end users have administrative access to employment systems, such as HR admins, people operations professionals, benefits managers, or even finance team members. These users can then authorize a secure connection to key sources of employment data housed in their HRIS or payroll system. Developers can then leverage that data to create deeply integrated and personalized solutions for their customers.

Additional Resources

The Emergence of Unified Employment API

Authentication & Authorization

API authentication is vital in retirement technology to confirm users' identities when accessing sensitive employment data. Authentication is the process of verifying the identity of a user making an API request. It involves presenting credentials such as a username and password, API key, or digital token, which are then accepted or rejected.

Various authentication protocols, such as API keys, JSON Web Token (JWT), OAuth 2.0, user credentials, token-based authentication, and two-factor authentication protect sensitive data by reducing potential risks like data breaches, corruption, deletion, and denial of service (DoS) attacks.

However, authentication alone isn't sufficient for total security. It needs to be paired with authorization, which determines the level of access users should have based on their credentials.

Data Mapping

Data mapping is the process of reconciling data from different API endpoints to seamlessly sync data between systems. Even if two fields contain the same information, they might be named or structured differently. The process involves literally “mapping” two distinct data fields that hold the same information to one another, so the data can be automatically synced.

For example, when handling "employee address" in two different HRIS, what's referred to as 'location' in one system might be called 'residence' in another, causing confusion and making it harder to use the data. Data mapping involves training the API integration to recognize that the data held under ‘location’ in one system should sync with the data field called ‘residence’ in the other.

Data mapping can be tedious, especially when dealing with multiple APIs from different providers.  This is where a unified API can help—it lets vendors map data from different providers to one common model. Users can then request data from various providers without fretting over their differences.

Data Standardization

Data inconsistency among payroll systems can occur due to different data storage protocols followed by different providers. Data standardization normalizes data formats across endpoints to prevent loss of data due to mapping errors. Recordkeepers often opt for unified APIs for standardizing data obtained from multiple HRIS and payroll systems.

Data Synchronization

Data synchronization is the process of automatically updating data changes between two or more systems to maintain consistency. Frequent and timely data synchronization is vital for effective collaboration and compliance. Most automated API integrations sync data every 24 hours but will allow users to sync the data on demand.

Encryption

Encryption is the practice of disguising sensitive data in transit so it cannot be intercepted or accessed by unauthorized entities. In the retirement industry, end-to-end encryption protocols like AES 256-bit or TLS 1.2 are essential to safeguard sensitive employment data such as personal identifiable information (PII) and bank details and ensure compliance with data protection regulations.

What’s next?

Visit the Finch Blog to learn more about the best practices and trends shaping the retirement industry and discover what the experts are saying.

‍

Runae Lee is the Head of Partnerships at Finch. He’s spent years working in the human resources industry, where he’s seen first-hand the evolution of employment technology. At Finch, Runae leads our efforts to partner with leading HRIS and payroll providers as we work to create a more standardized and connected employment ecosystem.

Want to collaborate with us? Get in touch with our team and join industry leaders like Gusto, UKG, BambooHR, HiBob, and more.

‍

I didn’t have “watch a live performance by Flo Rida with a cameo from Flavor Flav” on my 2024 bingo card, but that’s the thing about Transform—the HR conference of the moment is full of surprises. 

Some Finch colleagues and I attended the Las Vegas event last week, where we got to talk shop, meet hundreds of like-minded HR tech professionals, and celebrate Finch being named a finalist in the Transform Awards’ Innovators category: “Transformative Tech of the Year.” 

Most importantly, we came back energized and with fresh insights into the state of employment technology. Here are my key takeaways from Transform 2024.

1. Enthusiasm for AI remains high, but the best is yet to come

Artificial intelligence, like many emerging technologies (crypto, Web3, 3D TVs, AR/VR, etc.), was a bit oversold last year, when seemingly all vendors added "AI-powered [fill in the blank]" to their marketing materials. That was scaled back a touch this year, as most tech companies refocused their attention on their core products, but there is no doubt in anyone's mind that AI is coming. 

I had more than one friendly debate with other attendees in which I sided with the skeptics, but we all agreed that it’s critical we prepare our workforce for the fundamental changes AI will bring in the coming years. That means it’d be prudent to invest in the employees who are most likely to see their jobs disrupted by training them on new skills or upleveling their current strengths. 

Bottom line, AI is having its “moment” with technologies like ChatGPT and DALL-E already in the hands of consumers; but the reality is, it's been around for years. It's already being used, but in ways that are behind the scenes and mundane. However, investment in AI is accelerating and undoubtedly creating the next wave of disruptive tech that will change the way we work and play. Let's start preparing for that future.

2. Is the HRIS undergoing a renaissance?

A slew of employment technologies across various verticals, from people analytics to ATS, have recently launched their own HRIS: Chartop, Workable, and Lattice to name a few. Seemingly a trend, it begs the question—why?

I have a few theories. 

First of all, HRIS is easier to build than a full-fledged payroll system. But alongside payroll, HRIS has true platform power. Point solutions need to be in sync with systems of record like BambooHR or HiBob, since they also house important employee data. So it would make sense that these point solutions want to bring HRIS in-house to deliver a more seamless, unified experience to customers. 

In speaking with these companies, a recurring theme became abundantly clear: customers who are fanatical about your products and services want you to solve more of their problems. Tech companies are very sensitive to customer pain, and will build adjacent products where there is strong demand and where they feel confident that they can deliver something unique and truly special.

3. Integrations are table stakes

This one wasn’t much of a surprise, but it’s worth mentioning just how much this concept permeated the entire conference. Long gone are the days where integrations were a value-add. Employers want modern solutions, and every vendor touts their "seamless" and "automated" workflows to attract new buyers. This means that today’s leaders need to adapt their integration and API strategies to fend off new-age, tech-forward upstarts that feature integrations out of the box for customers. 

For many of the new solutions on the block, the SMB segment is still paramount; but all big companies started out small, and as the winning SMBs grow, even the tech-forward platforms will likely need to look to outside solutions like Finch to continue scaling their integrations and expanding upon the integrated experiences they offer to their customers.

4. Invest in people, not products

This probably won’t come as a surprise to any seasoned venture capital folks, but it was definitely a strong learning for me. I attended several VC panels during Transform, and at least one of the speakers noted something that stuck with me: Products change over time; founders do not. 

Their point was that when investors are evaluating a company, what they’re also asking themselves is if they believe in the people that are building the product. You can’t exactly fire a founder. Meeting in person is crucial, because it helps both parties gauge each others’ personalities and the other intangibles that don’t stand out on a Zoom call or in a slidedeck. 

This doesn’t only apply to VC. Meeting remotely is fine, but there’s something electric about meeting prospects, customers, or partners in person that we need more of. We all want in-person events to come back because there’s no better way to build rapport and trust.

5. Transform brings the energy

A conference is a conference is a conference—until it’s not. Transform really took the monotonous and breathed some life into it. I was so invigorated by the passionate group of People leaders and early stage founders in attendance, from CHROs and their teams to CEOs pounding the pavement for their companies with fire in their bellies (and probably too much caffeine).

To put it simply, Transform just had good vibes. Who could argue with a welcome reception complete with hors d'oeuvres served under a massive tent and a live drum line? 

Where will we see you next?

While we eagerly await Transform 2025, our team is busy preparing our conference schedule for the next few months. If you’re attending the NAPA 401(k) Summit or SHRM Annual Conference, swing by our booth to say hi and learn about Finch’s Unified Employment API. Or try it yourself for free. 

We’re delighted to announce our new partnership with Oyster, a leading global employment solution. This partnership takes us one step closer to our vision of democratizing access to employment data by supporting innovators who are creating an integrated experience for employers.

‍

Finch is on a mission to empower innovators to build the next generation of employment technology. Through our Unified Employment API, Finch unlocks instant access to employment data from hundreds of HRIS and payroll systems with a single integration—making it easier for developers to build useful tools for employers. 

Partnering with like-minded platforms is vital for Finch's success, which is why we’re thrilled to team up with Oyster, a leading global employment solution for compliantly hiring, paying, and providing benefits to employees around the globe.

“We’re beyond thrilled to partner with Oyster. We share a vision of empowering employers who onboard and support people around the world with the latest technology. Our partnership will help us deliver amazing integrated experiences for employers and accelerate innovation across the employment ecosystem." — Runae Lee, Head of Partnerships at Finch

Oyster at a glance

Recognized as a Leader among global employment platforms by G2, Oyster is trusted by thousands of businesses. These businesses rely on Oyster to simplify and automate hiring, onboarding, payroll, and employee rewards processes as well as to develop sustainable global talent strategies. As a popular Global Employment Platform (GEP), Oyster is designed to meet compliance standards in 180+ countries, which makes it a lucrative choice for global enterprises. 

Employers love Oyster because it provides access to deep local intelligence that can be used to build a competitive global employment strategy and a single platform to hire, onboard, pay, and care for talent without the need to open a legal entity in multiple countries. This saves time and costs, reduces administrative burdens, and simplifies compliance requirements associated with global hiring, payroll, benefits, and more. 

Oyster integrates with several HR tools including popular HRIS and ATS tools to help employers build custom workflows and improve team productivity.

Oyster and Finch: Shaping the future of employment

Oyster is committed to assisting innovators in creating solutions for a connected future of work, aligning well with Finch's mission to unify the fragmented employment ecosystem. This partnership highlights our shared goal and dedication to advancing employment technology.

Navigating a closed Employment Ecosystem

The rapid growth of the HR tech landscape over the past decade has caused employment data to be dispersed and siloed across thousands of payroll and HR systems—causing inefficiencies and blocking innovation across the employment ecosystem. To create a seamless user experience, HR systems must be able to interact with one another and share information easily.

However, building integrations and forming 1:1 partnerships is an uphill battle that requires a considerable investment of time, money, and talent, both upfront and on an ongoing basis.

What the Finch + Oyster partnership means for the future of employment

By fostering a close relationship with Oyster, Finch continues its mission to democratize access to the employment ecosystem. Together, we aim to lessen the integration woes for developers and employers in several ways:

1. Enable developers to unlock employment data in minutes: For years, data silos have been a burden on tech applications in the employment space, requiring an outsized investment in building 1:1 integrations and siphoning resources from product-enhancing initiatives. 

With this new partnership, approved developers can use Finch’s unified API to seamlessly read data from Oyster, enabling innovative use cases and solutions. Businesses can now focus 100% of their efforts on building tools that help employers create a productive, engaged workforce. At the same time, by partnering with Finch, Oyster can expand its network of developers and accelerate innovation for SMBs. 

“Delivering an integrated experience to our customers is the driving force behind all of our partnership efforts at Oyster. Working with Finch is a great opportunity for us to simplify integration-based partnerships and encourage more developers to connect with Oyster, ultimately providing a better user experience for our shared customers. We’re excited to support innovation and tackle unique use cases across the employment tech space with Finch.” — Mark Frein, Chief Operating Officer at Oyster

2. Create an integrated employer experience: Employers are turning away from data silos and manual data entry practices and looking to invest in integrated experiences in the workplace. This partnership presents a great opportunity for developers to use Finch’s API to create a connected experience or embed Oyster’s global hiring functionality into their platform.

With Finch Connect, employers can now connect their Oyster accounts and start syncing data with other third-party applications in their tech stack in a fraction of the time—eliminating hundreds of hours each pay period required to manually assist HR workflows.

How the integration works

Developers who build B2B applications with Finch can now enable users to connect their Oyster accounts through a simple workflow that is baked into their application. Using Finch Connect, employers can safely grant permission to access data housed in Oyster to the third-party applications they use.

Finch Connect can be displayed at any point in an application’s customer flow and handles credential validation, multi-factor authentication, and error handling for each system Finch supports—including Oyster. With Finch Connect, employer onboarding time is significantly reduced compared to antiquated integration methods—making it simpler for Oyster users to onboard with any third-party platform they need. 

Once the employer has completed the process with Finch Connect, our Unified Employment API starts syncing data between the two platforms, enabling various use cases. By establishing data flow from Oyster to third-party applications, this integration can enable use cases like these: 

• Automated employee onboarding in training modules, dashboards, and directories based on criteria like start date or title
• Increased employee engagement through automated rewards and recognition triggered by milestones like anniversaries and promotions
• Simplified benefits eligibility checks and enrollment processes
• And much more

Learn more about Oyster’s API by visiting their integrations page. Or, if you’re building your Oyster integration via Finch, check our developer docs.

Unlock employment data with Finch

As the #1 Unified Employment API, Finch allows users to access organization, payroll, and deduction data across multiple payroll and HRIS systems, including Oyster, through a single integration. Talk to our sales team to learn how we can help.

If you’re an HRIS or payroll provider, increase compatibility with third-party applications by partnering with Finch. Contact us for partnership information.

The retirement industry is on the precipice of explosive growth. Alarmed by Americans’ lack of retirement savings, the US government has enacted new legislation to incentivize small businesses to offer 401(k) plans and to increase employee participation. Key to those incentives are the SECURE Act 2.0 tax credits.

SECURE Act 2.0 established three tax credits for small businesses that offer retirement savings plans to their employees—two of which are specific to plans established after 2022—including a credit that covers the startup costs of establishing a plan for the first time. 

This presents a golden opportunity for 401(k) administrators: there has never been a better time for small businesses to offer a retirement plan. Recordkeepers are in a position to capitalize on this push, leveraging the urgency SECURE Act 2.0 tax credits are driving among small employers to earn new business and increase revenue from existing customers.

In this article, we’ll cover the new requirements and tax credits of the SECURE Act 2.0, how they’re driving more small businesses to offer retirement plans, and what 401(k) recordkeepers and TPAs need to do to stand out and win these sponsors’ business. 

What are the SECURE 2.0 tax credits?

The Setting Every Community Up for Retirement Enhancement Act of 2022—better known as SECURE Act 2.0—aims to boost individual retirement savings and encourage employers to offer attractive retirement plans by reducing startup expenses. The three tax credits offered under the new provisions are:

• Employer contribution tax credit
• Startup cost tax credit
• Automatic enrollment tax credit

Employers that take advantage of all three tax credits could be eligible for up to $55,500 in tax credits in the first year alone—an enormous potential cost savings. 

The employer contribution and startup cost credits only apply to plans established after 2022; the automatic enrollment credit is also applicable to older plans. All three credits are only available to businesses with fewer than 100 employees.

Employer contribution tax credit

Sponsors offering new 401(k), SEP, and SIMPLE plans are eligible to receive tax breaks for employer contributions, up to a maximum of $1,000 per employee per year. Businesses with fewer than 50 employees can claim up to 100% of their contributions; larger businesses’ claims are reduced by 2% for every employee over 50. These credits can be claimed for up to five years; the percentage decreases each year by 25%, beginning in year three. 

Startup cost tax credit

Sponsors can also claim the startup and maintenance costs of new plans for up to three years. These credits cover 100% of plan costs for employers with fewer than 50 employees and 50% for employers with 51–100 employees. Sponsors can claim $250 for each eligible Non-Highly Compensated Employee (NHCE), up to a maximum of $5,000.

Automatic enrollment tax credit

This is the only credit that applies to retirement plans in place before 2023. Sponsors that incorporate automatic enrollment into their plans under the Eligible Automatic Contribution Arrangement (EACA) before the mandated deadline of January 1, 2025 can earn a $500 annual credit for up to three years.

‍Also read: Secure Act 2.0 Implementation Plan

How can 401(k) recordkeepers leverage SECURE Act 2.0 tax credits?

401(k) recordkeepers have an opportunity to take advantage of the urgency SECURE Act 2.0 is driving among small employers, both through compliance mandates and tax incentives.

Traditionally, small businesses have been less likely to offer retirement plans for a variety of reasons. In addition to the startup costs, small teams may be particularly concerned about the administrative burden of a retirement plan and intimidated by the stringent regulations that govern them. 

That means that while 401(k) recordkeepers can expect an influx of new sponsors seeking their services, they’ll need to be prepared to accommodate these sponsors’ unique needs to stand out among the competition and win new business and establish positive, long-term relationships with customers.

This all boils down to three key strategies:

1. Invest in the sponsor experience — Small businesses are just that—small. They have less bandwidth to take on the administrative burden that comes with managing a retirement plan. To avoid these additional complexities, 74% of small businesses do not offer a 401(k) plan to their employees. Recordkeepers can leverage this gap and win more deals by offering the easiest user experience.
2. Simplify compliance with auto-enrollment and eligibility checks — Retirement plans established after 2022 are subject to new regulations, some of which are already in place and some that will go into effect in January 2025. Sponsors will seek out providers that are best suited to keep them compliant and reduce their risk of incurring fines.
3. Offer world-class security — Retirement plans hold tons of sensitive data, so recordkeepers need to be prepared to demonstrate how they’re keeping sponsor and employee data safe.

Invest in the sponsor experience 

As a first-time sponsor, many employers are wary about the hassle of plan administration and the degree of resource involvement. To deliver a high-quality customer experience, recordkeepers need to ensure fast sponsor onboarding, ease of using the plan administrator’s service, and reduced administrative work for the plan sponsor. 

Traditional methods of pulling employee data and setting up data-sharing processes are highly time and resource-intensive tasks—leading to lengthy onboarding processes for sponsors. Employers need to spend hours on HR administrative work each pay period to keep the 401(k) running smoothly, which can negatively impact customer satisfaction.

Recordkeepers that want to take advantage of the new business spurred by the SECURE Act 2.0 tax credits will need to offer an alternative that minimizes the sponsor’s responsibility. Payroll integrations offer a solution—when the recordkeeper can pull data directly from the sponsor’s payroll and send changes in contributions and deductions back, much of the manual work is eliminated, which reduces the burden on both the sponsor and the recordkeeper.

These 401(k) payroll integrations, powered by APIs, are game changers—but they’re also expensive and time-consuming to build and require ongoing maintenance. Rather than trying to build integrations to multiple payroll systems in-house, recordkeepers can leverage unified APIs to gain access to a multitude of payroll providers in the time it takes to build just one integration.

Simplify compliance with automatic enrollment and eligibility checks

SECURE Act 2.0 set forth new requirements, including the auto-enrollment of employees and new eligibility criteria for part-time employees and catch-up contributions. Recordkeepers must be prepared to quickly and accurately check employee eligibility and enroll them in their sponsors’ plans to maintain compliance. 

All new retirement plans established after 2022 are required to have automatic enrollment enabled by 2025, meaning employees have to opt out of participation, rather than opting in. 401(k) recordkeepers that make it easier for employers to conduct eligibility checks and simplify the process of automatically enrolling employees in specific plans will win against the competition.

Also read: SECURE Act 2.0 Timeline for Retirement Plan Providers.

However, there are two issues that can make auto-enrollment problematic for plan administrators:

1. Data validation: Many recordkeepers and plan sponsors rely on manual data entry for enrolling employees in retirement plans, which is prone to error and leads to data inconsistency across platforms—making it difficult to conduct eligibility checks.
2. Timeliness: Manual methods of enrolling employees can also lead to missed deadlines and inaccurate contribution details, risking penalties for non-compliance.

Both of these problems can be solved by removing the element of manual data entry. Payroll and HRIS integrations give retirement plan providers real-time access to employee census and payroll data, allowing them to perform eligibility checks and automate plan enrollment based on information from the employer’s source of truth. When the payroll integration offers both read and write capabilities, the recordkeeper can also automatically update changes to employee deductions and employer contributions directly within the sponsor’s payroll systems—no manual intervention required.

Offer world-class data security

Retirement is a heavily regulated industry due to the sensitive nature of employment data, such as personally identifiable information (PII), bank details, and so on. Many small businesses starting 401(k) plans for the first time are concerned about ensuring compliance and safeguarding data. 

Although plan sponsors tend to delegate data cybersecurity duties to recordkeepers, they have a fiduciary duty to ensure that their recordkeepers follow maximum security practices. As a result, to win customer confidence, all 401(k) plan administrators need to ensure total transparency and comply with industry standards like SOC2 and HIPAA when dealing with employment data.

Once again, integrations can play a pivotal role here: because integrations eliminate the need for manual data-sharing through CSV uploads or SFTP, they incur less risk that sensitive data could be exposed. Unified API providers typically come with industry-standard security for data in transit and data at rest, offering peace of mind for both the recordkeepers that use them and the employers whose data travels through them.

Create best-in-class customer experiences with Finch’s Unified Employment API

SECURE Act 2.0 tax credits stand to drive many more small businesses to offer retirement plans for the first time. As a 401(k) recordkeeper, you have an opportunity to capitalize on this movement and win new business; but doing so will require a user experience that reduces the burden on sponsors and ensures compliance. 

Finch’s Unified Employment API can help by unlocking integrations to 200+ HR and payroll providers, covering 88% of US employers. That affords your team to focus your efforts and resources on providing innovative solutions for your sponsors. 

Talk to our sales team today to explore the ways you can use Finch to help small businesses start a 401(k) plan and take advantage of the tax credits afforded by SECURE Act 2.0.

Frequently asked questions

Which employers are eligible for a SECURE Act 2.0 tax credit?

Employers must meet the following criteria for employer contribution and plan startup tax credits:

• Have fewer than 100 employees who earned at least $5,000 in compensation in the previous year
• Include at least one Non-Highly Compensated Employee (NHCE) in the plan
• Have not provided retirement plans covering the same employees in the last three years

All new and existing 401(k) plans that add the automatic enrollment feature under EACA before the January 2025 deadline are eligible for a $500 automatic enrollment credit for up to three years.

Are businesses in MEP or PEP eligible for a SECURE Act 2.0 tax credit?

Yes, all eligible employers, including those in a multiple employer plan (MEP) or pooled employer plan (PEP), can avail the small business tax credits under SECURE 2.0.

Which plans are eligible for tax credit?

The following plans are eligible for small business tax credit under SECURE 2.0:

• SEP, or simplified employee pension 
• SIMPLE IRA, or savings incentives match plan for employees
• 401(k)
• 403(b)

What are the qualified costs for the startup cost tax credit?

Qualified startup costs refer to the essential expenses a small business incurs for:

• Setting up and managing a qualified retirement plan, including recordkeeper fees and third-party administrator charges
• Educating employees about the plan

The credit doesn't cover costs paid through plan assets or investment expenses. 

What is the best way to auto-enroll employees in retirement plans?

The most effective method for 401(k) plan sponsors and recordkeepers to automatically enroll participants into retirement plans is through integrations with the sponsor’s HRIS and payroll systems. Finch’s Unified Employment API offers access to over 200  HRIS and payroll providers, allowing automatic eligibility checking and enrollment based on employment data directly from the employer's source of truth. Contact us to learn more.

Employers felt the repercussions of a slew of macro trends and technology changes in 2023: workforce volatility, challenging economic conditions, growing data security threats, and the rise of generative AI.

To adapt, employers turned to technology, seeking fast, user-friendly, and integrated tools to automate manual tasks and enable their teams to focus on high-priority work. More than ever before, they relied on their platforms’ ability to access and share employment data that has historically been locked within systems of record.

Since 2020, Finch has been committed to democratizing access to the otherwise complex, closed, and fragmented employment ecosystem so innovators are empowered to build powerful new solutions. Now, we’re looking back at what we accomplished together in 2023—and sharing our big goals for the year to come.

2023 Highlights

In 2023, we continued to expand the breadth and depth of Finch’s integration coverage and took our first step into write-back capabilities with the public launch of our newest product, Deductions. We hyper-focused on the developer experience to make connecting to Finch as seamless as possible, so our customers can focus on investing in their core product and bringing more value to employers.

A few major milestones helped us get here—from raising our Series B and expanding our Finch team to growing our network of partners and expanding our data coverage in new ways. 

Let’s take a closer look:

Investing in our team to build the #1 Unified Employment API

Finch started the year strong with a $40 million Series B round led by General Catalyst and Menlo Ventures, with participation from PruVen Capital, Altman Capital, and QED Investors. A few months later, we received an additional investment from Intuit Ventures, reflecting their trust and interest in Finch’s aim to enable Intuit Quickbooks’ partners and small business customers to connect applications to their payroll data. 

This new capital helped us support our customers in building new, innovative use cases across HR, fintech, and benefits verticals.

Our product is only as good as the team that stands behind it—so we invested in that team, growing our headcount by 67% to 80 employees. These reinforcements helped us reach new heights in 2023, like… 

3M+ employees connected through Finch

Since we started Finch in 2020, we’ve connected more than 3 million employees across nearly 40,000 employers. 

• Bigger network → more connections Finch integrates with 200+ HRIS & Payroll providers, covering 88% of all U.S. employers.
• More connections = more API calls Last year alone, we handled more than 1 billion API calls—that’s 31.7 per second!
• More API calls demand more reliability We understand that our customers place their trust in us when they connect to Finch’s API, so we worked hard to increase our field coverage and reliability in 2023. I’m proud to say that those efforts resulted in 99.99% uptime.

Launched new product to general access: Deductions API

Traditionally, for benefits providers, employer onboarding and enrollment has been a long, tedious process requiring a series of manual operations, heavy administrative burden, and coordination across multiple teams. Our recent survey of over 1,000 HR professionals revealed that HR teams invest 3-5 hours per payroll cycle to ensure accurate deductions and contributions for employees.

To automate this process, we launched a new product: Deductions APIs. This offering enables benefits applications to create and update employer contributions and employee deductions in their customers’ payroll systems, enabling use cases like automatic enrollment. We’re proud to be the only unified API offering it today.

Employers took notice: Deductions saw a 9x increase in adoption since its beta release. By leveraging this product, some of the largest retirement and benefits companies in the country offered employers greater compliance capabilities with new legislation like the SECURE Act 2.0, providing peace of mind for employers and an easier enrollment experience for employees.

This was just our first foray into Deductions—looking ahead, we plan to expand our coverage of popular payroll systems to serve more employers, broaden our deduction type support, and support complex edge cases like tiered and catch-up contributions. 

Announcing best-in-class partnerships with top employment providers

In 2023, we forged partnerships with leading employment providers, unlocking read and write capabilities to these employment systems of record.

• Gusto — An all-in-one HR platform, Gusto serves 200,000 small business employers and has been rated the Best Payroll Software of 2023 by the U.S. News and World Report.
• Paycor — Paycor’s HR platform modernizes people management for 40,000 employers ranging in size from 1–5,000 employees and had the highest user adoption among enterprise solutions in 2023, according to G2.
• Personio — Personio’s 6,000 employers across the globe benefit from automated and simplified HR tasks through a single platform. 
• UKG — UKG is an all-in-one suite of human capital management (HCM) applications used by 80,000 employers that has been recognized as a top-rated solution by G2, TrustRadius, and more.

Partnerships like these were huge stepping stones toward our broader vision of building a more connected experience for employers and accelerating innovation in the employment space.

Delivering an improved developer experience

Our mission is to democratize access to employment data, so it’s important that we make it easy for developers to connect applications to Finch. We introduced several features this year to provide more timely access to data, help developers build to Finch better and faster, and expand our data coverage in new ways.

• Real-time status updates with Finch webhooks for account update events, job completion events, and data change events
• Data syncs user interface (UI) to give developers, support teams, and product managers a quickly accessible dashboard containing the status of scheduled and requested data syncs across all connected customers
• Data Refresh endpoint for developers to request new data whenever they need it
• Provider Sandbox and backend software development kits (SDK) in multiple languages to help developers test integrations before building and spend less time on boilerplate code
• Request Forwarding to enable developers to make direct requests to employment systems and access any functionality that is natively supported by a provider’s API—even those outside of the scope of our standardized data models

2024 Goals and Plans

A successful 2023 paved the way for a brighter 2024—and we’re incredibly excited for what's to come. This year, we'll scale Finch’s product offering to accommodate greater coverage and more complicated setups, dive into payment operations, and expand across more employment systems. Here’s a preview of what we have up our sleeves for this year:

• Grow the Finch Provider Network — In 2024, we’ll expand the coverage and number of providers we support. At the same time, we’re committing to forging new partnerships, further increasing our API’s reliability, and supporting new, complex setups.
• Go deep with read-write capabilities — Deductions was our foray into productizing critical write-back capabilities from benefits providers to payroll systems; but we’re not stopping there. There is so much more value that we can offer in the employment stack. In partnership with our current customers, we’re exploring new offerings in payment operations, such as employee earnings and time and attendance.
• Expand to employment systems beyond HR and payroll — The rise of the Open Employment Ecosystem is inevitable. In the same way Open Finance has unleashed a new era of innovation in fintech, we believe a more accessible and connected employment ecosystem is a win-win-win for employment systems of record, third-party applications, and the employers they serve.

To catalyze this revolution in employment data access, we started with HR and payroll. But we’ll need to go beyond these systems of record and connect with new segments to unite the entire employment stack. We’re looking forward to exploring those next steps—stay tuned.

Build with Finch

In 2023, we worked alongside our customers to deliver the infrastructure that connects the employment industry, helping employers own their mission-critical data. This year, we’ll build on our momentum with continued investment in our talent, our resources, and our products to create an employment ecosystem where data and payment flow is safe, fast, and convenient.

We’re always looking to help innovators address crucial problems across the ecosystem and get to market faster. Get in touch with us or sign up for free.

A lack of integrations between your product and other software-as-a-service (SaaS) tools can be a dealbreaker for potential customers. In Gartner's 2023 report, B2B buyers ranked integration with their existing tech stack as the third most crucial factor in provider selection. To stay competitive, companies are increasingly turning to integration partnerships.

Simple integrations aren’t enough. Today’s customers demand seamless data exchange, but they also expect customizability and that the features of each tool will work in harmony to create a whole greater than the sum of its parts. Integration partnerships lay the foundation for creating this kind of user experience.

In this article, we'll discuss everything you need to know about building successful integration partnerships—from how to choose the right partner and best practices to common challenges and how to overcome them. We'll also answer some frequently asked questions.

Let's dive in.

What is an integration partnership?

Partnerships don’t always involve integrations, and vice versa. Software providers can form partnerships with one another for a variety of reasons—to cross-promote their solutions or share resources, like splitting the cost of a co-branded industry report. Similarly, two companies can integrate their applications through an open API under developer terms and conditions governing use. 

An integration partnership is the combination of a formal business relationship and a software integration between systems. These partnerships can support stronger, more strategic integrations and formalize a working agreement between both companies that empowers both to grow.

Companies that offer distinct but complementary services and share the same ideal customer profile (ICP) will partner to blend services, technologies, and resources that make both products stronger and enhance the customer experience. This offers a distinct advantage over competitors whose products don’t work with the other tools in their customers’ tech stacks.

Often, integration partnerships also involve cross-promotion efforts—they may list each other on their product marketplaces, share leads, or establish referral programs to mutually grow one another’s business.

The benefits and business value of integration partnerships

A good integration partnership opens new revenue opportunities and fosters business growth for both parties in several ways:

• By accelerating business growth and expanding your total addressable market (TAM)
• Through reduced churn and increased product stickiness
• By leveraging deeper industry relationships to raise brand awareness 

Accelerate business growth

The ultimate goal of integrations and partnerships between SaaS applications boils down to driving more revenue, which is achieved through better products and an elevated customer experience. Integration partnerships can add to your bottom line in several ways:

• Mission-critical product integrations expand the total addressable market of one or both companies. For instance, Calendly expanded its TAM by integrating with Google Calendar, allowing the massive Google Calendar user base to leverage their calendar data, greatly improving the utility of the app itself.
• Integrations can help products to stand out among the competition—those that integrate with the existing pieces of their customers’ tech stack are more useful for new users, since the integrations make it easier to layer a new piece of technology into an existing tech ecosystem.
• Partnerships expand your market reach and build credibility through cross-promotion, marketplace listings, and referral programs with your partner. For example, if a customer uses ADP and is looking for a new 401(k) recordkeeper, they’re most likely to first look at the list of ADP partners on the integration marketplace since data needs to be shared securely and accurately between the two systems. 

Reduce churn and increase stickiness

Integrations help applications improve their product offering and automate workflows. This increases the utility of your app—making it integral to your customer’s tech stack and difficult to replace. 

For instance, tax credit platform MainStreet uses Finch to integrate with their customers’ payroll and HR systems, which allows MainStreet to programmatically pull the data they need from each customer in moments. This means the end user no longer has to get on a support call with MainStreet to integrate their payroll system, dramatically improving the user experience.

When two companies establish an integration partnership, they may be able to offer more useful integrations by collaborating on use cases and common customer requests.

Deepen industry relationships

Establishing strong partnerships with industry leaders can bolster your company’s reputation, potentially paving the way for future partnerships. These partnerships can include referral agreements that send leads to your company when your partner has a customer who would benefit from your solution.

Integration partnerships also lead to co-selling opportunities by creating a bespoke solution that combines both companies’ strengths. For example, last year Workday and ADP announced an extended partnership to improve data visibility between systems and provide a technology-first experience to their joint customers. 

The bottom line is that building integrations and creating strong, lasting partnerships can offer both direct and indirect benefits that will help your business to grow.

When should you consider integration partnerships?

Given their time and resource-intensive nature, whether or not to enter an integration partnership is a strategic business decision that should be made carefully and depends on how important the use case is to your ideal customer.

You should consider opting for an integration partner in the following scenarios:

• When you are losing customers or sales because your application lacks connectivity to the other tools your customers use
• When you need to quickly add support for a product feature that's not core to your business but is essential for attracting and retaining customers
• When there’s an opportunity to make your product more valuable by syncing seamlessly with a customer’s systems of record

Step-by-step guide to establishing integration partnerships

While the details may differ by industry, the general process for building integration partnerships is roughly the same. Here's what a standard integration partnership process entails:

Step I: Reaching out to potential partners

The first step is finding a potential partner and starting the conversation. Many vendors have an established partner program and an intake form on their website; others may require more direct outreach to Partnership or other company executives. Be prepared to explain what you’re looking to accomplish and how a partnership would benefit you both.

Step II: Negotiating terms of partnership

Next, you need to outline how you want to collaborate, which may include setting timelines and goals and agreeing to both technical and commercial terms. Some common conversations at this stage include:

• How both parties will measure success
• Partnership exclusivity
• Conditions for terminating the partnership
• The level of access and functionality available through the API
• How to address product updates and new versions of the API, and how those will be communicated
• If and how the companies will co-sell, cross-promote, or co-market their products

Step III: Legal discussions and contract submissions

Most companies will have a standard set of legal contracts, such as NDAs, licensing agreements, terms of use, privacy contracts, liability and indemnity clauses, and so on. These contracts clearly define ownership, intellectual property usage, and risk mitigation clauses.

Step IV: Building the integration

Once all parties are in agreement, the engineering teams can begin testing technical compatibility, synchronizing data, and building the integration. In some cases, developers can leverage an integrations platform like Finch to eliminate the need to build a bespoke integration and go live with their partnership in much less time.

Step V: Leverage the partnership

Now that the integration has been established, both companies can leverage the benefits of their new partnership, whether that’s through co-selling a robust solution, co-marketing the new integration features, advertising one another on their marketplaces, or whatever other benefits the partnership entails.

Best practices for forming and maintaining integration partnerships

Remember: integrations and partnerships are distinct, and they’re not mutually inclusive—one can exist without the other. Applications can integrate with each other without a formal partnership, and partnerships can be established without ever connecting technologies. 

When two companies form an integration partnership, they connect their applications and institute a formal agreement that leverages the integration to help both companies grow.

So, best practices for a successful integration partnership include best practices on both the technical side (the integration) and the business side (the partnership). The following best practices may apply on one end, the other, or both, as we’ll discuss below:

• Identify and assess the right integration partner
• Invest in your partner relationships
• Carve out revenue opportunities
• Onboard the partner
• Establish agreements about how both parties will maintain the integration throughout its lifetime
• Use tools to expedite building new integrations

1. Identify and evaluate the right integration partner

Integration partnerships require a lot of work to do well, so the first step is to choose the right partner—one that will offer long-term value to your business. 

To choose the ideal partner, you’ll have some considerations that are specific to the integration, some that are specific to the partnership, and some that apply to both. We’ll explore the best practices based on where they fall on each side of this coin. 

Both the integration and the partnership

• Objectives — Identify shared business objectives and how an integration would help both parties satisfy them. Understand how integrating the applications will provide a better user experience. Integrations that involve a partnership will need to benefit both parties, or there will be no basis for, or value to be gained from, a partnership. 
• ICP overlap — Partner with a company that offers a distinctly different solution than your own to a similar user base. Ideally, you’ll both be able to introduce new users to each other’s platforms through the integration partnership and address your respective TAMs more effectively.

Integration-specific

• Technical discovery — Consider the other company’s technical and resource requirements and confirm their technical setup, API type (like REST or SOAP), and the quality of API documentation. This ensures a smooth experience when building, maintaining, and using the integration.
• Integration difficulty — Once you have performed discovery and determined the level of effort, assess your bandwidth and capabilities to determine whether the project is feasible.

Partnership-specific

• Reputation — Evaluate your potential partner’s reputation in the industry. Analyze what their customers have to say about their reliability by checking reviews on sites like G2 and Capterra. Gather testimonials, check social media, and get a holistic view of their tool’s performance and their business values to ensure you’re partnering with a brand that reinforces your own brand values and reputation.
• Priority alignment — Ensure the other company is willing and able to engage in a lasting partnership. Discuss how you’ll help each other achieve your business goals once the integration is built.

2. Build relationships and appoint a Partner Manager

Once you’ve identified the right partner and both parties have agreed to work together, you’ll need to build trust to be effective partners. 

Large organizations recruit entire partnership teams to effectively develop and maintain relationships. If you’re a smaller organization without a dedicated Partnership team, start by assigning partnership responsibilities to someone who can own the relationship with the partner organization. These Partner Managers play a pivotal role in maintaining healthy relationships between the companies—they’re responsible for identifying opportunities to drive mutual revenue and user growth with your partner. 

3. Find revenue opportunities

There are two things to consider here: how the integration itself may be monetized, and how the partnership can lead to new revenue from customers.

Many SaaS tools charge direct and indirect fees to their partners, like API usage fees and flat partnership fees. In this case, one company or both may pay for the right to use the integration they’ve built. Be aware that while they’re common practice, API usage fees often lead to friction and frustration between the two parties. 

On the other hand, the business partnership may include agreements to promote each other’s products, with incentives like referral bonuses or customer discounts. These formal agreements can help one or both companies grow their user base at a lower customer acquisition cost. 

Separately, partners may engage in co-marketing commitments like co-hosting events, campaigns, and webinars, which typically don’t involve exchanging money. These collaborations can build mutual trust and goodwill while bringing each company new leads.

4. Set up a solid partner onboarding process

Partner onboarding can be helpful both for building the integration and defining the partnership. For example, you may exchange product walkthroughs so both you and your partner develop a better understanding of each product and how they can best work together before engineering the integration.

Once the integration is built, sharing enablement resources and marketing collateral as well as  establishing support paths can help each partner to effectively serve shared customers and engage in cross-promotional efforts. 

5. Establish a plan to maintain the integration over time

Integration partnerships, like any long-term relationship, require ongoing maintenance—both to the technical bridge and the human one. It’s good practice to assign dedicated points of contact to your partnerships—you may even establish routine meetings—to keep both parties on the same page about:

• Technical maintenance to keep integrations updated, fix bugs, handle versioning or user migrations, etc. 
• New products and services or shifts in focus and strategy
• Enablement opportunities like lunch-and-learns to strengthen the relationship and learn about each other’s offerings

6. Leverage a unified API to scale your integrations 

The dual nature of integration partnerships can make them especially taxing, because they require the effort of building the integrations and the effort of establishing and maintaining a business relationship.

Unified APIs like Finch can alleviate the strain on your team, empowering you to build integrations at scale. Instead of investing time, money, and resources in one-off integrations, companies that use Finch build just one integration to access hundreds of systems of record for HR and payroll. Finch’s Unified Employment API is intentionally focused on the employment ecosystem, but there are other unified APIs that serve additional markets and verticals.

Once you’re able to support connections to hundreds of providers through a unified API, you may choose to augment some of those connections with a formal partnership. In that case, unified APIs like Finch can speed these partnerships' time to launch by eliminating the technical element and giving your team the freedom to focus on building relationships and investing more heavily in your core product.

In short, you should consider a tool to leverage more integrations in the following scenarios:

• When customer data is falling out of date because you don’t have the necessary integrations to systems of record
• When your customers are forced to make manual updates to their data
• When you’re losing deals or churning customers because your integration coverage isn’t sufficient
• When you need to focus your engineering resources on core products and not integration work

Common integration partnership challenges

Finding the right integration partner that is collaborative and fits your strategic roadmap can pose several challenges:

• Lengthy negotiation process
• Technical checks
• API integration challenges
• Monetary burden
• Difficulty of scaling

Lengthy negotiation process

Negotiating legal contracts and commercial terms can take weeks or months to finish—often delaying time to market. This is especially difficult for startups or companies who want to go live with partnerships quickly and launch integrations with customers.

Technical assessment

Some companies may require their prospective partners to undergo technical evaluations to ensure compatibility, security compliance, and adherence to data protection standards—this is especially true of systems of record that hold sensitive data like PII. 

Many also require their partners to have a minimum number of shared customers before allowing them into the integration marketplace, which acts as a barrier to entry into the partnership ecosystem for early startups.

API integration challenges 

Most integrations are built through APIs. Integrating with a provider’s API is challenging for multiple reasons, including data mapping errors, API versioning, ongoing maintenance, and more. We expand on these hurdles in our article "Common Challenges of Building Multiple API Integrations."

Additional cost 

Integration partnerships are often a source of additional revenue for systems of record. As a result, partners may charge a flat fee or incremental fees for API usage—adding to the monetary burden for budget-conscious companies.

Difficult to build and maintain at scale 

A lot of time, energy, and resources go into building just one integration partnership. Companies that want to establish many integration partnerships face long timelines, tricky resource allocation decisions, and compounding long-term maintenance work—rendering it nearly impossible to scale without sufficient resources. 

Scale your integrations with Finch

Few companies have a surplus of time, talent, and capital. Invest those precious resources in your partnerships and product by using Finch’s Universal Employment API to access integrations to 200+ HR and payroll systems. 

Finch partners with industry leaders like Gusto, Paycor, Personio, UKG, and others, empowering innovators to focus on building their core product while leveraging our partner network to deliver a smooth user experience.

‍Talk to our sales experts or sign up for free.

Common FAQs

What makes integration partnerships successful?

Almost all successful integration partnerships involve the following:

• A clear value proposition and revenue-sharing model for long-term partnership planning and getting executive buy-in
• A commitment to technical support from each provider to ensure a smooth customer experience
• A demo environment to educate customers
• Co-marketing materials 
• (Preferably) Dedicated partnership resources

How long does building partnerships with top HR and payroll providers take?

Partnership efforts—identifying a partner, vetting them, developing outreach programs, building integrations, and implementing a shared go-to-market strategy—can take a few months to a few years.

Who does Finch partner with?

Finch is a unified employment API that helps you scale HR integrations faster. You can unlock integrations with 200+ HRIS, directory, and payroll systems by building and maintaining just one integration with Finch. Finch also partners with multiple HR and payroll providers your customers use, including Gusto, Paycor, Personio, UKG, BambooHR, HiBob, and more. By leveraging Finch's extensive network, you can save months of integration-building efforts and reduce time-to-market while creating a more integrated, seamless customer experience.

What are the technical requirements for an integration partnership?

Typically, integration partnerships involve:

• Application programming interfaces (APIs)
• Clear and concise documentation
• Data-sharing protocols
• A sandbox environment
• Security compliance checks
• Legal contracts

To protect their customer data, sometimes applications will decline partnership offers if data and security standards are not met. It’s crucial to ensure you meet the technical requirements, such as encrypting data in-transit and at-rest, before entering into a partnership.

According to our June 2023 survey of 1,000+ HR professionals, 97% of employers agree that employment systems like HR and payroll should integrate with other tools in their tech stack. But building and maintaining these integrations can be a big challenge for PMs and developers. 

That’s where Finch comes in. 

On February 6th, Finch teamed up with HR platform Deel to demonstrate how easy it is to connect to employers’ HR or payroll systems through our API and sandbox. With these tools, any PM or developer can connect to live HR and payroll systems, generate mock data, and simulate real-world testing scenarios — for free.

We covered the following topics:

• The challenges with integrating with HR and payroll providers today
• Types of HR and payroll integrations
• How lack of integration impacts employers (your customers)
• How Finch works
• The Provider Sandbox (connect to demo accounts)
• The Finch Sandbox (generate mock data on-demand)

‍

Below, we provide highlights from the webinar. You can also watch the complete recording by filling out the form below.

‍

The challenge: your customers are spread across countless HRIS and payroll systems

HR and payroll systems are every business’s source of truth for their employees. It’s where you can reliably find if individuals are actively employed, where they work and live, how much and how often they’re paid, what benefits they’re enrolled in, and more.

But there are literally thousands of HR and payroll systems on the market that your customers may be using — more than 5,700 in the US alone. 

While all of this variety is great for employer choice, it can make integrating with those providers a big challenge. With so many integrations to build, it can be hard to know where to start.

Why are HR and payroll integrations so complicated?

Beyond the sheer number of providers you’ll want to integrate with, the variation between providers poses another set of challenges. Every provider expects PMs and developers to integrate in a unique way (if they’re willing to support integration at all). 

Typically, PMs and Developers find they have 3 options:

1. Build integrations from scratch using each provider’s public API
2. Help your customers set up a secure, automated file-sharing process between their HR or payroll provider and your app
3. Ask employers to simply upload or enter the data manually. This isn’t really an integration, but will still require engineering resources to manage.

For more information on how these integration methods stack up, you can also check out our SFTP vs API whitepaper.

Finch is a unified API for hundreds of HR and payroll systems

With Finch, you only need to build and maintain one API integration to unlock connectivity with 200+ HR and payroll providers. And with one shared data model, you don’t need to worry about nuances between providers. No matter what HR or payroll system your customers use, all data is returned in a standardized format. 

But instead of taking out word for it, we encourage PMs and developers to try it themselves. That’s where our sandboxes come in. 

Finch has two testing environments — the Provider Sandbox and the Finch Sandbox.

Finch Testing Environment #1 – The Provider Sandbox

Our Provider Sandbox allows you to connect to demo instances of live HR or payroll providers. You can utilize them as you would a real production connection.

Watch the demo to learn step-by-step how to:

1. Set up your demo or trial account
2. Set up a connection through Finch
3. Experiment freely by making changes in the system of record and seeing how it’s returned

Finch Testing Environment #2 – The Finch Sandbox

The Finch Sandbox allows you to create mock connections for any provider that Finch supports, giving you greater configurability and control over testing scenarios. 

Perhaps the most valuable part of the Finch Sandbox is that the mock data generated reflects what can actually be returned by each provider—a valuable insight when determining if an integration is going to be able to adequately support your use case.

While Finch generates the data, the user can configure these connections any way they want using our sandbox API. Using the API rather than relying on a provider’s dashboard makes it easier to set up bulk or repetitive testing scenarios. For example, you could quickly generate multiple pay statements with specific earnings and deductions amounts, and replicate that scenario across multiple connections.

In the Finch Sandbox demo, we explain how you can:

1. See what data can be returned from providers you care about
2. Manipulate specific data fields or the state of connections
3. Simulate edge cases for last-mile testing scenarios

Try before you build with two powerful testing environments

To recap, there are 3 key benefits to using our developer sandboxes. 

1. You can set up live, external connections for free. 

There’s nothing that can beat getting to jump in and try out your use case with real providers. The provider sandbox can really help you identify the opportunities and boundaries around what you can build with Finch.

2. See exactly what data can be returned, and what features can be supported for each individual provider. 

This is important since different providers may support different fields and functionality.

3. Use the Sandboxes to demo Finch Connect to your own customers.

While this wasn’t included in the demo, our customers love that they can use our sandbox to demo Finch to their own customers. For example, you could incorporate the connection flow and return mock data from our sandbox in your own live product demo. This helps employers see just how easy it is to set up their connection through Finch.

If these benefits sound interesting to you, reach out to our team for more information, or sign up for free to try Finch yourself.

The votes are in

Finch is HackerNoon’s Startup of the Year in San Francisco! We’re honored to be recognized as the top startup in a city brimming with technology trailblazers. 

Startup of the Year is HackerNoon’s global community-driven award that celebrates the world’s most innovative and game-changing tech ventures. This year’s competition included more than 30,000 entities across six continents and 4,200 cities. 

In addition to being designated as the top startup in San Francisco, Finch placed third among all startups in North America. We’re committed to building on this momentum in 2024 as we continue our mission to democratize access to employment data, unlock innovations, and create an integrated user experience for employers and employees.

"Today's macro environment requires companies to do more with less, so it's not surprising that HR professionals are looking to their tech stacks and process improvements to help them accomplish this. The tools that offer the best user experience, functionality, and connectivity will win in a competitive landscape," said Ansel Parikh, COO and Co-Founder of Finch. 

World-class win

While the winners were chosen by voters around the world, the nominees were required to fulfill either or both of the two following criteria:

• Generated between $50,000 to $50 million in annual expected revenue
• Secured $1 million to $100 million in funding

‍

{{state-of-employment}}

"Reflecting the technology industry requires a comprehensive company database, and with this campaign, I'm excited to discover and showcase the world's best startups," said David Smooke, HackerNoon Founder and CEO. "We are building an open, reliable, and editable technology startup database that will enable technologists to make informed decisions about which emerging startups to learn about, invest in, partner with, or even work for."

Finch is a unified API for employment data. We are working to provide innovators with mission-critical employment data, including read and write compatibility with 200+ employment systems (HRIS, payroll, directories)—with just one integration. If you are driving innovation with employment data, get started with our self-serve platform today—it’s free!

Building SaaS integrations doesn’t have to feel intimidating; but let’s face it, it usually does. Many factors—from complex APIs to poor documentation—can make it tough for product teams to scale integrations.

In this article, we'll cover common obstacles SaaS companies face while building multiple API integrations and how to overcome them. 

But before we delve into that, let's first discuss what API integrations are and use an example to understand why they can be more complex than you think. (You can skip to the next section to jump quickly into the list of challenges.)

The complexity of multiple API integrations

APIs, or application programming interfaces, enable two applications to connect and seamlessly exchange data. APIs allow these systems to specify how requests are made and data is shared. The convenience of API integrations makes them a popular choice for SaaS developers.

However convenient, APIs are far from simple. Their complexity makes building and maintaining multiple API integrations challenging for engineering teams.

To understand this better, let's consider the HR and payroll integrations landscape. 

The need for multiple integrations in HR

Today, an average HR tech stack has seven or more employment systems of record, including human resource information systems (HRIS), payroll software, benefits administration platforms, performance management tools, and so on. 

The efficiency of HR processes depends on how effectively these tools communicate with each other. As a result, employers are increasingly prioritizing product integrations as a critical criterion before investing in any SaaS product to add to their HR tech stack. 

Therefore, if you are a developer, product manager, or owner of a SaaS tool in the employment tech space, your ability to remain competitive and close more deals depends on your ability to offer seamless integrations across multiple HR and payroll systems. 

The difficulty of API integrations

As of 2023, the U.S. has nearly 6,000+ HR and payroll providers. Many of these providers do not have public APIs. And the ones that do have hundreds of variations in their APIs, data formats, documentation, and integration protocols. 

Understanding different HRIS or payroll APIs and then planning, building, testing, and implementing dozens or hundreds of integrations can take months or even years and cost millions of dollars—not to mention the ongoing maintenance required for all the connections. 

These complexities apply to API integrations across all software categories, not just HR. In the next section, we’lldiscuss in depth what makes scaling API integrations a challenge for SaaS builders. 

Note: Meanwhile, if you are building multiple HRIS and payroll integrations, you should check out Finch's unified employment API. With Finch, you can unlock access to data from 200+ HR and payroll providers using just one integration. Learn more. 

Common challenges of building and maintaining multiple API integrations

Building API integrations is a complicated endeavor for several reasons. The primary challenges developers face are:

• Diversity and complexity of the API ecosystem
• Data mapping and consistency errors
• Security and compliance issues
• Integration partnership challenges
• Third-party API updates
• Integration maintenance problems

Complex API Ecosystem

Developers find it increasingly difficult to build integrations with a diverse set of APIs for several reasons, such as negotiating lengthy partnership contracts, testing integrations across multiple environments, the cost and complexity of scaling product integrations, and much more. Let’s examine these issues in detail.

Diverse APIs

While APIs make it easier to connect two systems, the diversity of API providers and integration procedures makes it a nightmare for developers to build multiple API integrations. 

Each API provider has different systems built into the API. They may use different technologies, error-handling mechanisms, or rate-limiting protocols and can also have unique data formats—making it further challenging to facilitate seamless communication between them.

Gated APIs and integration partnership challenges

Not all APIs are open for anyone to use—gated APIs require partnership agreements to access 

their API keys, documentation, and sandbox environments. The companies that enter these agreements have to undergo security checks, lengthy negotiation processes, and, in some cases, pay additional fees—rendering partnership agreements extremely time and resource-intensive. 

Some providers even require a minimum customer count before entering a partnership agreement, posing additional challenges for resource-limited startups that need product integrations to grow their customer base.  

Testing across multiple environments

Building API integrations in-house means ensuring each integration runs as intended and is reliable. Testing is crucial to check the stability of each integration and whether it can handle varying data loads under different use cases.

The problem with API testing is twofold:

• First, every API provider may not offer testing environments to build against, requiring developers to figure out how to test in production with real customer data.
• Second, testing integration against a provider system requires a thorough understanding of how that system behaves, how it defines data, and so on. It requires specific knowledge and expertise that may not be available to a typical SaaS product/engineering team. It can take weeks for a developer to understand the nuances of API testing for a specific provider. 

Neither of these options allows SaaS product teams to move quickly.

Scalability issues

It’s important to remember that all of the challenges we’ve mentioned apply to every API integration, and most SaaS companies need to integrate with dozens of systems in their space. Scaling your company’s integration catalog is a challenge. Here’s why:

• First, building multiple SaaS integrations is time-consuming and resource-heavy. Developers must decode each API, understand documentation and data schemas, write custom codes, and test and implement the integration. Building just one integration—from planning to implementation—can take a few weeks to a month and thousands of dollars. If you have 20, 30, or a hundred integrations to build quickly, it’s definitely not a viable option. 
• Second, developers’ work is not finished once the integration is implemented; they then need to spend their valuable time maintaining these integrations and optimizing their performance. 
• Third, integrations are not a core product feature for most SaaS tools, yet integration with customers' existing tech stack is essential to remain competitive and reduce churn. Building dozens of integrations can take valuable time from the engineering team, which could be spent enhancing your core product. Developers often deprioritize integration-related tasks to work on core products or vice versa. Neither benefits the bottom line. 

Note: Finch not only makes it easy to scale HR and payroll integrations quickly but also offers a sandbox environment for select providers to give developers a safe test environment. Visit Scale with Finch.

Data-related challenges in API integration

The complexity of diverse APIs also poses to data mapping and consistency for integration builders.

Data mapping and normalization

Normalizing data from multiple systems of record is not an easy task. Here’s why: 

• First, different providers store data in different formats. They may provide the same information but return it under fields with different names in varying formats.
• Second, some providers may not offer the data developers need in a simple format. For example, they may not pre-calculate the values that are required. It forces the developer to collect and calculate values themselves—adding to the complexity of the API integration process and elongating the timeline for completion.
• Third, different systems may use different types of APIs. Some providers use SOAP APIs instead of the more common REST APIs. As a result, developers spend more time learning how to integrate in new ways they may not have experience with. This delays integration shipping time even further.

Developers can save hundreds of hours when provided with data in a standardized format. This abstracts away the additional complexity of mapping data in different formats from different systems of record each time a sync happens.

Data consistency and accuracy

Ensuring data quality and integrity is crucial to avoid compliance and security issues as well as to minimize errors in data processing. Data quality in API integration is measured by its accuracy, timeliness, and consistency across multiple systems. 

Considering the complexity of data mapping, it is clear that maintaining data quality while building multiple API integrations is a challenge for SaaS product teams.

Establishing clear data standards and validation checks is essential to address this challenge. Also, using a tool to normalize data can bring the dual benefit of ensuring data accuracy and standardization.

For instance, Finch acts as a single source of truth for HR and payroll data, regardless of where the data comes from. As a unified API, Finch normalizes hundreds of variations in employment data into a standard format. Thus, making it easier for developers to read updates and write changes into the employers' primary HR tool—while maintaining data accuracy and completeness.

Security issues in API integrations

Security challenges in API integration include unauthorized access, denial-of-service (DoS) attacks and excessive data exposure.

Data security and compliance

Every organization, regardless of its size, is wary of safeguarding and sharing its data. This is especially true for sectors dealing with sensitive information such as financial data, employment data, or health records. 

While it may be manageable to establish and monitor security standards for one or two integrations, it’s nearly impossible to continuously monitor security health for a dozen or more integrations without dedicated resources. 

Another solution is to use dedicated integration solutions like unified APIs or iPaaS that are compliant with global standards for security practices like CCPA, SOC2, GDPR, ISO27001, HIPAA, and so on.

Authentication issues (401 unauthorized errors)

Another security issue in API integrations is broken authentication or broken function-level authorization. Authentication errors return an HTTP error code 401. 

Complications can also arise from different authentication mechanisms like OAuth, API keys, and access tokens used by different API providers. Developers must familiarize themselves with multiple authentication protocols and implement custom processes for each API integration they build.

For example, if you are building multiple HRIS or payroll API integrations, you must carefully build and manage authentication and authorization. Any unauthorized access or erroneous permissions can lead to disastrous consequences for your end users—employers and employees.

To account for this, Finch's unified employment API not only supports different authentication protocols but also makes it easy for end users to authorize access control. With Finch Connect, employers can select their choice of HRIS and payroll providers and authorize permissions in less than 30 seconds. Learn more about Finch's security practices here.

Challenges of keeping up with third-party APIs

Two of the most common struggles for developers building multiple third-party API integrations are inadequate or incomplete documentation and backward incompatibility.

Documentation discrepancies 

Documentation discrepancies in API integration are multifold. For example:

• Some providers do not make their documentation publicly available, restricting it to approved partners only. 
• The documentation may not be clear and concise, requiring developers to spend more time finding necessary information. Sometimes, the API documentation may not be available in your preferred language.
• Documentation may not be updated with the latest API versioning changes. 

API versioning and backward compatibility

APIs are not static—they’re updated over time. API version changes can break the existing integrations or lead to broken endpoints and consistency issues. Therefore, it’s crucial to ensure each API integration has backward compatibility—in other words, they continue to perform even when a new version of the API has been released. 

In our experience, developers often find it difficult to contact the API providers when a documentation page returns an HTTP 404 page not found error or a versioning change returns HTTP 301 error code.

To effectively manage API versioning, developers need to create flexible codes for the integrations that can adapt to API version updates and remain functional. They also need to have communication and support plans in place with API providers to stay updated about version changes and preemptively adjust integrations.

Note: Finch makes handling third-party API integrations easier for HR integration developers. For instance:

• Finch maintains up-to-date, standardized documentation across providers. It helps developers save themselves the time and effort of dealing with varying quality API documentation by different providers.
• Finch adjusts for API version updates for all the integrations on its end, so your developers don’t need to keep tabs on the status of multiple APIs. Check out our developer documentation for more details.

Integration maintenance challenges

Maintaining dozens of integration maintenance indefinitely is a monumental task. You need to constantly monitor the health of each integration for performance issues, error resolution, and rate limits. Let’s examine these issues in detail.

Rate limiting (HTTP 429 error) and throttling

API providers sometimes impose API rate limits and throttling to control the number of API calls, prevent over-usage, and maintain integration stability. This returns an HTTP 429 error code. 

To avoid being rate-limited, developers must monitor API usage carefully or use webhooks to receive notifications instead of polling the API connection excessively. Adjusting for rate limits is doable for a few integrations but adds to the complexity of scaling.

API monitoring and error handling 

Building integrations is only one part of the equation. Another hurdle is maintaining them for optimum performance on an ongoing basis. Integration performance depends on the time it takes to sync data, the accuracy of the data synced, frequency of errors, and the time it takes to resolve them. 

Ensuring reliable integration performance is tricky. API integrations can fail, break, or malfunction for several reasons, such as incorrect parameters, server errors, and network issues. It can also fail due to third-party provider issues such as API versioning or any incident or outages that impact their APIs.

As a result, developers need to continuously monitor these integrations individually. Diagnosing and solving integration performance issues also requires knowledge of the specific API and its nuances. Monitoring individual integration can be difficult, especially when you have dozens of integrations running simultaneously and a relatively small engineering team. 

Given that poor integration performance is one of the leading causes of SaaS customer churn, SaaS companies must identify errors on time and promptly resolve them. 

For this reason, SaaS builders are increasingly opting for unified APIs like Finch as a go-to solution for scaling customer-facing integrations. Unified APIs allow developers to build and maintain one integration and unlock access to data from hundreds of applications. It’s always easier to deal with one API integration than the nuances of dozens of APIs.

If you are building three or more HR and payroll integrations, consider checking out Finch unified employment API. Connecting with Finch can unlock integrations with 200+ HRIS and payroll providers—covering 88% of the U.S. employer market. 

Throughout this article, we have discussed how Finch solves the common challenges in API integration. With more than five million API calls every day and tens of thousands of employer connections, Finch is the trusted HRIS and payroll API solution for several B2B applications. 

You can learn more about Finch by booking a call with one of our experts. We would be happy to discuss your specific integration needs.

We are thrilled to share that GGV Capital U.S., in partnership with Crunchbase, has named Finch in its Fintech Innovation 50—a list highlighting the rising stars in the fintech sector. It is another notable achievement for Finch after last year's recognition in GGV's inaugural Embedded Fintech 50 list.

GGV Capital's Fintech Innovation 50 reflects the continued trust of the investors in the fintech industry—including financial infrastructure, lending, AI, and more. In celebration of the launch, the honorees were invited to ring the opening bell at the Nasdaq Marketsite this morning. 

Finch, a unified employment API, is committed to increasing connectivity in the employment data ecosystem and providing fintech firms with greater data access. 

"Time and time again, we have seen how data silos across HR, payroll, and benefits systems have stunted organizational growth and technical innovation in fintech. Our goal is to simplify secure access to employment data. GGV Capital's recognition motivates us to continue improving connectivity, innovation, and automation in the employment-fintech ecosystem,” said Jeremy Zhang, CEO and Co-Founder of Finch.

For the 2024 list, 150 companies were nominated by 44 investment firms. The firms submitted an equal number of portfolio and non-portfolio companies and voted on the aggregate list. The nomination criteria included companies with the following:

• A primary focus on fintech
• The U.S. as a primary market
• Series A financing or beyond

Here is the complete list of Fintech Innovation 50 honorees, the methodology, and participating investors.

Even amidst the uncertainties looming in the fintech sector in 2023—including decreased valuation and increased interest rates—these emerging and established players ignited possibilities in the eyes of startup investors. 

"Despite a rocky 2023, the list celebrates the innovation, perseverance, and the future potential of fintech," said Hans Tung, Managing Partner, GGV Capital U.S. "We believe the long-term tides are in fintech's favor with disruptors and value-added enablers like the Fintech Innovation 50 honorees leading the charge."

Finch is a universal API for employment data. We are working to provide innovators with mission-critical employment data, including read and write compatibility with 200+ employment systems (HRIS, payroll, directory). If you are driving innovation with employment data, get in touch with us.

Today, we're excited to announce our second Request for Startups (RFS) — our annual call for innovators in the employment tech space. In last year’s RFS, we focused on workplace connectivity, financial savings, and ancillary benefits. This year, we're expanding our scope to include HR tech, compliance, B2B fintech, and insurance. We will discuss the gaps and potential for innovation we see and invite tech leaders to collaborate in these areas.

No matter which vertical you work in, it is evident that 2023 was a turbulent time for the tech industry. CFOs are still pushing for a reduction in software spending by 10%-30%. If a technology isn't essential or lacks a clear return on investment (ROI), its budget share is at risk. This especially affects HR, fintech, and benefits products. These products often work with fixed budgets that can shrink during team and cost restructuring.

But, amidst the gloom, there’s a silver lining. Generative AI and workflow automation are creating new possibilities for innovators. In fact, AI tops the spending priorities for nearly 50% of top CIOs and CTOs in the coming year.

This increase in the AI budget makes sense when considering the returns. For example, HR teams can use generative AI to automate leave processing, documentation, and report generation. Operations teams can benefit too, with generative AI automating routine tasks like data entry, analysis, and scheduling.

But there's more to explore. As the complexity of operational tech stacks grows, AI-powered workflow automation becomes a significant opportunity. Our survey of over 1,000 HR professionals reveals that companies on average use 6-7 employment systems daily. Building solutions that work across these systems can unlock substantial cost and time savings.

Startups that harness AI in novel, scalable ways can meet the rising demand and enable higher efficiency for HR, finance, and benefits professionals.

Benefits

1. Benefits enablement — Choosing benefits can be daunting for employees with little experience navigating through plans and offerings. To make matters worse, 54% of employers offer access to benefits on different platforms, adding to the complexity of enrolling. Benefits administrators and brokers could utilize a tool that pulls employee data and generates educational content that summarizes different plans based on their profiles. This solution would reduce admin work and increase employee enrollment in high-impact benefits programs.
2. Contribution optimizer — The emergence of student loan benefits, increased 401(k) contribution limit, and rise of HSAs give employees more ways to achieve financial stability. However, it’s not always clear how much to contribute to each of these benefits to achieve different financial goals. An embeddable recommendation engine that ingests payroll data could help direct funds across benefits and increase utilization across an entire organization.
3. Combined health and financial benefits —  More than half of U.S. adults said they delayed getting medical attention in the past year due to an affordability concern. A majority of employees face potential out-of-pocket exposure greater than their household savings. Yet, high inflation in the cost of employer-sponsored health benefits is making it harder to offer high-quality healthcare at an affordable price. With 360° integrations to payroll systems, health and financial benefits platforms can bring more customization and configurability to employee health benefits while keeping administrative costs low — like in the case of Thatch and TempoPay.

HR Tech

1. Streamlined onboarding — Companies spend on average $400 worth of people hours on paperwork and administrative costs. Creating a product that can autofill forms, guide new employees through a customized onboarding journey, and proactively notify HR admins of necessary approvals can eliminate the tedious manual work and reduce the likelihood of costly errors.
2. Personalized learning and development — Training is an essential driver of a productive organization. However, employer-assigned workforce training can take an average of 62 hours to complete and cost $1,207 per employee per year. Building training materials and surfacing them to the right individuals is a complex process that requires constant adjustments. A platform that can generate training material, consolidate it into personalized development paths, and automatically trigger new training modules based on promotions, job title changes, and tenure could lead to higher employee productivity and engagement.

Tax & Compliance

1. Curated compliance training — While employees already spend an average of 11 hours annually on compliance training, organizations are aiming to boost this further by 38%. The challenge here lies in ensuring that time invested correlates with risk reduction. An effective solution would integrate internal company practices with regulatory requirements to generate pertinent and engaging compliance content. This not only decreases the hours spent on training but also mitigates compliance risks, providing a more impactful approach to workforce compliance.
2. Automated policy generation — Navigating reporting requirements and internal policies becomes increasingly complex at employee milestones such as 10, 20, 50, and 100. To alleviate the burden on resources, companies would benefit from a proactive solution that automatically generates policies and forms (such as EEO-1, FMLA, etc.) based on the changing dynamics of employee growth and organizational complexity. This approach would minimize the administrative effort of creating these documents from scratch, offering a more streamlined and efficient process with limited lapses in compliance.

B2B Fintech

1. Commission scenario builder — Effective commission management is vital for a successful Go-To-Market (GTM) strategy. With commission rates spanning 5% to 40%, a well-structured system is key. Many decision-makers currently rely on static spreadsheets. Having a comprehensive tool that combines team composition and sales records with scenario plans would help inform on how best to incentivize their teams without breaking the bank.
2. Meeting cost calculator — No one likes unproductive meetings. And there’s a real cost to consider — US businesses waste $37B worth of resources on unproductive meetings every year. Quantifying this cost with payroll and calendar data could drive greater urgency and shape strategic decisions on how the team spends time, from the line manager to top executives.

Insurance

1. Virtual agents — Insurance is mostly sold through 881,500 licensed agencies and brokers. Many of these individuals run manual processes and are limited by the time they have to help customers get quotes and adjust policies. They could be more efficient with their time if there were a solution that helped summarize different policies, address quote questions, and autofill forms that are done manually.
2. Worker’s Comp Class Code validation — Worker’s compensation is often mandatory for any company with employees in the US. Worker’s compensation class codes are a necessary data point for underwriting. But there are over 700 of them and manually filling them out is left to a policyholder. Mapping these codes against job titles within HR and payroll systems could help carriers infer risk more accurately without manual work from their customers.

If you’re building something related to any of the above (or thinking of doing so), sign up for Finch to build your MVP. We’re always looking to help innovators address crucial problems across the ecosystem and get to market faster! Contact us.

We are excited to announce that Finch is named in the Built In’s 2024 Best Places to Work list. This is Finch’s second win after being ranked #12 for Built In’s 50 Best Startups To Work for in San Francisco 2023. 

This time, we are elated to be named alongside the biggest employers in tech for not one but three categories:

• Best Places to Work, Seattle
• Best Startups to Work, Seattle
• Best Startups to Work, San Francisco

Each year, Built In Best Places to Work recognizes top employers across the country—startups and tech enterprises alike. The award is given to companies that offer the best compensation packages, total benefits, and cultural programs. 

It is based on the data that reflects what tech candidates are searching for in their future workplaces—from flexible work opportunities to innovative employee benefits.

This award is a testament to our commitment to building a people-first culture that inspires talented professionals to do their best work.

"At Finch, the team comes first. We're proud to have built a workplace that prioritizes culture and fosters individual development in addition to highly competitive total rewards packages. Built In’s recognition is a great reminder to keep setting even higher standards of workplace practices as we grow," says Ansel Parikh, COO & Co-Founder, Finch.

At Finch, all of our decisions and actions are driven by our core values—curiosity, execution, humility, and empathy. We not only strive for team progress but consistently encourage individual growth. 

• Our benefits packages include generous stipends of $1,000 work from home and $200/month flex benefits. We also cover 100% of health insurance plans for employees and offer unlimited PTO, including a mandatory 15-day minimum per year.
• As a people-first organization, we foster a culture of appreciation and gratitude and take the time to celebrate one another’s accomplishments. Plus, we promote talent from within. 
• Finch offers a hybrid-flexible workplace that helps our employees maintain a healthy work-life balance and cultivate hobbies outside of work. 
• We fly the entire team out for bonding activities for our semi-annual company offsites.
• Our fast-paced work environment offers tremendous opportunities for honing professional skill sets and creating an impact that moves the needle forward.

“I’d like to extend our heartfelt congratulations to the 2024 Best Places to Work winners,” says Maria Christopoulos Katris, CEO, Built In. “I am truly inspired by these companies that have risen to the challenge of fostering a positive work environment, maintaining a strong brand, and ensuring employee satisfaction. The future is filled with promise and we are so excited to see what lies ahead.”

Join us to shape the future of employment. Apply to one of our open positions.

HRIS integrations are crucial for streamlining essential HR functions such as employee onboarding, performance management, benefits administration, compliance, etc. They also support broader business operations like accounting and enterprise resource planning (ERP).

Integrating operational tools with HRIS systems can eliminate the need for employers to switch between different applications. It also boosts the adoption of new SaaS tools and minimizes manual data entry errors.

In this article, we will explore what HRIS integrations entail, discuss popular use cases, and examine both the challenges and benefits associated with them. We will also touch upon the common methods for building and maintaining these integrations.

Additionally, we'll introduce how Finch allows you to unlock integrations with 200+ HR and payroll systems using just one API. Tools like Finch are especially valuable when dealing with the complexity of building three or more HRIS integrations.

What are HRIS Integrations?

Today, an average-sized organization utilizes 6-8 HR applications. This requires employees to spend significant time keeping their employment tech stacks up-to-date. Based on our research of 1000+ HR professionals, seven in ten HR admins (68%) say they routinely switch between different employment systems throughout the day. Half (51%) admit doing so leaves them feeling overwhelmed, stressed, annoyed, frustrated, or angry. 

HRIS integrations facilitate seamless data exchange between the primary HRIS (housing employment records) and other software applications. This means that any changes made in one system will automatically appear in another, and actions in one application can trigger workflows in another. This reduces the need for employees to switch between apps frequently.

Types of HRIS integrations

HRIS integrations fall into two main categories based on their purpose. 

• They can be customer-facing and connect your application with a third-party HRIS used by your customers. Employers can authorize your tool to exchange data with their HR systems. For example, whenever a new employee joins an organization, a sequence of onboarding activities must be completed—from enrolling their details into payroll and benefits systems to completing onboarding training and providing access to key business tools. With HRIS integrations, all of these can be automated. 
• Alternatively, HR integrations can be developed for internal use within an employer’s org. This facilitates seamless data sharing with business tools like ERP, accounting, or communication systems. It reduces unnecessary app-hopping for employees and HR managers. For example, you can integrate your HRIS or HCM system with Slack to send automated reminders.

Top HRIS Integrations

HR and payroll represent one of the most fragmented markets in the United States, boasting nearly 6,000 providers processing around $3 trillion in payroll annually for SMBs alone!

Adding to the complexity, the functionalities of HR systems vary widely among different providers. Some offer only HRIS or employee directories, while others provide a comprehensive suite encompassing HRIS, payroll, benefits, and collaboration tools.

As of 2023, Quickbooks, ADP Run, and Paychex Flex collectively hold over 40% of SMB payroll  market share. However, newer tools like Gusto, Zenefits, and BambooHR leverage innovation and integrations to offer diverse HR, payroll, and benefits solutions to SMB employers through a single platform.

Note: Given the abundance of HR and payroll providers, it's essential for any company serving the SMB market to integrate with as many HR providers as possible. 

Building a few integrations with the top five or ten HRIS may cover a decent portion of your customer base, but to serve the remaining half or tap into new regions and industries, you would need to build hundreds of other HRIS integrations. Needless to say, this is tremendously time and resource-intensive. 

To address this coverage challenge, many employment tech companies seek solutions to streamline the development and management of HRIS integrations. If you're developing a solution that requires access to employment data from multiple sources, Finch’s Unified Employment API can unlock hundreds of HRIS integrations in as little as 3 days. Contact us.

Now, let's explore some common use cases of HRIS integrations.

Common HRIS Integration Use Cases

Payroll

Integrating an employer's HRIS with a payroll provider is the most efficient approach to handling payroll functions efficiently. Especially when an employer’s HRIS does not include a payroll module. This integration automates tasks such as setting up new employee payroll, tracking tax regulations, and managing benefits deductions based on employee directory data. 

401(k) and retirement plan providers

Providers of 401(k) plans, record keepers, or third-party administrators can integrate with an employer's HRIS and payroll systems. This integration streamlines auto-enrollment to retirement plans, facilitates seamless deductions management and yearly recordkeeping audits.

Benefits administration

If an HRIS lacks benefits administration features, employers can connect with a benefits administration tool to automate employee enrollment, modifications, and cancellations. Learn more.

Talent acquisition tools

Recruitment tools, like applicant tracking systems (ATS) or background verification tools, often collaborate with HRIS’s to offer all-in-one talent acquisition solutions. This enables employers to manage recruitment tasks from a single platform. For instance, when a candidate's status changes to "Hired" in the ATS, HRIS integrations can automatically create the employee profile and trigger onboarding functions.

Compliance and security

Compliance tools can use employee census details (job title, department, employment status, etc.) to build security training programs, auto-enroll employees, send periodic reminders, and update results directly to the HRIS, ensuring increased participation.

Also read: How Secureframe used HRIS integrations to simplify compliance for thousands of employers.

User provisioning & de-provisioning

Tools like compliance, expense management, employee recognition, and identity management must stay updated with the latest employment details for accurate employee access. HR integrations ensure accurate access to employee records, making it easy to grant or remove user access to essential tools. This maintains compliance and reduces the risk of data leaks.

Employee onboarding & offboarding

As soon as an employee joins, a series of onboarding workflows ensure that employees have access to all the equipment, software, and documents they need to get started on their first day at work. Effective employee onboarding also includes company orientation, training, and in some cases, specific certification processes. HRIS integrations automate these workflows by swiftly capturing employee details, eliminating the need for manual ticket generation. The same automated efficiency applies to the triggering of offboarding workflows.

Read: How tools like Trainual simplified employee onboarding with HRIS integrations. 

Time tracking and leave management

Time tracking and leave management applications use HRIS integrations to automate hours worked and time off updates based on employee census data. This reduces HR admin workload by eliminating manual data syncs.

Employee engagement and performance management

Integrating workforce management solutions with HRIS’s creates a centralized platform for daily tasks and performance management. For instance, HRIS integrations help employee engagement and performance management tools to track employment information like employee roles, organizational structure, manager information and use them to trigger relevant workflows.

Read: How employee rewards tool PerkUp launched HRIS integrations in a sprint.

Personalized employee learning

Integrating learning management systems (LMS’s) with HRIS’s simplifies managing the professional development of employees. Customizing their learning experience based on employee data, such as role, department, and manager details, facilitates skill gap identification and discovery of training needs. Moreover, completion reports are automatically sent back to HRIS, allowing employers to stay informed about employee learning without manual effort. For example, with an LMS-HR integration, employees can be auto-enrolled in role-based learning programs following role changes or promotions.

Internal use cases of HRIS integrations

• Communication and collaboration tools: HR integrations with communication and collaboration tools like Slack. Microsoft Teams, Zoom, Dropbox, etc., can streamline organizational communication, such as quick announcements, file sharing, and other important team updates. 
• ERP: Organizations often build HRIS integrations with their enterprise resource planning (ERP) tools to share employee census data with other business tools like finance, operations, and accounting systems. This facilitates collaboration between different business units. For example, with integrated systems, HR and accounting teams can access real-time data. This allows for quick and accurate reporting on financial metrics related to payroll, expenses, and budgeting. Some external ERP or accounting tool offer HRIS integration for this purpose. 

Read: How accounting software Rillet leveraged HRIS integrations for better employer experience.

How to Build HRIS Integrations?

The most effective approach to building HRIS integrations depends on the number of integrations needed, the purpose of integration, scalability needs, engineering bandwidth, and budget. Common HRIS integration methods used by SaaS tools include:

Custom API integrations

Application programming interfaces or APIs serve as connectors for seamlessly exchanging information between different software tools. Custom-built API integrations simplify setting up automated triggers for custom HR workflows. APIs offer greater flexibility, personalization, and customization of the end-user experience. However, each integration requires significant development and partnership efforts, creating scalability issues. Moreover, any API changes require updates to HRIS integrations, adding complexity and fragility to this approach.

Unified APIs

In recent years, new solutions like unified APIs have been developed to meet the demand for scalable API integrations. Unified APIs consolidate APIs of applications within a specific software category. This enables developers to connect with multiple platforms simultaneously. Also, these APIs standardize data from different applications into a common format, making it more accessible to developers.

For instance, Finch’s unified employment API simplifies integration with 200+ HRIS and payroll providers through one integration. Managing a single integration with Finch may prove to be the quickest and most cost-effective method for scaling HRIS integrations.

Native integrations

Some HRIS tools form partnerships with vendors to offer native integrations. However, these integrations are often limited in number, and the level of customer service may not be satisfactory. Additionally, accessing these integrations may involve extra fees.

iPaaS solutions

Integration platform as a service (iPaaS) solutions help companies integrate HRIS platforms into their applications, streamline workflows, and facilitate data synchronization. iPaaS is a fairly low-code solution suitable for organizations with limited tech resources. But the process can be slow and challenging to scale. Plus, they are often tailored for specific use cases. If your needs do not perfectly match, this approach can be very limiting. 

Point-to-point integrations

Point-to-point HRIS integrations, while cost-effective, are the least efficient option. They involve connecting an employer's HRIS with operational tools without using APIs or third-party solutions. These integrations are challenging to maintain and scale. Any change in one system requires adjustments to multiple connections. However, if the integration needs are minimal and a high level of personalization is essential, point-to-point integrations may be a viable solution.

Challenges to HRIS Integrations

Ensuring data quality and standardization

Challenges in HRIS integrations involve maintaining data quality, accuracy, completeness, timeliness, and consistency across multiple HR providers. These are crucial to avoid compliance and security issues. To address this challenge, establishing data standards is essential, ensuring compatibility among data from different sources. 

Note: If you are building integrations with multiple HR systems, consider using a specific tool to normalize data into a common format to save significant engineering resources.

Gated APIs and partnership complexity

Many HR platforms lack public APIs, requiring a partnership agreement to access API keys, documentation, and sandboxes. These agreements often involve security checks, lengthy negotiations, and additional fees. Some providers even demand a minimum customer count before partnering, posing a challenge for resource-limited startups seeking essential integrations for their products.

Also Read: How to Build and Maintain Successful Integration Partnerships

Post-integration maintenance

Ongoing maintenance is vital for the accuracy and quality of integrated data, especially for customer-facing integrations. Key maintenance issues include:

• API versioning: Custom API integrations must address versioning challenges to ensure continued compatibility with HRIS APIs, even after updates.  
• Documentation updates: Some HR API providers may not regularly update developer documentation. They may also not provide it in your language. This places additional burden on the development team.
• Monitoring and logging: To offer a smooth customer experience, you need to establish mechanisms to track the health and performance of each integration. You should also allocate engineering resources to regularly check logs and promptly address errors. 

Cost of building and maintaining 1:1 integrations

Creating and maintaining 1:1 integrations demands a substantial investment of time and resources. The entire process, from planning and testing to development and ongoing updates—can consume hundreds of developer hours and tens of, if not hundreds of thousands of dollars annually for just one integration. Unfortunately, this approach lacks scalability, as resources dedicated to integration maintenance could be better utilized to enhance product features.

Refer to our whitepaper Build vs. Buy for a detailed discussion on the merits of building integrations in-house versus using a commercially available unified API.

Scalability

When handling in-house HR integrations, scalability becomes a significant hurdle. Developers must delve into various providers' API/developer documentation, decode data intricacies, craft custom codes for each integration, test them, and offer indefinite support. Managing more than three integrations can become a monumental task. Leveraging an integration tool or API aggregator improves scalability, allowing you to concentrate primarily on product development projects 

Also read: How equity management tool Carta scaled their integration strategy overnight with Finch.   

Benefits of HRIS Integrations

HRIS integrations offer numerous advantages, reducing time, cost, and resource requirements for app developers while notably enhancing employer experience.

Benefits for HR applications/ service providers

• Increased total addressable market (TAM): The number of integrations is pivotal in SaaS tool purchasing decisions. In fact, 97% of HR admins believe that connections with employment systems, such as HRIS, are important to them. Supporting more HRIS integrations can broaden your platform's reach, enabling you to effectively serve more employers and shorten deal cycles. Utilizing unified APIs can accelerate your integration roadmap with minimal effort.
• Improved customer experience: HRIS integrations automate data synchronization between applications. This means when an employee joins the organization or achieves a milestone, they can be automatically enrolled in specific programs without manual intervention. This frictionless experience increases customer satisfaction and loyalty, encouraging more consistent app usage.
• Better compliance: Automated data synchronization between your product and the customer's HRIS ensures that any changes in either application are promptly captured and communicated. This minimizes the risk of overlooking crucial alterations in employee or organizational details, leading to better compliance.

Benefits for employers 

• Streamlined HR administration: Automating repetitive tasks and workflows reduces HR administrative burden, freeing up valuable time for strategic initiatives.
• Enhanced data accuracy: Data entry for HRIS integrations occurs only once in the HRIS and automatically syncs with other application systems. This significantly lowers the likelihood of costly data entry errors, such as delays in updating data, entering incorrect information, or forgetting to make necessary changes manually.
• HR data visibility (eliminate data silos): Integrating the HRIS with other oft-used platforms ensures a centralized system for managing all employee and employment data. This fosters greater visibility and eliminates data silos, enhancing overall organizational efficiency.
• Enhanced employee experience: HRIS integrations boost HR operational efficiency. It provides employees with a single platform to update and monitor their employment details. This eliminates the need for toggling between multiple platforms to manage benefits, performance, and payroll information.

Simplify HRIS Integrations with Finch

If you need to build multiple HRIS integrations, Finch offers a unified employment API that simplifies the process with a single integration. Finch provides a standardized data model, eliminating the need for developers to handle different data formats, development complexity, and API variations.

• Industry-leading coverage: Finch is the leader in the HR and payroll integrations space in terms of coverage and depth. It connects with over 200 HR and payroll providers—covering 88% of the US employer market—and helps you unlock easy and secure access to employment data overnight. See our integration catalog. 
• Easy, secure employer experience: The Finch Connect feature streamlines employer onboarding into two simple steps: selecting the HRIS and authorizing permissions. It takes just 30 seconds for employers to connect their HR systems with your tool. Plus, Finch improves employer experience by eliminating the need for manual data entry and reducing occurrence of errors.

Please contact us if you are looking for a comprehensive HRIS integration solution. 

If you are looking to automate payroll deductions, Finch can help. Talk to sales. 

Payroll deductions refer to the money withheld from an employee's paycheck each pay period to cover taxes, benefit premiums, and other financial obligations. Whether you're a business establishing your payroll, a SaaS tool offering employee benefits, or an employee seeking clarity on paycheck adjustments, it's crucial to grasp the different types of payroll deductions and how they differ.

This article explores common payroll deductions, their legal requirements and addresses some frequently asked questions. Plus, for those involved in employee benefits, retirement, health insurance, and more, we have a bonus section that explains how to seamlessly adjust deductions within the employer's payroll system.

Now, let’s decode different types of payroll deductions one by one. 

What are payroll deductions? 

Payroll deductions involve subtracting money from an employee's total wages each pay cycle to cover both mandatory and voluntary employment expenses, including taxes, benefits, and garnishments. 

Each deduction has distinct calculations, regulatory requirements, and is applicable in different scenarios.

The deduction amount depends on multiple factors like federal or state tax laws, withholding information supplied by the employee in their Form W4: Employee’s Withholding Certificate, and the benefits programs the employee is subscribed to. The calculation process can be manual or automated.

Some types of benefits deductions are taken out of a paycheck based on the written approval of the employee. However, statutory deductions and garnishments are withheld by the employer as mandated by law.

Types of payroll deductions

Here are the common payroll deductions to keep in mind if you are working for an employee benefits or payroll company that does business in the United States. 

Mandatory deductions 

Mandatory deductions are commonly called withholdings. Some examples of statutory payroll deductions include state and federal taxes, wage garnishments, and FICA. 

• Income taxes: Employers must withhold federal and state income taxes each pay period. Federal taxes have seven brackets (ranging from 10% to 37%), applied incrementally. Taxable income depends on the employee's filing status (single, married, head of household) and claimed allowances in Form W4.  Based on which state the employer operates in, the state income tax rate changes as well. Some states follow federal tax brackets, while others have different local tax protocols. Some states charge progressively, while some charge none. Employers must follow local payroll laws to avoid penalties. Calculating taxes is a complex process and if you are doing it manually, it can be a nightmare.

• FICA (Federal Insurance Contributions Act): FICA includes Social Security and Medicare, with a standard rate of 7.65% per paycheck (6.2% for Social Security and 1.45% for Medicare). Social Security has an income-based upper limit, and employers are mandated to match this contribution. Medicare tax, on the other hand, pays for doctor’s fees, hospital care, and nursing care for 65 years or older as well as for those who receive social security benefits. Employees earning over $200,000 annually must pay an additional Medicare tax.

• Garnishments: Employees may owe a portion of post-tax wages to cover unpaid dues in areas like child support, alimony, defaulted loans, or tax obligations. Employers can be legally ordered to withhold these amounts by courts, government agencies, or the IRS. Failure to accurately handle these payroll deductions can hold employers financially responsible.

Voluntary deductions

Employees can choose from various employer-offered benefits programs and agree to deductions from their paychecks on either a pre-tax or post-tax basis. These programs encompass 401(k) and retirement plans, health insurance, health savings accounts (HSA) and flexible spending accounts (FSA), life and disability insurance, commuter benefits, wellness programs, college savings plans, and other common voluntary payroll deductions. 

Note: Employers need written authorization from the employee for the following deductions:

• Health insurance: Employees with employer-sponsored health, dental, or vision plans have premiums deducted on a pre-tax basis from each payroll, typically with employers sharing the cost.
• 401(k) & retirement benefits: The two most common employer-sponsored retirement benefits plans are 401(k) and Roth IRA contributions. 401(k) is deducted from payroll on a pre-tax basis but subject to FICA taxes. While Roth IRA contributions are deducted on a post-tax basis. As the complexity of the retirement benefits industry increases, more employers and plan providers are relying on 401(k) payroll integrations. This helps them automate payroll deductions, save time, and significantly reduce compliance risks. 
• HSA and FSA contributions: Health Savings Accounts HSA) and Flexible Spending Accounts (FSA) are both employee health benefits that are typically deducted from payroll on a pre-tax basis. Employees can opt to deduct a certain amount of their paychecks each payroll towards paying HSA to cover specific medical expenses like copay, prescriptions, dental or eye care. HSAs are called “triple advantaged” benefit plans, because 1) the money that employees contribute is tax-exempt, 2) the money isn’t taxed while it’s in the Health Savings Account, and 3) it is also tax-free when employees use the money for qualified medical expenses. This triple advantage makes HSAs one of the most popular payroll deduction types by employers. Unlike HSAs, FSAs cannot be transferred, and have a lower contribution limit.
• Commuter benefits: Employees can use tax-free funds from their paychecks for commuting expenses, including mass transport, ride shares, and qualified parking.
• Wellness programs: Employers may offer health promotion and disease prevention plans, like diabetes management, vaccination, weight loss plans, etc. Sometimes wellness programs include employee’s spouses as well. Wellness program-related payroll deductions can be calculated pre-tax if the employee does not have any unreimbursed medical payments related to the payment. 
• College savings plans: Employees can allocate a percentage of their paycheck to state-sponsored 529 plans (known as college savings plans or qualified tuition plans) for a beneficiary's education, which may be state tax deductible. Note: they are not federal tax deductible.
• Life and disability insurance: This includes employee contribution towards group life insurance plans and short or long term disability insurance premiums.
• Others: Voluntary payroll deductions also include U.S.Savings Bond purchases or any money owed to the company for tools, uniforms, loans, etc. 

Pre-tax and post-tax deductions

Voluntary and mandatory payroll deductions can be further classified as pre and post-tax deductions. 

Pre-tax deductions are subtracted from an employee's gross paycheck before any state or federal taxes are withheld, lowering the taxable income. Common examples include health insurance, commuter benefits, group term life insurance, health savings accounts (HSA), flexible spending accounts (FSA), and retirement benefits plans. While participation is optional, it is generally beneficial for employees. Note that there's an annual limit set by the IRS on how much can be contributed to these pre-tax plans, such as 401(k).

Conversely, post-tax payroll deductions are adjusted from an employee's paycheck after taxes have been withheld. Examples include Roth IRA retirement contributions, charitable donations, disability insurance, and garnishments. These deductions don't reduce an employee's tax burden. Employees can choose not to contribute to these plans, except for wage garnishments.

How do payroll deductions work?

Employers typically rely on benefits partners to inform them about various deduction details. These deductions are then processed through a payroll provider to determine an employee's net take-home pay. Payroll providers also ensure that necessary payments are made to the appropriate government entities on time. 

The payroll deduction process follows a standard sequence:

• Deduct pre-tax contributions (e.g., health insurance, 401(k) retirement benefits, and other eligible voluntary payroll deductions) from the gross pay.
• Calculate and withhold federal tax deductions based on the employee's W4 and IRS tax bracket requirements.
• Withhold 7.65% for FICA and an additional 0.9% for Medicare tax if the applicable threshold is met.
• Determine and deduct state tax according to state tax regulations to arrive at the net pay.
• From the net pay, withhold garnishments, dues, and post-tax contributions for other employee benefits such as Roth IRA and disability insurance.

As you can see, to successfully manage payroll deductions, there’s a lot of information exchange required between the employer, payroll provider, and benefits plan partners. Manual processes can render this experience even more redundant and error-prone. Tools like Finch help automate payroll deductions to ensure a seamless experience end-to-end. Learn more.

FAQs about common payroll deductions

What are some examples of wrongful payroll deductions?

With so many deduction types, mistakes can happen. Common errors include:

• Inaccurate deduction amount: Employees often make choices about voluntary benefits plans, like how much to defer from their paycheck or which plan to enroll in. Any error in documenting these details can lead to incorrect premium deductions.
• Incorrect tax calculations: Misclassifying deductions as pre-tax or post-tax can result in employees being assigned the wrong tax brackets. Errors in adjusting these deductions can lead to overpayment or underpayment of taxes. Also, if an employee's filing status (single, joint) or employment details change but are not updated in the systems, it can cause inappropriate tax liability for the employee.
• Getting employee details wrong: Whenever an employee experiences a qualifying life change like the birth of a child, getting married or divorced—employees get the option to update their benefits deduction details mid-year. With multiple benefits providers involved, employers might miss these updates, leading to inaccurate payroll calculations.
• Other common payroll mistakes include non-compliance with local payroll laws, miscalculations of pay or overtime wages, and filing delays. 

Automating payroll deductions is highly beneficial as it captures changes and updates employee information, employment status, and contribution details promptly between systems, reducing errors in deduction calculations. Learn how Finch's automated deductions can reduce deduction errors altogether.

What happens when payroll deductions are calculated incorrectly?

If payroll is calculated with incorrect deduction details it can result in employees being enrolled into the wrong tax brackets. This can result in higher taxes, penalties, or lost interest for employees. 

If withholding calculations are not compliant with state and federal laws, employers need to compensate for back payments, not the employees. 

What is the difference between core benefits and fringe benefits?

Core benefits are the primary benefits employees receive for being employed by an organization. This includes retirement benefits, health insurance, etc. Fringe benefits are the extra perks that some employees get like free meals, childcare (up to $5,000), gym memberships, mental health benefits, group term life insurance, employee discounts, etc. 

While most core benefits are mandated by federal and tax laws, employers offer fringe benefits to retain talent and infuse a positive work culture. The fringe benefits that are translated into cash form are usually deducted from employee wages. 

How do you simplify payroll deductions for employers?

Finch is committed to making payroll deductions easy and automated for employers. It aims to do this by helping innovative SaaS tools in the retirement, benefits, and insurance sectors build solutions that can be integrated with 200+ HR and payroll systems using a single unified employment API. By allowing benefits providers to fetch data from the employer’s source of truth, Finch ensures data accuracy and timely contribution updates to payroll. 

Streamline deductions management: Finch eliminates the need for flat files, SFTP, or manual data entry to fetch employee census data and contribution details. It automates the entire process of payroll deductions by connecting the employer’s payroll systems with the benefit providers' tool. 

Enhance accuracy through automation: Today, every employer is looking for automated deductions management. It frees up employer admin time as they don’t have to manually enter data into the provider’s system each time employment status changes. 

Similarly, all contribution details can be written back into the payroll system without manual intervention. Automated adjustments increase data accuracy and help employers avoid the common payroll deduction mistakes we discussed earlier.

If you are a SaaS tool looking to automate payroll deductions, reach out to us, we’d be happy to help.

If you’ve ever worked in the retirement benefits space, you know that keeping track of information between systems is one of the most challenging aspects of managing 401(k) plans. Using manual methods makes it even more difficult. For this reason, the popularity of automated 401(k) payroll integrations is on the rise. 

In this article, we'll cover how 401(k) payroll integrations work, the differences between 180 and 360-degree payroll integrations, the cost and risks of sharing data manually, and some frequently asked questions. 

We will also discuss how Finch is powering payroll integrations for top players in the retirement benefits industry such as Human Interest, Betterment, Ubiquity, and more—helping them offer best-in-class 401(k) experiences for employers and individuals.

How payroll integrations work in 401(k)

A 401(k) plan is a defined contribution plan. Employees receive a certain amount at retirement based on their contributions over the years. They defer a part of their wages into a 401(k) account which is processed and managed by plan administrators and recordkeepers. 

Employers, or plan sponsors, are in charge of running and overseeing the retirement plan. They:

• Enroll employees into 401(k) plans based on their eligibility
• Calculate contribution details 
• Record deduction details for each pay cycle

While employers can offload some of the responsibilities to a recordkeeper, there is often still a surprising amount of manual work involved. Typically, employers manually enter the data and make necessary adjustments in their payroll system or to their recordkeeper’s system.

Some plans allow employees (or participants) to submit modification requests for their deferral options too. This leads to more administrative burden and complexity for employers and recordkeepers. 

In the absence of 401(k) payroll integrations, plan sponsors are responsible for ensuring employee deductions and employer contributions are always up-to-date between systems. 

But when the employer’s payroll is fully integrated with the plan administrator's system, any changes made to employment status or contribution rates are automatically adjusted.

Who benefits from 401(k) payroll integrations?

401(k) payroll integrations are critical to all stakeholders involved in enabling retirement benefits to employees. This includes plan sponsors, payroll providers, 401(k)/retirement plan administrators, and recordkeepers. 

Plan Sponsors

401(k) plan sponsors benefit greatly from payroll integrations. They automate employee enrollment as well as contribution and match updates. This boosts operational efficiency, reduces data entry errors, and eliminates the need for manual data reconciliation by sponsors.

Payroll Providers

According to our recent survey, today’s employers on average use 6-7 employment systems. As a result, they are always on the lookout for integrated experiences. As retirement benefits gain popularity among employers, especially small and medium businesses (SMB), the demand for payroll providers that easily integrate with chosen 401(k) plan administrators will also rise. This makes integrations essential in the payroll tool decision-making process.

401(k)/Retirement Benefits Plan Administrator

Retirement plan administrators can improve data accuracy and process efficiency with payroll integrations. They can also use it to offer customizable and tailored 401(k) solutions. This helps them build trust and loyalty with employers in the competitive retirement benefits market.

Recordkeepers and Third Party Administrators (TPA)

Recordkeepers and TPAs can harness bi-directional data synchronization—that is, the ability to pull employment information from payroll systems and push contribution data back —enabled by payroll integrations, to reduce data reconciliation efforts and demonstrate higher responsiveness throughout the retirement plan cycle. 

180° vs 360° payroll integrations in 401(k)

Payroll integrations are automated connections between employers’ payroll systems and 401(k) plan administrators. There are two types of connections available based on the scope of data flow: 180 payroll integrations and 360 payroll integrations. 

180 degree payroll integration

In a 180 degree payroll integration, data flow is unidirectional—from payroll providers to the 401(k) systems. This means whenever employment data (such as termination, address, promotion, etc.) is changed in payroll systems,  a 180 degree integration will automatically update the information in the 401(k) software or the recordkeeper’s system. 

However, if an employee modifies their contribution details in the 401(k) tool, it will not be reflected in the payroll system. The employer will have to update the changes on the payroll platform manually. This leaves room for data entry errors.

While it is more advanced than manual data entry, bulk uploads, or SFTP, 180 degree integrations are still limiting in scope. 

360 degree payroll integration

With 360 degree payroll integrations 401(k) plan providers can bi-directionally sync data with the employer’s payroll system:

• Any data updated in the payroll system is captured in the 401(k) tool 
• Any contribution changes made in the recordkeeper’s system are automatically adjusted in the payroll tool 

This ensures consistent and up-to-date information exchange between all systems of record. Recordkeepers can automate the entire benefits workflow—from enrollment to deductions changes.

For this reason, 360 degree payroll integration is often a favorite by sponsors. 

Benefits of 180 and 360 degree payroll integrations 

A complete integration between payroll and 401(k) systems is critical. It solves multiple problems for the retirement benefits ecosystem. Payroll integrations can:

Reduce administrative burden and save time for plan sponsors

Extracting and uploading data manually from one system to another every pay period is inefficient and resource-heavy. Employers can save significant time by using advanced integration technology to automatically track and capture retirement data changes.

Improve data accuracy to maintain compliance

401(k) is a heavily regulated industry and the compliance requirements for retirement plan providers are quite strict. 

The manual data entry process is prone to data entry errors causing compliance risks. They can also cause delays in updating deferral details leading to late deposits, wrong investments, penalties, and increased tax liability for employees. 

401(k) payroll integrations, automate and eliminate compliance risks by directly capturing data from the employers’ source of truth. 

Improve 401(k) yearly audit with streamlined employee census

Eligibility to 401(k) plans depends on the employment details captured in the employee census report. Employee census data include:

• Individual employee information (name, address, SSN, date of birth)
• Employment details (date of joining, compensation, eligibility information, employment status)
• 401(k) information (employee deferral and contribution amount)

As employee information changes throughout the year, so does their census data. 

Typically, organizations conduct yearly census updates and send employment data to their recordkeeper. Each time a new employee joins or leaves the organization, plan sponsors must send their eligibility or distribution details to their recordkeepers. It helps to keep the 401(k) plans up-to-date. 

But, doing so involves a lot of back-and-forth data exchange between employers, plan administrators, and recordkeepers. These manual processes can make it more difficult to manage.

180 or 360 degree payroll integrations sync employee census with recordkeepers and ensure that the retirement plan is always compliant and correct. 

Enhance user experience

If you are a 401(k) plan administrator, your ability to attract and retain customers depends on two things: 

• How much administrative burden you can reduce for them 
• How easily they can navigate between different systems they already use

360 payroll integrations enable you to do both. 

FAQs about 401(k) payroll integrations

1. What is the best payroll integration method?

Most 401(k) administrators prefer a 360 payroll integration. It enables them to fetch data from the payroll systems and update contribution changes back into the payroll system without having to lift a finger. Plus, it saves their customers, the employers, the headache of ensuring no data is missed.

But, a 180 payroll integration is better than no integration. Plus, only some payroll systems support 360 integrations. 

Regardless of the use case, manual data entry is the least preferred method for most sponsors and providers due to its inefficient and outdated mechanisms. 

2. How much do payroll integrations cost?

To scale your business as a 401(k) plan administrator or a recordkeeper, you need to provide some level of payroll integration. 

But, building integrations in-house is a costly affair. It requires technical expertise, and hundreds of building, testing, deployment, and maintenance hours. As of 2023, building just one payroll integration can cost SaaS businesses in the retirement industry an average of $187,500. 

Now, multiply that by 5,700+ payroll providers in the U.S. market today, and you’ll see how unrealistic this method is. 

If you have limited engineering bandwidth, look for a unified solution that will make payroll integrations easy and cost effective. 

3. What is the best way to implement a 360 payroll integration strategy? 

If you are an employer, look for a 401(k) plan partner offering bi-directional data sync capabilities (i.e., a 360 degree integration) with your payroll provider.

If you are a retirement solution company i.e. a 401(k) plan provider, recordkeeper, or TPA, create a shortlist of payroll providers that your customers use most. Then explore what a direct integration might look like for each — or contact Finch. 

Finch is a unified employment API that makes payroll integrations quick and easy for retirement benefits solutions. It allows applications to read accurate employment data and write back deduction details back into the payroll system. 

No manual data entry, bulk upload, or SFTP setup is needed. Learn more about Finch’s automated deductions here

How is Finch different from other payroll integration solutions in the market?

• Immediate integration capabilities: Finch is the only payroll integration solution today that offers integrations with 200+ HR and payroll providers in the US. By connecting once with Finch, you can immediately unlock access to hundreds of HR and payroll tools.
• Smooth employer onboarding with Finch Connect: Employers can connect their payroll to your system in two easy steps during onboarding. 1) They select their payroll providers from the options provided, and 2) they sync their account and set up permissions for data transfer using Finch Connect. Thus, completing the onboarding process in 30 seconds. 
• Manage integrations on autopilot: Finch is designed for ‘set up and forget’. It does all the heavy lifting for building and managing integrations. It enables smooth, consistent, and fresh employment data exchange between systems. 

Building a 401(k)/ retirement benefits solution? Let us help you

Finch is powering retirement benefits platforms and 401(k) plan providers like Human Interest, Ubiquity, and Betterment offer employers 360 degree integrations with the payroll provider of their choice. Want to learn more? Set up a call with our sales team here or get started with Finch today for free.

Company

Rillet is modern accounting software made specifically for SaaS companies. Founded in 2021 by Nicolas Kopp, Rillet is on a mission to automate the tedious work that falls on accountants, empowering them to quickly get meaningful insight into the state of their company’s finances. 

Challenge

Payroll is a vital source of truth for accounting. But for accounting platforms like Rillet, collecting this data is no simple task. 

In the early days, the Rillet team relied on accountants to manually download files from their customers’ payroll systems and manually map, transform, and sanitize the data before uploading it to Rillet. If an accountant served multiple clients, the process had to be repeated. And if there was an error, they would be forced to manually revert the changes and run the process again. This tedious, repetitive, and error-prone process had to be completed each month. 

As Ernesto Medina Delgado, a software engineer at Rillet, points out — this initial experience was not tightly aligned with Rillet’s value proposition. 

“Our intention was to make the accountant’s life easier, not more complicated,” said Ernesto. “The initial solution was putting the burden on their shoulders, and we wanted to take that friction away.” 

The team quickly agreed that in order to deliver on Rillet’s vision, they would need to build integrations with payroll systems. The problem was that doing so would require a lot of engineering resources, both upfront and on an ongoing basis. 

“Building integrations requires a lot of effort from developers, not only to get them set up correctly but also to maintain the integration,” said Ernesto. “These are live systems that evolve over time. It’s not a set-it-and-forget-it type of situation.” 

“Building integrations requires a lot of effort from developers, not only to get them set up correctly but also to maintain the integration. "

Making matters worse, the sheer number of payroll systems on the market—5,700 and counting —meant they’d have to build many integrations if they wanted to serve both current and future customers. 

Solution

After some research, Nicolas asked Ernesto to evaluate Finch, the unified API for the employment ecosystem.

Ernesto soon discovered that, by building a single integration with Finch, Rillet could unlock the data they needed from over 40 payroll systems.

“Finch very quickly jumped to the front of the line,” said Ernesto. “Both the breadth of payroll systems they supported and the data standardization removed a huge burden from our developers’ shoulders. It was clear Finch would save us considerable time and money.”

Finch wasn’t the only provider the Rillet team considered, but it was the one with the best developer experience, according to Ernesto. 

For one, the developer documentation was clear and easy to understand, even for non-technical team members. 

“Code should read like a newspaper, with the most important information at the top and less important information at the bottom. Finch’s docs followed this best practice,” said Ernesto. “More importantly, the accounting team was able to validate that they would get the data they needed without the engineering team’s assistance.” 

Ernesto also received a technical walkthrough from one of Finch’s sales engineers, who helped him understand the options at his disposal for how to build the integration with Finch. 

“My experience with the Finch team not only left a positive impression, but also made me confident in my ability to integrate with Finch,” said Ernesto. “It made the decision to move forward with Finch easy.” 

When it came time to implement, the process was straightforward. His team built a functional proof of concept within a matter of hours, which they later leveraged to build the final solution. They then spent about one-third of their week mapping the data before they were ready to push to production. 

“After a single week, we were able to add all the payroll systems Finch supports to our list of integrations,” said Ernesto. “Compared to integrating with payroll systems one by one, it was really low-effort.”

“After a single week, we were able to add all the payroll systems Finch supports to our list of integrations. Compared to integrating with payroll systems one by one, it was really low-effort.”  

Results

Ernesto estimates that the process of integrating with Finch was 7X faster than it would have been to build a 1:1 integration with a single payroll system. More importantly, Rillet unlocked 40 payroll systems for the price of one. 

“I can’t imagine having to do the massive amount of work it would have taken to integrate with each individual payroll system,” said Ernesto. “We saved so, so many developer hours.” 

“I can’t imagine having to do the massive amount of work it would have taken to integrate with each individual payroll system. We saved so, so many developer hours.” 

Rillet’s customers also reaped the benefits of their decision. 

“The value our customers received during that timeframe was way higher than it would have been if we had to build the integrations ourselves,” said Ernesto. “Without the burden of building integrations, we were able to significantly improve our product during that period.” 

In addition to automating key accounting processes by pulling in and standardizing the customer’s payroll data, the Rillet team has embedded built-in reporting around key SaaS metrics into the product. That makes it possible for customers to get meaningful insight into the state of their finances within minutes of signing up, saving them the time it would typically take to build all those reports from scratch. Moreover, these reports allow accountants to see where the data comes from and how the numbers are calculated—helping eliminate possible errors. 

“Most accounting software was designed before the advent of the software-as-a-service industry,” said Ernesto. “We’re reimagining accounting software for the current era.” 

Throughout Rillet’s journey with Finch, they’ve been nothing but satisfied. 

“We’ve had very few issues throughout our journey with Finch, and the support team has been very responsive. They answer our questions and resolve any issues fast, while maintaining a high bar for quality,” said Ernesto. “We’re really happy to be working with Finch.”

Software sandboxes offer a controlled environment where developers can play, explore, and learn about a product without real-world consequences. While Finch has always had a sandbox for our API, we’re excited to share a brand new sandbox experience that will help developers test our integrations with specific HR and payroll providers. We call it the Provider Sandbox.

What is the Provider Sandbox?

The Provider Sandbox is the easiest way to test our integrations with HR and payroll providers. It provides a realistic environment where developers can initiate an external connection with live providers like Gusto and Deel — and receive data from demo and trial accounts.

The beauty of the Provider Sandbox is the ability to test live, external connections with specific providers. It’s as realistic as you can get outside of a live customer scenario. That means you can test everything our API offers – like request forwarding and data syncs – just as you would a production account.

The Value of Dummy Data from Providers

Each HR and payroll provider is unique. They offer different features, specialize in different industries and customer sizes, and even if the data they store is similar – the way that they manage the data is different. Without actually connecting to providers’ systems during the testing phase, it’s difficult to know what data you’ll actually have access to. And that makes it tricky to test your unique use case. 

With the Provider Sandbox, you can test for specific field support and understand specific nuances of a provider - for example how contractors are handled in the system. Most importantly, you’ll be able to update your demo company within the provider’s dashboard, resync with Finch, and see those changes reflected in the Finch API response. This is the simplest way to realize the power of Finch without having to worry about using a live customer – or worse, your own payroll account – to test.

How to Connect To Your First Demo or Trial Account

In order to use the Provider Sandbox, you’ll need to first set up a demo or trial account with a supported provider. Then, you can modify the data in your account, sync with Finch, and understand how those changes are reflected in the Finch API. Getting comfortable with this back and forth can help you feel more confident that this provider can support your use case.

Currently, the Provider Sandbox supports Gusto, Deel, and Square demo accounts and BambooHR, Bob, Humaans, Personio, Sage, Square, and Zenefits trial accounts. 

In the demo below, you can see the process of setting up a demo account and testing your first connection with Gusto. 

Experiment with Finch’s API and Dashboard

Connecting to an external provider is only the first step. With the Provider Sandbox, you can use this connection to test many of Finch’s API and Dashboard features.

For example, say you’re building a financial forecasting product, and require weekly working hours from Personio. While this isn’t supported in our standardized data model, it is possible to access it with Finch Request Forwarding. Simply use our /Forward API to request data from Personio in their native API data model. Once the raw data is returned, you can understand exactly how this data can be utilized in your production application. To see how this works, watch our Request Forwarding demo.

This is just one example of how you might use the Finch API to experiment with provider data. Please note that Request Forwarding is only available for active customers on our scale plan.

Conclusion

Together, we hope both our Provider Sandbox and Finch Sandbox can help developers test exciting new applications of Finch without having to worry about the sensitivity of live customer data and PII. 

Our Provider Sandbox is free for developers. If you’re already a Finch customer, get started by visiting your Sandbox Application in the Finch Dashboard. If not, sign up for free.

Most people aren’t aware of the huge inefficiencies that plague the benefits and retirement industries. But if you have ever enrolled in a 401k, HSA, FSA or other fringe benefit there is likely a chain of manual processes that have made that benefit available to you.

At Finch, we’re helping retirement and benefits platforms improve not only the administrative experience for HR professionals, but also unlock new products and services that are personalized, easy-to-use, and scalable.

So how are we doing it?

Finch was built to connect the employment ecosystem. In 2020 we launched seamless read access to HR and payroll systems so applications could consume employer and employee details in a standardized format. Then, last year, we launched Deductions (previously Benefits) to help applications write deductions and contributions changes back to their customers’ payroll systems automatically.

This two-way integration is critical to employee benefits platforms, which need to fit seamlessly into their customers’ existing HR tech stacks. Finch is the only unified API offering it today.

“Frankly, there were no other solutions that could support our vision and facilitate writing payroll deductions automatically," says Erika Davison-Aviles, Deductions customer and Co-Founder of TempoPay, "Finch had the technology and functionality that best met our product needs.”

“Frankly, there were no other solutions that could support our vision and facilitate writing payroll deductions automatically. Finch had the technology and functionality that best met our product needs.”

The Need for Automated Deductions Management

Benefits platforms want to be able to offer seamless experiences for the employers (sponsors) they serve. But, it’s not uncommon for the sponsor onboarding process to require a lot of manual work and coordination across operations, customer success, and technical teams. There is also a significant administrative burden for their core user, the HR admin.

Benefits platforms face monumental administrative burdens

Most payroll providers don’t offer deductions management through their API, this means one-off file transfer processes need to be created for each supported provider. This means a months-long process of discovery, setup, data mapping, and operational change management. It means setting up unique SFTP servers for each provider and paying for implementation or hosting. And it means any subsequent change to the data collected means revisiting the process again. On top of ongoing testing and quality checks. 

This administrative overhead not only impacts what these platforms can build and offer, it also has significant downstream effects on the sponsors and employees they intend to serve. It's a big challenge for companies hoping to differentiate with a great user experience.

As Davison-Aviles explains, “SFTP and flat file uploads were out of the question. Manual file uploads are not only time-consuming, they’re wrought with errors. They simply didn’t align with our vision.”

“SFTP and flat file uploads were out of the question. Manual file uploads are not only time-consuming, they’re wrought with errors. They simply didn’t align with our vision.”

Operational overhead limits viable benefits options for sponsors

In our recent survey of over 1,000 HR professionals, HR teams spent 3-5 hours per payroll cycle to ensure employees had the correct deductions and contributions applied. That may work with a large HR team, but often isn’t feasible for small businesses. As early Finch Deductions customer Chris Ellis, Co-Founder and CEO of Thatch says, “Small businesses want to offer great benefits, but don’t have the bandwidth to deal with complexity.”  

Additionally, employers update their payroll systems as they grow, but the lack of integration and standardization across the ecosystem makes it impossible (or unreasonable) to take their benefits with them. 

According to Fidelity Investments’ 2023 Small Business Retirement Index, 22% of small business owners said they don’t have time to offer retirement options to their employees, (only 34% currently offer retirement savings plans). But, with new legislation enacted in Secure Act 2.0 and the rise of state-mandated retirement plans like CalSavers, employers may need to find a way. There is an opportunity for benefits platforms to use technology to help these businesses control costs while remaining compliant.

What’s Next for Finch Deductions?

In the past year, we’ve made huge strides in delivering automated deductions management for some of the largest payroll systems on the market. We’ve enabled platforms like Thatch to reliably manage employee deductions and contributions across payroll providers through a standardized experience. And we’ve made it flexible enough to enable brand-new use cases, such as TempoPay’s individualized health benefits that allow employees to control their payments every month.

But there’s still more to do. In the next few months, we’ll more than double our coverage of popular payroll systems to help our customers serve more employers, leverage automation to tackle new industry requirements, and deliver new, innovative benefits that help individuals achieve their mental, physical, and financial goals. 

As we scale, our focus is on expanding coverage of payroll systems that we offer in completely automated ways, while simultaneously raising the bar for reliability. Our goal is to build comprehensive tooling to help benefits providers reduce operational overhead and focus on providing first-class services to employers and employees. And we will continue to build deep industry partnerships across different parts of the employment stack.

Employment and benefits industries are at the cusp of monumental change, and payroll integration will be crucial. In the words of Chris from Thatch, “Payroll integration shouldn’t be your core competency. Like Stripe for payments and Plaid for bank accounts, Finch is the best solution in its category. It would take you longer and cost you more to reinvent the wheel."

“Payroll integration shouldn’t be your core competency. Like Stripe for payments and Plaid for bank accounts, Finch is the best solution in its category. It would take you longer and cost you more to reinvent the wheel."

To learn more about how benefits platforms are using Finch, check out our new customer stories from Thatch and TempoPay. Or get started with Finch today for free.

‍

TempoPay is a financial benefits platform that enables employers to remove the financial barriers that prevent their employees from accessing healthcare. The company’s mission is to empower people to access healthcare when they need it, without worrying about affordability concerns. Founded in 2021 by Tim Danison, Erika Davison-Aviles, and Joshua Goldstein, the company was conceptualized, built, and launched from within Redesign Health. 

The Challenge

“Financial barriers shouldn’t prevent people from staying healthy,” says Hattie Ninteau, TempoPay’s Marketing Manager. “But they do today.” 

Hattie knows what she’s talking about: According to a Kaiser Family Foundation study, more than half of U.S. adults said they delayed getting medical attention in the past year due to an affordability concern. Even those who are insured often cannot afford care due to high deductibles, especially when faced with rising inflation. 

For employers, that means more sick days are used, along with a significant loss of productivity.

“Whether or not an employee seeks healthcare impacts their employer,” says Hattie. “It influences both if and how they show up to work.”

TempoPay’s founding team envisioned a solution that would help employees pay for out-of-pocket healthcare expenses—the ones traditional health benefits too often fail to cover. Employees would download a mobile app, register in under two minutes, and instantly get access to a TempoPay card. They could leverage the funds right away to pay for healthcare—unexpected or planned. TempoPay would finance the cost, secured by the individual’s employment. 

It quickly became clear that TempoPay would need a way to write after-tax deductions back to each individual's payroll. Traditionally this burden would fall on the HR administrator, but TempoPay knew that wasn’t an option.

“SFTP and flat file uploads were out of the question,” said Erika Davison-Aviles, Co-Founder & Head of Product, TempoPay. “Manual file uploads are not only time-consuming, they’re wrought with errors. They simply didn’t align with our vision.”

Reducing the burden on employers would be key to getting employees fast access to the care they so desperately needed. 

The Solution

TempoPay’s founding team began to search for a solution that would empower them to build an MVP. They needed to find an API product that could both read vital employment data and write deductions back to each employer’s payroll system. 

This was the only path forward. After all, they wanted to provide a frictionless user experience for everyone. 

“Employers don’t want to jump through hoops to figure out how to deliver benefits to their employees,” said Hattie. “They want simple, set-it-and-forget-it solutions.” 

Through thoughtful research and market analysis, the TempoPay team identified Finch, the unified API for the employment ecosystem, as a potential partner. 

The TempoPay team did their due diligence: They assessed several unified APIs and iPaaS providers. But only Finch offered the ability to both read the employee’s payroll frequency and write deductions back to their payroll system.

“Frankly, there were no other solutions that could support our vision and facilitate writing payroll deductions automatically,” said Erika. “Finch had the technology and functionality that best met our product needs.” 

The Benefits of Using Finch

After becoming a Finch customer, the TempoPay team was thrilled.

“Implementation was straightforward, and the impact was immediate,” said Erika. “Finch's assisted integrations are leagues ahead of the typical batch file process. Instead of waiting a month for new deductions to process, we can make updates every week. That’s lightning speed in our niche.”

In other words, TempoPay can now write payroll deductions over 4X faster. 

The end-user experience exceeded Hattie’s expectations. 

“Employers literally just press a button. It typically takes 30 seconds to onboard through Finch Connect," said Hattie.

As a result, they were able to achieve industry-leading adoption rates.

For Erika, the experience with Finch’s developer success team also stands out. 

“Every time I share product requirements and emphasize the need to move quickly toward a solution, the Finch team delivers. It’s the quintessential case study for agile.”

Together, the TempoPay and Finch teams are testing the limits of how deductions are managed.

“Every time an employee’s card is swiped, a new payment plan is triggered and their deductions change as a result,” said Erika. “For us, that means that every employer, every employee, and every pay period is unique.”

While the initial MVP build took some time, they’ve since enjoyed “months of smooth sailing” while providing healthcare benefit solutions the industry never before thought possible.

Looking forward, the TempoPay team plans to continue innovating. They recently expanded into pet care and veterinary expenses, and are offering more comprehensive employee benefits and financial wellness solutions that give employees access to critical funds when they need it most. 

“We’re growing quickly and Finch has been a fantastic partner throughout our journey, helping us realize our vision of providing financial benefits that meet the needs of the modern-day employee.”

Their customers are eager for the TempoPay team to solve new and related problems. With Finch as a partner, they’re able to fulfill most requests. 

“I’m confident in our growing platform because I know we have Finch as our partner,” said Erika. 

At Finch, we’re excited to partner with game-changing applications like TempoPay. If you’re interested in exploring data integrations, reach out to our sales team or start building with our unified API.

More about TempoPay

TempoPay is available 24/7/365 and employers can bring TempoPay to their company anytime. There’s no need for employees to wait until an enrollment or onboarding period starts. There is no need for credit checks. Employees pay zero fees and no interest. They can choose to repay via payroll deductions or their personal bank account—providing them with a significant degree of flexibility. 

The social impact is profound. Employees can access care when needed, including medications or treatments that their health insurance plan doesn't cover. That’s helpful, for example, when you need to schedule a costly surgery. Or when your doctor prescribes a new medication that costs several hundred dollars to fill.

TempoPay works with each employer to understand their unique employee population. They then make a recommendation regarding an appropriate and responsible spending limit, which usually ranges from $1,500 to $5,000. True to their commitment to flexibility, they can support different benefit configurations such as spending categories and funding options. This enables the team to work creatively with employers seeking a modern financial wellness solution for healthcare expenses and more. 

‍

We're excited to share that Finch now supports real-time webhooks for all customers on our scale plan. Finch Webhooks help you monitor connections and sync jobs, and notify you when data has changed. This helps you keep your applications up to date with the freshest employment data available.

What webhooks does Finch offer?

Finch offers 3 types of webhooks, account update events, job completion events, and data change events.

• Account update events contain information about account connections, such as when a connection has been established or needs to be refreshed. Use these webhooks to determine when a new connection is fully set up and ready to begin syncing data.
• Job completion events fire when a data sync job finishes running, whether the final state is a success or an error. Use these webhooks to trigger workflows or notify customers when a sync has completed.
  

• Data change events fire when data from a connection has been created, updated, or deleted — after the initial data sync has been completed. You can subscribe for updates on all data, or just for specific endpoints. You can find a demo of data change event webhooks here.

How to set up secure, scalable webhooks in our Dashboard

We designed Finch Webhooks to empower our developers to build seamless and secure applications. With webhooks, there’s no need to make repeat data requests to find out what data has changed. Easily configure webhooks in the Dashboard, and start receiving notifications in real time.

Check out the demo below to learn how to set up your first webhook.

‍Easy setup
To set up a new webhook, simply register an endpoint in the Dashboard, and use our documentation to understand the structure of each event type.

Real-time notifications
Webhooks make it easier to get notified of updates instantly. Once you’ve set up your webhooks, you’re ready to receive updates in real time. 

Scalable and secure
As your business grows, so do your needs. Fortunately, Finch webhooks are built to scale—so whether you're handling ten employer connections or ten thousand, performance will remain consistent and reliable. Our webhooks are also signed by Finch so you can verify that the data you're receiving is coming from us.

Get started with Finch Webhooks today

Ready to try? If you’re already a customer of Finch, hop into our webhooks documentation to get started. You can also sign up for Finch today for free.

💡 Editor’s Note: This post was originally published in October 2023 and has been updated to include data change events.

Thatch is a health benefits platform designed for the modern era. The company’s mission is to help startups provide their teams with personalized healthcare in under five minutes. Founded in 2021 by Chris Ellis and Adam Stevenson, the company has raised funding from top investors like a16z, General Catalyst, and Google Ventures. 

The Challenge—Building Payroll Integrations, Fast

“The way health benefits work today is very paternalistic,” said Chris Ellis, Co-Founder and CEO of Thatch. “Employers are forced to choose one pair of shoes and hope it fits every member of the team.”

Imagine that, after researching your options and polling your team, you decide to buy Nike runners in a size 10 in bulk. Soon after, someone comes to you and says they need a size 7. Another team member says they’d prefer Reeboks. Yet another employee wants hiking boots. 

Picking a one-size-fits-all health benefits plan can be similarly frustrating for HR professionals and the employees they serve. To save money, employers must purchase group health insurance plans with standardized benefits, which often leaves employees with varying needs unsatisfied. 

Group plans also don’t make it easy for employers. The onboarding and yearly enrollment processes often require them to manually move data between their HRIS, payroll, and benefits administration systems. When a new employee is hired, an existing employee departs, or another qualifying life event occurs, the employer must also manually make changes to the plan.

From the start, Chris and his team were obsessed with delivering an unparalleled customer experience. To build a health benefits platform that provided employees the control and flexibility they deserved, his team would need to leverage technology to deal with any corresponding complexity. “Choosing and managing health benefits is often a thankless job,” said Chris. “We are determined to remove the administrative burden.” In other words, they refused to burden the HR administrator with the tedious task of manually managing employee deductions. After all, these deductions were bound to vary from employee to employee and pay period to pay period.

“Choosing and managing health benefits is often a thankless job. We are determined to remove the administrative burden.”

For example, say all employees have a $500 monthly budget for healthcare. One employee chooses a $350 health insurance plan, leaving them with $150 each month to spend on out-of-pocket medical expenses. In January, they spend $167.25 leading to a $17.25 deduction. But, in February, the employee has no medical expenses, and so doesn’t pay any deduction. 

Without automated deductions management, this data would need to be updated manually—for every employee, every pay period.

Making matters more complicated, every employee is different. Whereas one employee might choose a $350 health insurance plan, another might choose a $700 plan. That individual’s out-of-pocket expenses would be added on top of their monthly $200 deduction. 

“Small businesses want to offer great benefits, but don’t have the bandwidth to deal with complexity,” said Chris. “They just want to know that your solution works and it can deliver the end result they’re looking for.” 

To deliver on this vision, the Thatch team realized they would need to build integrations to each customer’s source of truth for deductions—their payroll system. Chris knew that wouldn’t be an easy feat. 

“With the unbundling of payroll from benefits, we needed to achieve the same level of connectivity, accuracy, fidelity, and timeliness as our customers had become accustomed to,” Chris explained. “And we had to do that without ever being inside the payroll system—and without burdening our customers or their employees.” 

Thatch’s founding team was left with two options: 

1. Invest in building a 1:1 integration with each payroll provider

By Chris’s estimation, in-house development would have meant hiring four additional employees across product, engineering, and business development at a cost of approximately $800,000 per year.

It would have taken at least a year to build the minimum number of integrations they would need to launch. Plus, they would probably have had to go to market with fewer integrations than desired. (After all, there are more than 5,700 payroll providers on the U.S. market, and the top 10 only account for 55% of employers.) In other words, if they chose this route, their near-term total addressable market would be limited.

Complicating matters was the fact that many payroll providers exclusively partner with businesses that already have shared customers. That created a chicken-or-egg problem for Thatch, which had yet to launch let alone acquire a sufficient number of customers to qualify.

2. Find a better way to achieve their goals

From Chris’s perspective, the traditional path presented obstacles that were insurmountable for an early-stage startup. So, his team kicked off a search for a more realistic solution that provided plug-and-play employment integrations. 

The Solution—Finch's Unified Employment API

Beyond needing a faster and more cost-effective way to integrate with the industry’s most popular payroll providers, Thatch wanted a solution that could help their team automate the tedious process of writing deductions back to each employer’s payroll system. 

They soon heard from another founder that they could leverage Finch’s unified employment API to unlock access to over 200 HRIS and payroll systems. 

Chris and his team did their due diligence: They evaluated several competitors, but quickly realized Finch was the only solution that could satisfy their need to both read employee data and write deductions back to each employer’s payroll system. Finch also allowed them to reconcile their ledger, making sure all the dollars and cents added up in a compliant way.

What stood out, though, was the exceptional user experience Finch facilitated. By embedding Finch Connect into their onboarding flow, employers could give Thatch permission to both read and write back to their payroll system in under 30 seconds. 

“Finch’s user interface and security standards met our high quality bar. We were confident that, by leveraging Finch, we’d be able to earn the trust of the employers we served.” 

When it came time to implement Finch, Chris found the setup process to be seamless. As his team navigated its complex use case, the Finch team not only offered unwavering support but also contributed their unique expertise. 

As a result, the Thatch team was also able to provide value-add services its customers never expected. For example, by reading whether an individual was still active within the organization, Thatch was able to notify customers when it came time to offboard employees from its benefits program. 

“Finch is truly a strategic partner,” said Chris. “Together, we’re able to push the envelope on what’s possible. In fact, in the short time we’ve been working together, most or all of our product requests have been implemented.” 

Results—$800K in Savings, 10X More Revenue

By leveraging Finch’s unified API, Chris estimates that his team saved $800,000 in payroll costs, got to market 10 months sooner, and captured 10X more revenue. 

“The benefits of Finch were immediately obvious. We can easily spin up new payroll integrations and unlock new revenue opportunities without adding engineering headcount or building out a business development team.” 

With the time and money the Thatch team saved, they were able to deliver on their commitment to their customers—building a product with a best-in-class user experience. 

“We made a great decision by partnering with Finch,” said Chris. “I can’t imagine building our product any other way.” 

Today, Thatch empowers small businesses to offer their employees personalized healthcare in just five minutes. 

The process is simple for employers: They define a tax-free healthcare budget. Their employees choose a plan that suits their needs and then use any leftover money to pay for out-of-pocket expenses. Individuals can use their Thatch card to purchase anything from therapy sessions to fertility treatments to braces for their children. 

By pooling the resources of many businesses together under the Thatch umbrella, they’re able to offer employers better health insurance plans at lower rates—benefits that are increasingly difficult for startups to access. In other words, Thatch helps small businesses offer big-company benefits.

When asked if he has any advice for the product and engineering leaders who are considering using Finch, Chris had this to say:

“Payroll integration shouldn’t be your core competency. Like Stripe for payments and Plaid for bank accounts, Finch is the best solution in its category. It would take you longer and cost you more to reinvent the wheel."

The wait is finally over. Download the 2023 State of Employment Tech Report for free below.

‍

In June 2023, Finch surveyed 1,004 HR pros from a variety of industries and company sizes. Our aim was to uncover emerging trends while exploring the relationships between HR pros, their tech stacks, and the employment data they manage. 

Inside, you’ll find powerful insights into the state of employment technology:

• The rate of adoption of generative AI in HR
• The fluid landscape of hiring and return-to-office trends
• The wishlist of HR pros and the surprising item that topped the list
• How companies are approaching data security and regulatory compliance
• And so much more! 

Download the report to discover how HR pros are navigating a tumultuous year, and what they want from the businesses that serve them. 

The payroll ecosystem in the US is fragmented, with over 5,700 providers serving the country alone. Meanwhile, the employment ecosystem has never been more competitive, with best-of-breed applications catering to employers of all types. While both employers and employees stand to benefit from this trend, it also raises the bar for applications in the space to uplevel their customer experience, or risk losing customers. Connectivity to other apps in the ecosystem, especially critical systems such as payroll systems, is a big piece of this customer experience.

We’re thrilled to share our latest whitepaper, The Emergence of the Unified Employment API, which documents the evolution of popular data sync options, from manual entry to flat file transfers to direct integrations to unified APIs to specialized unified APIs such as the unified employment API.

Inside, you’ll learn:

• A brief history and the range of data sync options, including APIs
• Definitions and examples of common types of APIs
• Why employer-facing businesses need vertical-specific unified APIs 
• How companies like Mosaic, Trainual, and PerkUp have benefited
• And so much more! 

Download the whitepaper learn more about the emergence of the unified employment API today!

Finch recognized for achievements in the Unified API space

CB Insights today named Finch to its sixth-annual Fintech 100 ranking (previously the Fintech 250) - showcasing the 100 most promising private fintech companies of 2023.

“Representing 24 different countries across the globe, this year’s Fintech 100 is shaping the future of real-time payments, spend management automation, embedded finance, and more,” said Chris Bendtsen, Lead Fintech Analyst, CB Insights. Together, they are not only increasing the pace of innovation, but launching new products and features to revolutionize the industry as a whole. I cannot wait to see what this cohort accomplishes next.”

“We are pleased to be featured in this list alongside other Finch customers. This ranking is further validation of Finch’s vision to make all applications in the employment ecosystem connected, so employers have the data and insights they need without unsecure and manual data transfers,” said Jeremy Zhang, CEO of Finch. 

Utilizing the CB Insights platform, the research team selected these 100 winners from a pool of over 19,000 private companies, including applicants and nominees. They were chosen based on factors including - including equity funding, investor profiles, business relationships, R&D activity, news sentiment analysis, competitive landscape, proprietary Mosaic scores, and Yardstiq transcripts - and criteria such as tech novelty and market potential. The research team also reviewed thousands of Analyst Briefings submitted by applicants.

Finch is the #1 unified API for employment systems, with industry-leading coverage across 200+ payroll and HRIS providers. Our technology underpins the employment ecosystem, helping employers share organization, pay, and benefits data securely. Finch powers integrations for hundreds of platforms including Brex, Carta, and Betterment.

Quick facts on the 2023 Fintech 100: 

• Equity funding and deals: The Fintech 100 includes a mix of companies at different stages of maturity, product development, and funding. The cohort has raised nearly $22B in equity funding across 381 deals since 2019.
• Unicorns: There are 31 companies with $1B+ valuations on the list.
• Global Reach: This year’s winners represent 24 different countries across the globe. Forty-three percent of the selected companies are headquartered in the US. The UK comes in second with 12 winners, followed by Singapore with 7. Additionally, some emerging markets stand out with multiple winners this year. For example, India has 3 winners, while Indonesia and Egypt each have 2.

About CB Insights
CB Insights builds software that enables the world's best companies to discover, understand, and make technology decisions with confidence. By marrying data, expert insights, and work management tools, clients manage their end-to-end technology decision-making process on CB Insights. To learn more, please visit www.cbinsights.com.

‍
Contact:
chris.orlando@cbinsights.com

‍

We’re excited to share a new feature in the Finch API, called Request Forwarding. 

Request Forwarding enables Finch developers to make direct requests to employment systems, and access any functionality that is natively supported by a provider’s API. Even those outside of the scope of our standardized data models.

With Request Forwarding, you get the benefits of direct integrations with employment systems like Bob, Personio, Gusto, UKG Pro, and more. Data is requested and returned in the provider’s native format, giving you greater flexibility to access unique data in these systems. This also means you can exercise any functionality, read or write, that is supported by their public APIs. 

How Finch Request Forwarding Works

Standard Finch API Request

Each of Finch’s 200+ integrations is built to our standardized data model. This data model helps unify the information coming in from each employment system so that developers aren’t required to manage nuances between providers.

When a developer sends a standard request to the Finch API, it goes through two key steps before reaching the data: data transformation and authentication. The data transformation process converts the request from our standardized data model to that of the system where data is stored. The authentication step then confirms that the employer has the correct permissions to access the data requested. Once the data is retrieved, it then moves back through the transformation layer to be returned in the expected format. This whole process ensures developers get a consistent request and response structure to work with, regardless of the system you’re extracting data from.

Finch Request Forwarding

Now, developers have the option to bypass the data transformation step and retrieve data in the original format of the provider. With the raw data exposed by an integration, the data mapping is completely in your control. 

Finch enables this by leveraging an employer’s existing secure connection with the provider that was established via Finch Connect, forwards the request to the provider, and then forwards the provider’s response back to your application. 

Abacum unlocks new value with Request Forwarding

Abacum, an automated FP&A tool that helps finance teams with revenue forecasting, headcount planning, and OPEX breakdowns uses Request Forwarding to gather expanded data sets from their customers' systems of record. "The ability to perform deep, nuanced analyses on HR and payroll data unlocks a higher level of value for our customers, " said Barbara, Senior Product Manager at Abacum. "Strong performing integrations is one of our main competitive advantages, and we can maintain a great level with Request Forwarding."

“The ability to perform deep, nuanced analyses on HR and payroll data unlocks a higher level of value for our customers. Strong performing integrations is one of Abacum's main competitive advantages, and we can maintain a great level with Request Forwarding."

Ultimately, Request Forwarding gives our developers complete control over the data that matters to them, without building and maintaining one-off integrations. In order to make a request to one of these providers’ public API endpoints, you’ll just need to use our new /forward endpoint. 

Request Forwarding is available now for all customers on a Scale plan. Check out our documentation for a complete list of supported providers, and details on how to get started.

We’re excited to announce our partnership with Gusto, one of the nation’s leading payroll, benefits, and HR services providers for SMBs. With this new partnership, approved developers can use Finch to seamlessly read and write data to Gusto — in addition to hundreds of other HRIS and payroll systems. By increasing the total number of developers that can integrate with Gusto, either through a direct partnership or through Finch’s unified employment API, we can empower innovators to build the next generation of HR technology. Learn more about Finch Partner Program.

As the HR tech landscape has grown, it’s become increasingly important that systems be able to interact with one another. But, building integrations across a wide variety of HR platforms can be costly and time-consuming for developers. Finch makes it easier for a developer to quickly integrate with 200+ HR platforms via their unified API, enabling innovation in the market.  

“Developers want to integrate with every HR system their customers use, but with so many players in the space, this can be a real challenge," said Jeremy Zhang, CEO and cofounder at Finch. “In the same way that Plaid created greater interoperability with financial service providers, Finch is emerging as the unified infrastructure underpinning the employment ecosystem. As we enter this new partnership with Gusto, we’re excited to work together to build more deeply integrated experiences for employers.”

As we enter this new partnership with Gusto, we’re excited to work together to build more deeply integrated experiences for employers. (Finch)

Gusto is a well-loved nationwide brand with over 300,000 employers using its platform for payroll, benefits, and HR services. Gusto supports integrations with hundreds of solutions in the SMB space, and launched an embedded payroll solution mid-2021 enabling other companies to offer its payroll services inside their app or service. By partnering with Finch, Gusto can expand their network of developers and accelerate innovation for SMBs.

"Our partnership with Finch creates a new way for developers to integrate with Gusto and will help to accelerate more innovation in the HR space," said Andy Toung, Chief Strategy Officer of Gusto. “By supporting more integrated experiences, we can solve real pain points for our customers allowing them to better care for their teams.”  

Our partnership with Finch creates a new way for developers to integrate with Gusto and will help to accelerate more innovation in the HR space. (Gusto)

For existing customers

Finch and Gusto have been working behind the scenes to upgrade your experience. OAuth, SSO, and performance improvements are some of the exciting features of our new integration. In partnership with Gusto, we’ve agreed to migrate users to the new experience by November 30th. Your Developer Support representative will be in touch to support your migration process, which you can start by heading to this migration guide.

For new customers

As the #1 Unified Employment API, Finch makes it possible to access organization, payroll and benefits data across 200+ payroll and HRIS systems — all through a single integration. We are proud to provide Gusto developers with another way to share data between your customers’ Gusto accounts and your application. Want to learn more? Set up time to talk with our sales team here.

Sign up here to be the first to receive the full report once it's published in October 2023:

Recently, Finch commissioned a survey exploring the relationship human resources (HR) professionals have with their tech stacks, specifically the employment systems they use to manage employee data. To get a clear picture of the industry, the survey polled 1,004 HR professionals throughout the United States. The full report will be published in October but, in the meantime, here’s a sneak peek into some of the findings. 

Note: Our team defines employment systems as tools that store data centered around the employee lifecycle. Examples of employment systems include but are not limited to Human Resource Information Systems (HRIS), payroll, benefits, business finance, tax, compliance, and insurance applications.

The Growing Tech Stack: Making the Case for More Connected Systems

In the survey, we found that 49% of HR professionals say they leverage seven or more employment systems of record, inclusive of their HRIS, ATS, benefits administration, payroll, and time-tracking systems. This becomes more complex with larger organizations: 38% of HR professionals whose organizations have more than 1,000 employees report having ten or more employment systems in their tech stack.

While nearly all respondents (97%) say it's important for their employment systems of record to integrate with other tools in their tech stacks, 84% say this connectivity is very or extremely important. Yet, 55% of HR professionals say that between one and six of their tools automatically sync employment data from their systems of record. 

With so many disparate and siloed tools to manage, there’s a strong need for greater connectivity throughout the employment ecosystem. For HR professionals, better system integrations will be the key to boosting efficiency, enabling them to do their jobs more effectively and with more ease.

Wasted Time and Errors Found

Our survey found that 58% of HR professionals spend more than seven hours in employment systems each week. 68% say they regularly or constantly switch between different employment systems throughout the day. 51% of those who toggle between different employment systems admit doing so leaves them feeling overwhelmed, stressed, annoyed, frustrated, or angry.

Interestingly, HR executives spend more time in their employment systems than their workers. Whereas 72% of VP- and C-level leaders say they spend seven or more hours logged in, just 46% of individual contributors say the same. Surprisingly, executives also report spending more time manually entering employment data and toggling between different systems than the individual contributors who work for them.

Not as surprising, 64% of HR professionals say they spend between four to nine hours manually entering data per week. This is somewhat expected and unfortunately accepted in the HR industry given the highly-sensitive nature of information that needs to be inserted into these employment systems. However, these manual processes clearly aren’t meeting the mark when it comes to accuracy: 56% of HR professionals say their team finds incorrect or outdated information in employee data at least once a week.

This data tells us that there’s a huge opportunity to improve the many employment systems that HR professionals have to manually enter data into. 

Security Issues Come From the Top

On the topic of entering data into employment systems, we decided to see how securely HR professionals gather and manage sensitive employment data. We found that the top two channels HR professionals currently use to communicate sensitive employment data are email (65%) and video conferencing tools, such as Zoom or Google Meet (51%).

Shockingly, 41% of HR professionals admit they communicate sensitive employment data via text message or SMS. Findings further reveal the biggest offenders are those who should know better: 50% of HR professionals with Chief Human Resource Officer, VP of HR or Head of HR titles admit to communicating sensitive employment data through text message or SMS. 

While most respondents (68%) admit they’re worried about employment data breaches, a greater percentage (76%) is concerned about complying with data security regulations, with 57% of HR professionals saying they are very or extremely concerned. 70% of those in executive roles such as CHRO, VP or Head of HR say they’re very or extremely concerned about complying with employment data security regulations. In comparison, fewer of those in individual contributor HR roles (39%) express the same high levels of concern about complying with employment data security regulations.

The takeaway is clear: HR professionals need to find a more secure way to share employment data. 

Conflicting Views on AI

With nearly three in five HR professionals already utilizing generative AI technologies, there is a decidedly large awareness of AI’s potential within the human resources field. Yet, notably, there’s a significant disconnect between HR executives and individual contributors when it comes to whether AI technology is actually being used on a regular basis: The vast majority (84%) of HR executives at the VP level or higher (e.g., Head of HR, CHRO, etc.) believe their teams are using generative AI, yet only 34% of individual contributors report doing so.

Meanwhile, views around the impact and implications of AI tools continue to be mixed. While a majority of HR professionals rate artificial intelligence as being both relatively powerful and a competitive advantage, many still perceive AI as being relatively expensive, exclusive, and risky to use. There is also a great deal of fear about the potential of the human resources occupation being outsourced to AI, as indicated in numerous open-ended responses. Yet, where AI takes the HR field going forward remains to be seen.

What’s To Come?

Finch will be announcing the full results of this survey in October, which will include in-depth breakouts of the above data. Interested in seeing the full report once it’s published? Sign up below to be notified.

This survey was conducted online within the United States from June 21 - 30, 2023 among 1,004 human resources professionals, all of whom were employed full-time. 

The vast majority (78%) were team leaders in director, vice president, or c-level executive roles. The other 22% were individual contributors, many of whom specialized in a specific domain within human resources, such as people operations, talent acquisition, or DEI. 

Surprisingly, 63% of respondents were neither remote nor hybrid workers, instead being required to come into the office five days per week.

‍

Today, we’re thrilled to announce that Finch has joined the UKG Partner Network, which currently boasts more than 350 solution and services partners. By fostering a close relationship with UKG, Finch has again advanced its mission to empower innovators by facilitating a more open and connected global employment data ecosystem for the world’s innovators. 

Expanding their reach

As a leading provider of HR, payroll, and workforce management solutions—one that is known for transforming businesses through innovation—UKG receives hundreds of applications from potential partners every year. 

But forming partnerships takes a considerable resource investment, both upfront and on an ongoing basis. So UKG set out to find a strategic partner who could help them expand their reach and unlock new growth by supporting the world’s innovators.

Finding a path forward with Finch

When the UKG team discovered Finch, they realized they had found a way to multiply the number of developers they served.

Finch is a unified API built for the employment ecosystem. It not only makes connecting with UKG possible, but also streamlines the integration process for developers. After building an integration with Finch and securing permission from their customers, developers can instantly access the employment data housed in UKG Pro® and UKG Ready®—alongside more than 200 other HRIS and payroll systems. 

Now that UKG has forged a partnership with Finch, UKG can continue to work with strategic partners through 1:1 integrations and enable innovative developers to build revolutionary solutions via Finch’s unified API. This new, multi-pronged approach to partnerships gives all companies, both big and small, the ability to access their customers’ employment data. 

Elevating the customer experience

With multiple ways to integrate, a larger percentage of the developer community can now connect to UKG—a fact that delights the UKG partnerships team. 

“Our partnership ecosystem helps us support our customers by providing them with seamless solutions that improve business outcomes and inspire people,” shared Mike May, vice president of technology partnerships at UKG. “Partners like Finch allow us to extend our capabilities with technology that elevates the workplace experience and meets the needs of people throughout their life work journey.”

What will you ship? 

Ready to build? Sign up today to get access to the API keys you need to innovate. Not quite there yet? Reach out to our sales team to learn more. 

Learn more about our partnership with UKG on the UKG Marketplace.

‍

This post was updated on Nov 6, 2023 to reflect support for Finch's integration with UKG Ready®.

Building with Finch just got easier. 

Today, Finch announces the release of a set of new backend SDKs that will help developers support integrations faster than ever. We expect this new functionality to help our customers focus more on their application logic and less on boilerplate code.

What’s a Software Development Kit?

A software development kit (SDK) is a set of platform-specific building tools for developers. SDKs put everything you might need to develop and run software in one place. They can also contain helpful resources like documentation, APIs, and frameworks that enable faster application development. 

While the actual contents of each software development kit will vary, most will include:

Libraries and Frameworks: These are collections of pre-written code that developers can leverage to perform common tasks without having to build from scratch. Libraries simplify the development process by providing reusable, modular components.

Documentation: Comprehensive guides and references that detail the functionalities, classes, methods, and best practices for using the SDK. Good documentation is crucial for developers to understand and effectively utilize the tools provided.

Sample Code: Examples of how to use the SDK's features. Sample code can serve as a starting point for developers, helping them get up to speed quickly and see practical implementations of the SDK's capabilities.

All of these resources help developers control costs, shorten development cycles, and ultimately ship great products faster. 

Backend SDKs for Authentication and Data Retrieval

Finch’s SDKs give developers the building blocks and tools needed to build robust, scalable, and efficient applications. Our SDKs are designed to streamline the development process, reducing the time and effort required to integrate with Finch — and by extension, hundreds of payroll and HRIS systems.

With this newest set of SDKs, developers can expect a comprehensive set of built-in functions and methods that allow them to interact with Finch's APIs directly in their language of choice. These backend SDKs include authentication and data retrieval operations, making it easier for developers to perform common tasks.

Let’s walk through an example using our Python SDK: After an employer authorizes through Finch Connect, developers can use the get_access_token function to exchange the authorization code for an access token. Once they have this access token, they can call any of the retrieval functions to retrieve data for that company. 

For example, client.hris.company.retrieve() will retrieve data from the /employer/company endpoint of the Finch API.

Developers can use this pattern to pull the same data models available in our API. This includes all data available via the company, directory, employment, individual, payment, pay statement, and benefits endpoints.

Get started with Finch SDKs

Looking to get started? Check out our SDK repositories, which provide extensive documentation and sample code. Start with selecting your preferred coding language:

• Python
• Java
• Javascript

Curious what other SDKs Finch supports? Check out our frontend SDKs, which can help you embed Finch Connect in your application.

We're excited to see what you build with Finch. Visit our docs for more information on installation and usage. If you have any questions or need help getting started, reach out to developers@tryfinch.com.

Product and engineering leaders who create products that connect to HRIS and payroll providers are faced with an ever-increasing array of options when it comes to their integrations strategy:

• Let customers connect via “old school” SFTP methods
• Build direct integrations
• Use a general / legacy iPaaS unified API provider
• Select a specialized unified API provider for the employment space

Download our new buyer’s guide to learn more about the pros and cons of these options and much more.

‍

Inside, you’ll find answers to the most common questions buyers ask when evaluating whether to invest in a unified API:

• What are unified APIs, and what problems do they solve?
• What types of unified APIs will we find on the market today?
• What buying criteria should we keep in mind when planning a purchase?
• What steps should we follow to find a solution that meets our company’s needs?

‍Download the guide to get the information you need to make an informed decision, then reach out to our sales team with any follow-up questions.

How to Prepare for Section 603 of SECURE Act 2.0

Have you been paying close attention to the SECURE Act 2.0? If so, you know that Congress has written new laws to expand retirement plan coverage for millions of Americans. While certain sections of SECURE Act 2.0 are already in effect, Section 603—along with many others—will take effect on January 1, 2024. 

This means that 401(k) and 403(b) plan providers and product leaders have a tight turnaround to stay compliant. It’s a race against time, but with proper planning, you can beat the clock. In this post, we break down Section 603 of SECURE Act 2.0 and the steps 401(k) and 403(b) plan providers should take to ensure compliance by the fast-approaching deadline. 

Breaking down Section 603

The United States is facing a retirement crisis. Across all age groups, the average American has only $89,300 set aside for retirement. When you consider that the benchmark set by popular savings strategies like the 4% rule is $1.5 million, there’s due cause for concern.

To curb this trend and help more people prepare for retirement, Congress is updating the catch-up contribution rules in Section 603 of SECURE Act 2.0. 

Under current law, retirement plan participants age 50 and older can make catch-up contributions to their 401(k), 403(b), or IRAs—but under Section 603, that’s about to change. According to Section 603, if a retirement plan participant wants to make a catch-up contribution—and they earn more than $145,000 per year—they will be required to make the contribution on a Roth tax basis. In other words, catch-up contributions for these individuals will no longer be eligible for pre-tax treatment in 2024.

The purpose of the provision is to create more opportunities for Americans to accelerate their savings in the years leading up to retirement. By imposing a Roth-based rule, Congress ensures that plan participants will be able to withdraw tax-free dollars when they retire, thereby strengthening their financial security. 

While a glitch in Section 603 could inadvertently eliminate the ability for anyone to make catch-up contributions in 2024, Congress has told the U.S. Treasury that corrections are coming, so retirement plan providers should prepare to stay compliant with Section 603 as Congress intended.

Section 603: Questions to ask yourself right now

Section 603 is effective beginning January 1, 2024, which means that 401(k) and 403(b) providers must be prepared to update policies for every single retirement plan participant age 50 or older who is making catch-up contributions and earns over $145,000. To ensure you are ready for the new requirements, here are some questions you should be asking yourself right now:

1. How do I identify which of my plan participants are currently subject to Section 603 regulations, and how many of these plan participants am I responsible for? Hundreds? Thousands? More?
2. How do I identify when participants become newly eligible (i.e., when they reach their 50th birthday and/or if they begin earning more than $145,000)?
3. Do I have the technology in place to automate all of these contributions updates and manage them on an ongoing basis?
4. Is my team capable of updating every single retirement plan in just six months? 

If you can’t keep up with Section 603, you risk noncompliance, which could result in harsh penalties, steep fines, or legal fees associated with disputing any penalties in court.

How to prepare for Section 603 of SECURE 2.0

If you determine that you are among the plan providers affected by Section 603, here’s what you can do to stay prepared:

Step I: Study up on Section 603 and learn as much as you can about the legislation. To help yourself, your team, and your customers understand what’s happening, remember the provision’s key points in simple terms:

• If a plan participant 50 or older makes more than $145,000 per year and wishes to make a catch-up contribution, they must do so on a Roth basis. 
• If other eligible employees wish to make catch-up contributions on either a pre-tax or Roth basis, they are permitted to do so. 
• All retirement plans must be modified to reflect these updates by January 1, 2024.

Step II: Get ready to transfer data. To prepare for Section 603, you’ll need to pull in data from payroll systems to:

• Determine which participants are 50 or older and earned over $145,000 in the 2023 tax year 
• Identify whether they are making catch-up contributions
• Verify those contributions are made on a Roth basis.

Step III: Monitor the situation. It’s unlikely, but Congress could delay the provision or the IRS could extend compliance due dates to January 1, 2026. Nevertheless, preparing for Section 603 should be mission critical at your organization, so you don’t fall behind.

Updating the data

Naturally, updating contributions means you’ll have to exchange large volumes of data between you and plan providers. Since you need to look at every plan participant who is 50 or older and earns more than $145,000 per year, you’ll need to pull in data from HRIS and payroll systems, such as:

1. Participant Information: Each participant's full name, Social Security number, and contact information is necessary to identify and locate the individual's retirement plan account.
2. Income Verification: Documentation or records are needed to confirm that the participant's gross income exceeds the threshold of $145,000 per year. 
3. Account Balance: Checking the current balance of the participant's retirement account(s) helps determine the available funds for transferring catch-up contributions to a Roth basis.
4. Catch-Up Contribution Eligibility: Each participants’ date of birth is needed to confirm whether they are age 50 or older. This is crucial since catch-up contributions are only available to participants who have reached the age threshold.
5. Job Change and Contribution Allocation: If a participant changes jobs mid-year, they may have contributed to retirement plans at both employers. Since each employer's retirement plan would have its own account for the participant, you need to consider the contributions made at each employer and ensure that the catch-up contributions are correctly allocated and characterized as Roth contributions.
6. Allocation Details: Information about the participant's investment allocation within the retirement account, including the percentages or amounts invested in different asset classes or specific funds, helps ensure that the updated contributions align with the participant's desired investment strategy.

While this data can vary based on your current retirement plan, platform, or procedures in place, it should give you an idea of how complex the compliance process can be. Now that you know the different types of data, how will you transfer all of it?

Transferring the data

When you’re updating retirement plans to stay compliant with Section 603 of SECURE Act 2.0, there are four ways to transfer data: 

Entering data manually 

Manual data entry is the least expensive option in terms of upfront costs, but it puts undue burden on sponsor administrators and is prone to errors. Improperly tracking data could result in a failure to update retirement plans and expose you to Section 603 compliance regulations. Manual data entry is simply unreliable, time-consuming, and expensive. ‍

Transferring data via SFTP files or flat files

Transferring SFTP and flat files could be easier than asking in-house developers to build custom, direct integrations—but transferring all of that sensitive retirement plan data has several drawbacks:

• Sponsor admins are forced to compose custom reports and upload them correctly.
• Manual data entry raises risks and requires validation to avoid errors.
• This method does not allow for real-time data access.
• Excessive data syncs slow down the compliance process for retirement plan providers and plan sponsors.

Note: Check out Finch's new product Flatfile to quickly scale your SFTP connections.

Building your own custom integrations

Custom integrations with HRIS and payroll systems offer the advantages of automatic, real-time data syncs, as well as read and write capabilities. However, they are also complex and expensive to build and maintain. Challenges of building custom integrations include:

• Number of systems: Did you know that there are more than 5,700 HRIS and payroll systems in the U.S. market? To serve every customer, your team would need to build custom integrations for hundreds of different systems, which could take months and cost hundreds of thousands of dollars. 
• Technical complexity: Building custom integrations is technical, complex, and difficult to achieve. Only experienced engineers with a strong understanding of both HRIS and payroll systems are capable of building the most effective custom integrations. 
• Cost: Custom integrations are not a cost-effective option for retirement plan providers. The soft costs of building a single integration can be as high as $200,000, and the hard costs, such as API fees, can add up quickly. Ultimately, custom integrations are a time-consuming and expensive undertaking. 

Leveraging the power of unified employment APIs

Unified employment APIs combine the advantages of custom integrations with the simplicity and cost-effectiveness of off-the-shelf software. How do they work? A unified employment API aggregates connectivity to hundreds of HRIS and payroll systems—automatically, instantly, and with a single integration. This means that you can get all of the benefits of custom integrations without having to build and maintain them yourself.

Specific to Section 603, unified employment APIs can help you:

• Pinpoint which participants are 50 or older and make more than $145,000 per year
• Limit these participants to Roth catch-up contributions in 2024
• Automate their catch-up contributions per pay run
• Automate recordkeeping to stay compliant
• Monitor participant ages and income to repeat the process in real time
• Identify when a participant switches jobs in the middle of the year
• Confirm a participant’s $145,000 salary from multiple payroll providers

‍What are the detailed pros and cons of buying a unified employment API versus building integrations in-house? Find out here. 

A Section 603 implementation plan for 401(k) and 403(b) providers

Remember, time is a crucial factor. To ensure you have a solution in place to comply with Section 603 by the deadline of January 1, 2024, we recommend:

• Evaluating your data transfer options and making a decision as soon as possible
• Implementing a solution no later than August 31, 2023
• Validating and testing your solution in September
• Rolling out your solution to all users in October
• Monitoring performance for complete and compliant functionality through the end of the year

With this implementation plan in place, you’ll be able to make the necessary adjustments before January 1, 2024.

Here's how Finch can help

‍Finch is a unified employment API that integrates with 200+ HRIS and payroll systems, allowing retirement plan providers to transfer critical data quickly and responsibly. With real-time access to employment data, retirement plan providers can automate contribution management and push changes directly to payroll.

The benefits of using Finch include:

• Speed to market: Finch is a pre-built solution that's ready to use. There's no need to build and maintain custom integrations, so you can launch integrations fast.
• Automated enrollment and contribution management: Finch provides real-time read-and-write access to HRIS and payroll systems, so you can automate contribution management with ease. This reduces the risk of errors and saves sponsor admins time in the process. 
• Stronger security: Finch is a pass-through system, which means that it does not store any sensitive data. This reduces the risk of data breaches and compliance violations.
• Confident compliance: Finch lets you set predefined rules and algorithms for retirement plan data—such as age and income—so you can easily check for compliance with contribution limits and eligibility criteria. You can also flag any non-compliant data for further review and action.
• Strong security: Finch uses industry-standard security measures to protect data privacy and security.

As you keep close tabs on Section 603, understand that time is short and compliance is critical. With a unified employment API like Finch, you can automate all the necessary updates and stay compliant.

Talk to sales

Talk to our sales team today to explore ways you can use Finch to ensure compliance with Section 603 of SECURE Act 2.0 and improve your customer experience overall.

In December 2022, Congress passed the SECURE Act 2.0, which builds on retirement savings regulations set forth by the original SECURE Act of 2019. Written to expand coverage and increase retirement savings for millions of Americans, SECURE Act 2.0 introduces some major changes to retirement plans nationwide. 

Since certain sections of SECURE Act 2.0 are already in effect—and even more will go into effect soon—retirement plan providers must act swiftly to ensure compliance. In this post, we offer an overview of Section 125, the part-time employees clause, then compare four methods for becoming compliant, and finally recommend a timeline for fulfilling your obligations. 

What is SECURE Act 2.0, and why was it enacted?

SECURE stands for Setting Every Community Up for Retirement Enhancement. Now in its second iteration, SECURE Act 2.0 is designed to help employers provide easier and more affordable retirement plans for their employees.

While some Americans are finding ways to save, the nation’s collective fear of not having enough money to retire is valid: The average retirement savings in the United States is only $65,000. 

To address this concern and unburden the American worker, SECURE 2.0 is creating more accessible opportunities to save for retirement. 

What is Section 125? The part-time employees clause

Signed into law in 2019, the SECURE Act mandates that employers allow long-term, part-time employees to participate in their 401(k) plans. The original legislation dictates that employees must have worked at least 1,000 hours in their first year or accumulated a minimum of 500 hours of service over three consecutive years.

SECURE Act 2.0, which passed in 2022, reduces the three-year rule to two years. It also stipulates that long-term, part-time employees must also be allowed to participate in 403(b) plans that are subject to ERISA. 

The new provisions under Section 125 are effective for any plan starting after December 31, 2024, which means that 401(k) and 403(b) providers must soon put in place and test the technology they will need to automatically enroll long-term, part-time workers. 

Failure to do so correctly and on time could result in stiff fines as well as the legal fees associated with disputing any penalties in court.

Read our new whitepaper: The Changing Retirement Landscape: How 401(1) Recordkeepers Can Thrive Under SECURE 2.0.

How 401(k) and 403(b) providers should prepare for Section 125

If you’re among the retirement plan providers affected by Section 125, your first step to preparing is to understand the legislation inside and out. Once you are confident that you know what is required of you, you need to determine how you are going to identify part-time employees, track how many hours they’ve worked, over what period, and auto-enroll those who qualify, as stipulated by Section 101.

By nature, this provision necessitates the regular sharing of large volumes of data between you and the employers who sponsor your plans, including sensitive personal identifiable information (PII) and payroll details for every participant. To transfer this data, which is largely stored in employers’ payroll systems and human resources information systems (HRIS), you can implement one of four approaches—some more seamless and effective than others:

Manual data entry

Manual data entry has its benefits. It allows plan sponsors to stick with a data collection system that works for them, and it is almost always the least expensive option in terms of hard, upfront costs. That said, the potential downfall from manual data entry cannot be understated:

• Manual data entry is prone to errors, which can lead to improperly tracked data, Section 125 compliance violations, and penalties from regulatory bodies.
• It can also lead to inaccurate retirement plan balances and contributions, resulting in penalties from the IRS.
• Manual data entry does not adequately protect PII, such as Social Security numbers and bank account information. Without safeguarding highly sensitive data, you run the risk of exposing employees to data breaches and potential identity fraud. 
• Manual data entry puts undue burden on sponsor admins, as it requires hours of their time and attention every month that could be spent on higher-value tasks.‍

‍SFTP or flat files

Secure file transfer protocol (SFTP) and flat files offer another way to transfer retirement plan data. 

With SFTP, you can bulk transfer large files of data in tables (in the form of CSV, JSON, and XML files, for example) over a secure network. The benefits of SFTP methods are that they’re generally easier for most in-house developers to build compared to custom, direct integrations (more on those next). But there are also significant drawbacks:

• SFTP requires sponsor admins to compose custom reports for each data sync and upload them correctly. This often presents technical challenges for your customers, who may be responsible for inputting host domains, keys, and other server-specific information into their system to establish a scheduled sync. 
• SFTP relies on manual data entry to a certain extent, which raises risks and means data has to be validated to avoid errors—a process that drains time and resources for all parties.
• SFTP doesn’t allow for real-time data access, preventing you from delivering the seamless, next-generation functionality business customers are looking for in their technology solutions.

This method is especially cumbersome when data syncs need to happen often, which will be the case for plan providers and plan sponsors who must comply with auto-enrollment and auto-contribution increase requirements.

Note: If you're a recordkeeper or third-party administrator (TPA) looking to quickly scale your SFTP integrations check out Finch's new product Flatfile. We not only simplify SFTP builds, but offer you vetted, standardized data from multiple providers that's ready to use.

Custom integrations

A more sophisticated approach involves direct integrations with the HRIS and payroll systems that house the data you need to perform auto-enrollment and auto-contribution increase functions. 

The beauty of direct integrations is that data syncs happen automatically and in real time, driving efficiencies for all parties, providing your customers with an optimally seamless experience, and giving you the peace of mind that you are always in compliance with Section 101. 

Crucially, custom integrations can be built to provide read and write capabilities, which means you can also use them to automatically push changes back to HRIS and payroll systems. This is especially valuable when it comes to contribution management. 

Custom integrations also present significant challenges: 

• There are more than 5,700 HRIS and payroll systems in the U.S. market. To adequately cover your customer base, you will need to build custom integrations to at least hundreds of them.
• Building custom integrations in-house is technically complex and requires specialized engineering skills and experience.
• They are also expensive to build and maintain, both in terms of time and money. If you assume that three engineers will work on a single custom integration for three months, that puts the soft costs of just your initial buildout in the ballpark of $200,000. Then, there are the hard, ongoing costs to consider, like the fees many HRIS and payroll systems charge to use their API. For access to a legacy system like ADP, the hard and soft costs combined can run in excess of $1 million.‍

‍Unified employment APIs

To get all of the advantages of custom integrations without the cost or hassle of building them in-house, you can turn to a unified employment API, which aggregates connectivity to many HRIS and payroll systems at once with a single integration. A unified employment API does the hard work of building and maintaining the integrations, and standardizing and abstracting all incoming data, so your team doesn’t have to. They are infinitely more efficient than custom integrations, so you can get to market faster and, ultimately, at less cost.

Learn more about the advantages and disadvantages of buying a unified employment API versus building integrations in-house.

A Section 125 implementation plan for retirement providers

To ensure you have a solution in place to comply with Section 125 by the deadline, we recommend:

• Evaluating your options and making a decision by July 30, 2023
• Implementing a solution no later than September 30, 2023 (keeping in mind that some solutions take much longer to implement than others)
• Spending the rest of the year validating and testing your solution internally
• Rolling out your solution to all users in 2024 and monitoring performance for complete and compliant functionality. This will give you time to make any required adjustments before December 31, 2024.

The bottom line: Becoming compliant takes time

As you prepare for SECURE Act 2.0 to come into effect, don’t lose sight of the fact that it will take time to prepare to be compliant with Section 125. The least risky way to ensure compliance—not to mention the most time- and cost-effective solution—is to integrate with a unified employment API like Finch.

Finch does the hard work of integrating with HRIS and payroll providers to facilitate the secure, permissioned flow of critical business data. Our dynamic, unified employment API offers:

• Easy integration: Finch makes it easy for retirement plan providers to integrate with 200+ HRIS and payroll systems, covering approximately 88% of the market. 
• Automated enrollment and contribution management: With Finch, retirement plan providers instantly access the real-time employee directory and payroll data they need to automate 401(k) and 403(b) enrollment, and push contribution changes directly to payroll—no manual intervention needed.
• Increased efficiency: Finch is a pre-built solution that’s ready to use. Plan providers waste no time building and maintaining custom integrations, and plan sponsors save dozens of admin hours a month—a win-win for you and your customers.
• Confident compliance: Finch replaces error-prone manual processes with seamless integrations that let retirement plan providers meet the stipulations in Section 125 of SECURE Act 2.0.
• Strong security: Finch is a pass-through system, and is SOC2 Type 2, CCPA, and GDPR compliant.

Talk to our sales team today to explore ways you can use Finch to ensure compliance with Section 125 of SECURE 2.0 and improve your customer experience overall.

In December 2022, Congress passed the SECURE Act 2.0, which builds on retirement savings regulations set forth by the original SECURE Act of 2019. Written to expand coverage and increase retirement savings for millions of Americans, SECURE Act 2.0 introduces some major changes to retirement plans nationwide. Since certain sections of SECURE Act 2.0 are already in effect—and even more will go into effect soon—retirement plan providers must act swiftly to ensure compliance. 

In this post, we’ll cover what SECURE Act 2.0 is, why it was enacted, and a timeline detailing the provisions that go into effect by the end of 2023. 

NEW! Download the Comprehensive How to Prepare for SECURE Act 2.0 whitepaper today

What is SECURE Act 2.0?

SECURE stands for Setting Every Community Up for Retirement Enhancement. Now in its second iteration, SECURE Act 2.0 is designed to help employers provide easier and more affordable retirement plans for their employees. 

While there are dozens of new rules and regulations to consider, here is a snapshot of provisions most pertinent to 401(k) and 403(b) plan providers:

• Automatic enrollment and contribution increases: All new 401(k) and 403(b) plans adopted after December 29, 2022 (with a few exceptions that we will discuss later in this post) will be required to automatically enroll participants at a rate of at least 3% of their pay but not more than 10%. They will also be required to automatically increase participants’ contributions 1% every year thereafter until they reach at least 10% but not more than 15%. 
• Increased catch-up contributions: The catch-up contribution limit for 401(k) and 403(b) plans will increase from $6,500 to $7,500 for Americans aged 50 and up. Since nearly half of Americans over the age of 55 have no retirement savings, this provision will help older employees contribute more to their plans as they near retirement. 
• Roth 401(k) expansion: The availability of Roth 401(k) plans will expand to all employers, regardless of size. With its embedded tax benefits, this provision will help small businesses, which have been historically less likely to sponsor a retirement plan, to offer a plan to their employees.
• Emergency withdrawals: To cover unforeseeable or immediate financial needs, plan participants can now withdraw up to $1,000 from their retirement plan without having to pay a 10% tax. With easier access to their retirement savings, Americans will be better able to weather a financial emergency.
• Saver's Credit: Saver's Credit, the tax break for low- and moderate-income workers, will be fixed at 50%. The qualifying income for eligible savers will also increase from $41,000 to $41,500.

Why was the SECURE Act 2.0 enacted?

According to a 2021 report by the National Institute on Retirement Security, 

• More than two-thirds of Americans say the U.S. is facing a retirement crisis.
• More than half are concerned about achieving financial security in retirement.
• Nearly two-thirds expect to work past the normal retirement age for financial security. 

While some Americans are finding ways to save, the nation’s collective fear of not having enough money to retire is valid: the average retirement savings in the United States is only $65,000. 

To address these concerns and unburden the American worker, SECURE 2.0 is creating easier, more accessible opportunities to save for retirement. 

Let’s take a look at some of the provisions that go into effect at the end of the year. 

A SECURE Act 2.0 Timeline: The provisions going into effect by the end of 2023

While many of the rules and regulations set forth by SECURE 2.0 took effect on the day the legislation was signed, deadlines for others are quickly approaching. It’s a race against time to stay compliant, and retirement plan providers would be smart to start preparing now.

Here’s a complete breakdown of every SECURE 2.0 provision that will take effect by January 1, 2024. 

Section 108: Indexing IRA catch-up limit

Section 108 increases the limit on IRA contributions by $1,000 (not indexed) for individuals aged 50 and older. Section 108 is effective for taxable years beginning after December 31, 2023.

Section 110: Treatment of student loan payments as elective deferrals for purposes of matching contributions

Section 110 allows employers to treat qualified student loan payments (QSLPs) as elective deferrals for the purposes of matching contributions. This means that employers can make matching contributions to employees' retirement accounts based on the amount of money that employees pay toward their student loans.

Section 110 is effective for contributions made for plan years beginning after December 31, 2023.

Section 115: Withdrawals for certain emergency expenses

Section 115 allows participants in retirement plans to make penalty-free withdrawals for emergency expenses. To be eligible, the expense must be an unforeseen or immediate financial need relating to necessary personal or family emergency expenses. Participants can withdraw up to $1,000 per year from their retirement plan for a qualified emergency expense. The withdrawal must be repaid within three years. If the withdrawal is not repaid within three years, the participant will be subject to a 10% penalty tax.

Section 115 is effective for distributions made after December 31, 2023.

Section 116: Allow additional nonelective contributions to SIMPLE plans

Section 116 says that employers with SIMPLE plans must contribute 2% of employee compensation or 3% of employee elective deferral contributions. Employers are allowed to make additional contributions up to 10% of compensation or $5,000, whichever is less.

Section 116 is effective for taxable years beginning after December 31, 2023.

Section 117: Contribution limit for SIMPLE plans

Under current law, the annual contribution limit for a SIMPLE IRA is $14,000. For employers with 25 or fewer employees, Section 117 increases the contribution limit by 10% in the first year of implementation. Employers with 26 to 100 employees can offer higher contribution limits if they provide a 4% matching contribution or a 3% employer contribution. 

Section 117 is effective for taxable years beginning after December 31, 2023. 

Section 121: Starter 401(k) plans for employers with no retirement plan

Section 121 allows employers without a retirement plan to offer a starter 401(k) plan. Employees are automatically enrolled at 3 to 15% of their salary, with a $6,000 annual contribution limit and a $1,000 catch-up contribution for those over 50. 

Section 121 is effective for plan years beginning after December 31, 2023.

Section 126: Special rules for certain distributions from long-term qualified tuition programs to Roth IRAs

Section 126 allows 529 plan holders to transfer up to $35,000 to a Roth IRA, tax- and penalty-free, if the 529 account has been open for more than 15 years. 

Section 126 is effective with respect to distributions after December 31, 2023.

Section 304: Updating dollar limit for mandatory distributions

Under current law, employers can transfer former employees' retirement accounts from a workplace retirement plan into an IRA if the balance is between $1,000 and $5,000. Section 304 increases this limit to $7,000. 

Section 304 is effective for distributions made after December 31, 2023.

Section 310: Application of top-heavy rules to defined contribution plans covering excludable employees

Under current law, qualified retirement plans must pass the top-heavy test. Section 310 allows employers to perform the top-heavy test separately on non-excludable and excludable employees. This removes the financial incentive to exclude employees from the 401(k) plan, increasing retirement plan coverage to more workers.

Section 310 is effective for plan years beginning after December 31, 2023.

Section 314: Penalty-free withdrawal from retirement plans for individual cases of domestic abuse

Section 314 allows domestic abuse survivors to withdraw up to $10,000 from their retirement plans without penalty. Participants can repay the money over three years, and they will be refunded for taxes paid on any repaid amounts.

Section 314 is effective for distributions made after December 31, 2023.

Section 315: Reform of family attribution rule

Section 315 updates two stock attribution rules. The first update removes the inequity between spouses in both community property and separate property states. The second update modifies the attribution of stock between parents and minor children.

Section 315 is effective for plan years beginning after December 31, 2023.

Section 316: Amendments to increase benefit accruals under plan for previous plan year allowed until employer tax return due date

Under current law, employers can amend retirement plans only in the year in which the plan was effected. Section 316 allows employers to amend retirement plans by the due date of their tax return.

Section 316 is effective for plan years beginning after December 31, 2023.

Section 323: Clarification of substantially equal periodic payment rule

Section 323 ensures that the 10% early withdrawal penalty does not apply to substantially equal periodic payments (SEPPs) from retirement accounts, even if the account is rolled over, exchanged, or converted to an annuity.

Section 323 is effective after December 31, 2023.

Section 325: Roth plan distribution rules

Under current law, required minimum distributions (RMDs) are not required for Roth IRAs until after the owner dies. However, RMDs are required for Roth accounts in employer retirement plans, such as 401(k) plans, while the owner is still alive. Section 325 eliminates the RMD requirement for Roth accounts in employer plans. This means that owners of Roth accounts in employer plans will no longer have to take RMDs while they are still alive.

Section 325 is effective for taxable years beginning after December 31, 2023.

Section 327: Surviving spouse election to be treated as employee

Section 327 allows a surviving spouse to elect to be treated as the deceased employee for required minimum distribution (RMD) purposes. This means that the surviving spouse can take RMDs based on the deceased employee's age, rather than their own. 

Section 327 is effective for calendar years beginning after December 31, 2023.

Section 332: Employers allowed to replace SIMPLE retirement accounts with safe harbor 401(k) plans during a year

Section 332 allows an employer to replace a SIMPLE IRA plan with a SIMPLE 401(k) plan or other 401(k) plan that requires mandatory employer contributions.

Section 332 is effective for plan years beginning after December 31, 2023.

Section 343: Defined benefit annual funding notices

Section 343 aims to define benefit pension plan funding issues more clearly on a plan’s annual funding notice. 

Section 343 is effective for plan years beginning after December 31, 2023.

Section 350: Safe harbor for corrections of employee elective deferral failures

Section 350 extends the safe harbor for correcting errors in automatic enrollment and automatic escalation features in retirement plans. Employers have nine and a half months after the end of the plan year to correct errors without penalty.

Section 350 is effective for errors after December 31, 2023.

Section 602: Hardship withdrawal rules for 403(b) plans

Under current law, 401(k) and 403(b) plans have different hardship distribution rules. 401(k) plans allow for all amounts to be distributed, while 403(b) plans only allow for employee contributions to be distributed. Section 602 conforms the 403(b) rules to the 401(k) rules.

Section 602 is effective for plan years beginning after December 31, 2023.

Section 603: Elective deferrals generally limited to regular contribution limit

Under current law, catch-up contributions can be made on a pre-tax or Roth basis. Section 603 requires all catch-up contributions to be made on a Roth tax basis, except for employees with compensation of $145,000 or less.

Section 603 is effective for taxable years beginning after December 31, 2023.

Learn what’s required to become compliant today

As you prepare for SECURE Act 2.0 to come into effect, don’t lose sight of the fact that it will take time to prepare to be compliant. 

You can get started today by reading our overview of Section 101, the automatic enrollment and increases clause. In this post, you’ll discover four methods for becoming compliant as well as a recommended timeline for fulfilling your obligations. 

In the coming days, we’ll dive into Sections 125 and 603 in greater depth, offering insight into what your obligations are and how you can become compliant before the relevant deadlines. Stay tuned!

In December 2022, Congress passed the SECURE Act 2.0, which builds on retirement savings regulations set forth by the original SECURE Act of 2019. Written to expand coverage and increase retirement savings for millions of Americans, SECURE Act 2.0 introduces some major changes to retirement plans nationwide. 

Since certain sections of SECURE Act 2.0 are already in effect—and even more will go into effect soon—retirement plan providers must act swiftly to ensure compliance. In this post, we offer an overview of Section 101, the automatic enrollment and increases clause, then compare four methods for becoming compliant, and finally recommend a timeline for fulfilling your obligations. 

What is SECURE Act 2.0, and why was it enacted?

SECURE stands for Setting Every Community Up for Retirement Enhancement. Now in its second iteration, SECURE Act 2.0 is designed to help employers provide easier and more affordable retirement plans for their employees. 

While some Americans are finding ways to save, the nation’s collective fear of not having enough money to retire is valid: The average retirement savings in the United States is only $65,000. 

To address this concern and unburden the American worker, SECURE 2.0 is creating more accessible opportunities to save for retirement. 

Read our new whitepaper: The Changing Retirement Landscape: How 401(1) Recordkeepers Can Thrive Under SECURE 2.0.

What is Section 101? The automatic enrollment and increases clause

One of the primary reasons so few Americans have sufficient retirement savings is because, even when employers do sponsor plans, many employees don't take the steps necessary to enroll. To address this problem, Section 101 of SECURE 2.0 requires all new employer-sponsored 401(k) and 403(b) plans adopted after December 29, 2022, to automatically enroll employees at an amount equal to at least 3% of the employee’s pay but not more than 10%.

Of course, Section 101 stipulates that employees have the right to opt out of participation, but the small friction of doing so is usually enough to keep many employees enrolled. In fact, studies demonstrate that automatic enrollment increases employee participation across the board, particularly among Black, Latinx, and lower-wage employees. Additionally, Fidelity Investments found that, among its clients, 90% of auto-enrolled employees stay enrolled in their plans.

In addition to auto-enrollment, Section 101 requires that each participant's contribution amount be automatically increased by 1% each year until it reaches at least 10%, but not more than 15%. The legislation does allow exceptions to both of these requirements for small businesses with 10 or fewer employees, new businesses that have been operating for less than three years, church plans, and governmental plans, but most 401(k) and 403(b) plan providers should anticipate that most of their new plans will ultimately be affected. 

Section 101 is effective beginning January 1, 2025, which means that 401(k) and 403(b) providers must soon put in place and test the technology they will need to automatically enroll and increase the contributions of millions of participants. Failure to do so correctly and on time could result in noncompliance, stiff fines, and legal fees associated with disputing any penalties in court.

How 401(k) and 403(b) providers should prepare for Section 101

If you are among the plan providers affected by Section 101, your first step to preparing is to understand the legislation inside and out. Once you are confident that you know what is required of you, you need to determine how you are going to auto-enroll participants in the years ahead. 

By nature, auto-enrollment and contribution increases necessitate the regular sharing of large volumes of data between you and the employers who sponsor your plans, including sensitive personal identifiable information (PII) and payroll details for every participant. To transfer this data, which is largely stored in employers’ payroll systems and human resources information systems (HRIS), you can implement one of four approaches—some more seamless and effective than others:

Manual data entry

Manual data entry can have its benefits. It allows plan sponsors to stick with a data collection system that works for them and it is almost always the least expensive option in terms of hard, upfront costs. That said, the potential downfall from manual data entry cannot be understated. 

• Manual entry is prone to errors, which can lead to improperly tracked data, Section 101 compliance violations, and penalties from regulatory bodies.
• It can also lead to inaccurate retirement plan balances and contributions, resulting in penalties from the IRS.
• Manual data entry does not adequately protect PII such as Social Security numbers and bank account information. Without safeguarding highly sensitive data, you run the risk of exposing employees to data breaches and potential identity fraud. 
• Manual data entry puts undue burden on sponsor admins, as it requires hours of their time and attention every month that could be spent on higher-value tasks.

SFTP or flat files

Secure file transfer protocol (SFTP) and flat files offer another way to transfer retirement plan data. 

With SFTP, you can bulk transfer large files of data in tables (in the form of CSV, JSON, and XML files, for example) over a secure network. The benefits of SFTP methods are that they’re generally easier for most in-house developers to build compared to custom, direct integrations (more on those next). But there are also significant drawbacks:

• SFTP requires sponsor admins to compose custom reports for each data sync and upload them correctly. This often presents technical challenges for your customers, who may be responsible for inputting host domains, keys, and other server-specific information into their system to establish a scheduled sync. 
• SFTP relies on manual data entry to a certain extent, which raises risks and means data has to be validated to avoid errors—a process that drains time and resources for all parties.
• SFTP doesn’t allow for real-time data access, precluding your ability to power the seamless, next-generation functionality business customers are looking for in their technology solutions.

This method is especially cumbersome when data syncs need to happen often and regularly, which will be the case for plan providers and plan sponsors who need to comply with auto-enrollment and auto-contribution increase requirements.

Also Read: If you're a recordkeeper or TPA working with SFTP to get necessary payroll data, Finch can help you quickly scale your SFTP connections. Learn more about Finch Flatfile in our detailed guide, Finch Flatfile: All the Benefits of Unified API, No Engineers Requried.‍

Custom integrations

A more sophisticated approach involves direct integrations with the HRIS and payroll systems that house the data you need to perform auto-enrollment and auto-contribution increase functions. 

The beauty of direct integrations is that data syncs happen automatically and in real time, driving efficiencies for all parties, providing your customers with an optimally seamless experience, and giving you the peace of mind that you are always in compliance with Section 101. Crucially, custom integrations can be built to provide read and write capabilities, which means you can also use them to automatically push changes back to HRIS and payroll systems. This is especially valuable when it comes to contribution management. 

Custom integrations also present significant challenges: 

• There are more than 5,700 HRIS and payroll systems in the U.S. market. To adequately cover your customer base, you will need to build custom integrations to at least hundreds of them.
• Building custom integrations in-house is technically complex and requires specialized engineering skills and experience.
• They are also expensive to build and maintain, both in terms of time and money. If you assume that three engineers will work on a single custom integration for three months, that puts the soft costs of just your initial buildout in the ballpark of $200,000. Then, there are the hard, ongoing costs to consider, like the fees many HRIS and payroll systems charge to use their API. For access to a legacy system like ADP, the hard and soft costs combined can run in excess of $1 million.

Unified employment APIs

To get all of the advantages of custom integrations without the cost or hassle of building them in-house, you can turn to a unified employment API, which aggregates connectivity to many HRIS and payroll systems at once with a single integration. A unified employment API does the hard work of building and maintaining the integrations, and standardizing and abstracting all incoming data, so your team doesn’t have to. They are infinitely more efficient than custom integrations, so you can get to market faster and, ultimately, at less cost.

Learn more about the advantages and disadvantages of buying a unified employment API versus building integrations in-house.

A Section 101 implementation plan for 401(k) and 403(b) providers

To ensure you have a solution in place to comply with Section 101 by the deadline, we recommend:

• Evaluating your options and making a decision by July 30, 2023
• Implementing a solution no later than September 30, 2023 (keeping in mind that some solutions take much longer to implement than others)
• Spending the rest of the year validating and testing your solution
• Rolling out your solution to all users in 2024 and monitoring performance for complete and compliant functionality. This will give you time to make necessary adjustments before January 1, 2025.

The bottom line: Becoming compliant takes time

As you prepare for SECURE Act 2.0 to come into effect, don’t lose sight of the fact that it will take time to prepare to be compliant with Section 101. The least risky way to ensure compliance—not to mention the most time- and cost-effective solution—is to integrate with a unified employment API like Finch.

Finch does the hard work of integrating with HRIS and payroll providers to facilitate the secure, permissioned flow of critical business data. Our dynamic, unified employment API offers:

• Easy integration: Finch makes it easy for retirement plan providers to integrate with 200+ HRIS and payroll systems, covering approximately 88% of the market. 
• Automated enrollment and contribution management: With Finch, retirement plan providers instantly access the real-time employee directory and payroll data they need to automate 401(k) and 403(b) enrollment, and push contribution changes directly to payroll—no manual intervention needed.
• Increased efficiency: Finch is a pre-built solution that’s ready to use. Plan providers waste no time building and maintaining custom integrations, and plan sponsors save dozens of admin hours a month—a win-win for you and your customers.
• Confident compliance: Finch replaces error-prone manual processes with seamless integrations that let retirement plan providers meet the stipulations in Section 101 of SECURE Act 2.0.
• Strong security: Finch is a pass-through system, and is SOC2 Type 2, CCPA, and GDPR compliant.

Talk to our sales team today to explore ways you can use Finch to ensure compliance with Section 101 of SECURE 2.0 and improve your customer experience overall.

Hundreds of employees were just denied life insurance benefits. Finch could have prevented it from happening.

In May 2023, the Wall Street Journal reported that hundreds of families who had diligently paid life insurance premiums were denied millions of dollars in death benefits. This unfortunate outcome stemmed from paperwork missteps made by both employers and insurance companies.

However, this situation could have been avoided with the assistance of Finch’s unified API, which bridges data silos to connect mission-critical employment data. In this blog post, we’ll delve into what happened and how Finch can help prevent such issues from happening again.

‍

What exactly happened?‍

The report revealed that a leading life insurer had made errors resulting in over 200 denied claims, amounting to as much as $7 million, in recent years. The denial of these claims left families in a distressing situation, as they were rightfully expecting financial support during a difficult time.

‍

Why were their claims denied?‍

Despite diligently paying life insurance premiums, employees were denied their life insurance benefits due to "paperwork errors" made by their employers. These errors specifically involved the failure to submit "evidence of good health" questionnaires, which are often required for employees to qualify for supplemental insurance beyond the basic coverage. As a result, the life insurance company did not approve the employees for supplemental life insurance, and their claims were denied.

For background, group life insurance is a common employee benefit, with coverage typically ranging from 1-2 times an employee's salary. Employers often offer supplemental insurance beyond the basic coverage, and employees contribute to it through their paychecks. However, to be eligible for this additional coverage, employees must fulfill certain criteria.

‍

Who's responsible for this outcome?

According to the carrier, the responsibility lies with employers, who must submit the required “Evidence of Good Health” form.

Employers often handle administrative tasks, including the calculation of premiums and ensuring that employees complete the necessary health forms for additional coverage. This allows insurers to offer life insurance to workers at relatively low costs and has been the standard practice for years according to the American Council of Life Insurers.

But doesn’t the carrier also bear some responsibility too? While it may seem logical that the carrier should be accountable for the payouts since they accepted the premiums, the truth is carriers are often encumbered by siloed systems and flawed processes—which lead to clunky and error-prone data exchanges with employers. For example, premiums are often aggregated rather than individually specified in employer-administered programs, making it difficult to link specific premiums to individuals. Furthermore, some carriers only conduct audits when a death claim is filed, rather than beforehand.

The courts say both parties have a role to play in preventing these issues going forward. Carriers must improve communication with employers regarding their responsibilities, and employers must submit the appropriate paperwork on behalf of their employees. In this case, the carrier  has agreed to notify its employer clients that they must confirm the approval of health forms for workers' supplemental coverage before deducting premiums from paychecks. At the same time, if employers fail to fulfill their obligations, they may be held liable for payouts to the beneficiaries.

At the end of the day, it’s about miscommunication between the carrier and employers, and inadequate sharing of data between them. And this problem isn’t unique to this case. Insurance carriers everywhere struggle with similar issues when it comes to collecting and managing data on individuals through their employer. In many instances, even leading insurers don’t have access to the technology they need to effectively tackle these challenges.

‍

Moving forward, who will be held accountable?

The responsibility for preventing such issues is increasingly falling on employers and their employees. Employers must be more diligent in filing paperwork, ensuring eligibility criteria are met, and obtaining approval for coverage before collecting premiums from employees and forwarding them to insurance carriers.

‍

Why hasn't this been automated?

Despite the advanced technology we have access to in 2023, the administration of employee benefits still poses challenges. Sharing employee data between systems is still in its infancy and although thousands of apps have been created over the past decade to help employers manage employee data—no underlying infrastructure exists to connect all this data together. In fact, with over 5,700 employment systems in existence today, the market remains highly fragmented, making it nearly impossible for a third-party solution to solve the problem comprehensively.

Consequently, employers are forced to manually enter and transfer employee data between multiple systems. This manual process is time-consuming and prone to error. And to make matters more complicated, each system has its own rules and standards regarding data formats, leading to inconsistencies and compatibility issues when transferring information. As a result, crucial details often fall through the cracks, causing problems such as the denial of life insurance benefits.

Employers need to demand that their HR systems communicate with each other, eliminating the need for manual data entry and ensuring a streamlined process. It's time for the industry to embrace interoperability and leverage its buying power to make automated employee benefit administration a reality.

‍

How can Finch help solve this problem?

Finch provides the vital infrastructure to connect disparate systems, facilitating secure and efficient movement of sensitive employment data between them. By integrating with Finch, third party organizations like insurance carriers gain direct access to relevant employee data from an employer's systems of record, such as HRIS and payroll software. This connectivity is extremely powerful for companies with the fiduciary duty to report on individual employee evidence of insurability—streamlining the exchange of information, and making it easier for carriers and employers to exchange employee data accurately.

For example, after integrating with Finch, carriers can prompt employers to connect their employment systems of record, granting permission for the carrier to access relevant employee data. The carrier can then automatically pull the required information, evaluate eligibility and approve coverage. Employers can proceed to collect and pay premiums, ensuring employees receive the coverage they are entitled to.

However, it’s important to note that no two implementations ever look the same. That’s why, at Finch, we’re here to help advise.

‍

What’s the bottom line?

Simple administrative errors shouldn’t be the reason life insurance benefits are denied. And with employment data that’s connected and programmable, they don’t have to be. In fact, everybody wins with effective data sharing. Carriers and employers can both ensure they’ve done their part, reducing their risk of future litigation, and employees get their rightful benefits, at a time when they need them most.

To learn more about how Finch can help prevent life insurance benefit denials, reach out to our sales team.

Finch is on a mission to empower innovators to access the global employment data ecosystem, so they can create cutting-edge solutions for employers. But we can’t do it alone. Partnerships play a crucial role in our work. That’s why, today, we’re excited to announce that Finch has joined Paycor’s network of more than 200 technology partners.

Paycor and Finch: Advancing the Interoperability of the Employment Ecosystem

Paycor is a human capital management (HCM) platform that enables organizations to streamline their HR, payroll, timekeeping, and talent management processes. More than 30,000 businesses trust Paycor to simplify and automate their HR and payroll operations—saving them time, reducing administrative burdens, and ensuring compliance with employment regulations.

Paycor views its customers as its beating heart. In recent years, the company has observed a rise in customers wanting to sync their employment data across the systems they use. Without open connectivity with other applications, their customers wasted time on manual data entry or used risky methods for transferring sensitive information. By developing tight integrations with other tools, the company was confident it could reduce the burden on its customers and improve the user experience. 

The Paycor team realized they faced an uphill battle: Building 1:1 integrations with the more than 5,700 tools in the employment ecosystem would take decades, plus new players enter the scene on a daily basis, making it impossible to keep up. The company needed a partner like Finch that could quickly expand the number of integrated experiences it could offer its customers.

‍

“Paycor, like Finch, wants to give employers power over their own data. By helping Paycor integrate with other tools in their customers’ tech stacks, Finch helps make this vision a reality. We’re excited to add support for such a big player this year and work together to drive more integrated experiences for employers.” 

—Runae Lee, Head of Partnerships at Finch

Finch is a unified API that offers third-party software providers with programmatic access to 200+ HR and payroll systems via a single integration. Once employers give permission to software providers to access their employment data, Finch Connect performs syncs regularly to keep the data fresh. This serves a multitude of use cases, from automating benefits enrollment to forecasting operational expenditures.

“As the leader in employment data, Finch is an ideal partner. The integration of our platforms unlocks new value for Paycor customers, who can now securely sync their data with other systems within their tech stack. By working together, we’ve made our product stickier and paved the way for an even better customer experience.” 

—Paycor’s Partnership Team

Unlock Employment Data in Paycor With Finch’s Unified API 

To leverage your customers’ employment data from Paycor, and give them a deeply integrated product experience, sign up to get API keys today or reach out to our team with questions.

Today we’re proud to announce additional funding led by Intuit Ventures, the venture capital fund of Intuit. Intuit’s QuickBooks payroll is the #1 payroll provider for small businesses.

The employment data ecosystem was built in an era of data silos. Even today, connectivity remains a challenge with the standard practices to share mission-critical employment data bottlenecked by flat files, emails, and even faxes. We are in the early stages of an industry-wide evolution toward a more connected, secure ecosystem allowing for innovative solutions across fintech, HR tech, compliance, insurance, and benefits to proliferate.

Today marks another step toward that inevitable, connected future. Just four months following our $40M Series B investment announcement, we have raised additional capital from Intuit Ventures. With over 1.6 million businesses utilizing Intuit’s payroll in fiscal 2022, Quickbooks is the leading payroll provider for small businesses. Their deep expertise in business software, combined with their proven track record of building 3rd party application marketplaces made them a natural fit for Finch as we continue to unify the employment data ecosystem.

"We are constantly looking to invest in innovative companies that are solving critical problems our customers face.” said Adam Coccari, Managing Director of Intuit Ventures. “Finch’s unified API currently enables our partners and small business customers to seamlessly connect apps to their data in Intuit QuickBooks payroll so the products that they love work together. We look forward to collaborating with Finch as they build deeper integrations to serve developers and our joint customers.”

We’re particularly excited by what this means for customers and end users — we are well on our way to building a future of employment that’s open, connected, and programmable. Today’s employers are demanding their systems of record speak to one another so they can get the best insights into their operations. By opening up the Employment Data Ecosystem, Finch can unlock the full potential of the suite of solutions that utilize HR, payroll and benefits data. This investment from Intuit, a major player in the employment data ecosystem, further strengthens our position as the leading employment data API.

Join our team to help shape the future of the employment ecosystem! To learn more about Finch’s solutions, talk to our sales team or sign up for free today.

Finch is proud to be a sponsor of the SHRM Annual Conference & Expo for 2023. Learn what we’re most looking forward to during the upcoming events and how you can find us. 

The SHRM Annual Conference & Expo is one of the premiere events for HR professionals. This year, the conference is taking place at the Las Vegas Convention Center from Sunday, June 11 to Wednesday, June 14. 

SHRM23 boasts a wide variety of education sessions, so teams can customize their schedules and attend panels that address individual challenges and business goals. With over 15,000 attendees and 650+ solutions providers, we’re excited for the chance to network with all of you and demonstrate Finch’s full capabilities in-person.

Finding Finch at SHRM23

We’ll be set up at Booth 2330. Come say hello, and grab some limited-edition, light-up memo boards while you’re there!

Finch focuses on accessing the employment data that's housed in HR, payroll, and benefits systems.

Our universal API integrates with 200+ HR, payroll, and benefits systems to help employers streamline onboarding, optimize employee benefits, and unlock tax savings—amongst many other use cases.

With more than five million API calls every day and tens of thousands of employer connections, Finch is the #1 API for unlocking the vast potential of employment data.

What the Finch team is looking forward to

When we’re not at Booth 2330, we’ll be checking out all the conference has to offer. We’ve looked through the SHRM23 content tracks and are happy to share the ones we’re most excited to attend: 

• At the start of the conference, we’ll be at “Using Integrated Analytics to Showcase the Business Value of Human Capital” since employment data is the heart of everything we do at Finch. 
• We’ll be sure to swing by “The Future of Work: Five Non-Negotiable Priorities for HR's Agenda” to learn more about the ever-evolving reinvention of work.
• We’re also looking forward to “Retirement Legislative Madness: Breaking Down Secure 2.0 Small Employer/No Plan Edition” since our API integrates with HR platforms like Gusto, Trinet (fka Zenefits), and BambooHR to automate participant onboarding and deductions and contributions management. 
• The panel on “Analytics Plus Hiring: The Evolving Parameters and Employment Law Concerns” is going to be interesting. We’re curious to learn more about the different ways HR departments are using analytics to improve decisions on their workforce talent acquisition and employee retention, and how they’re gaining access to those much-needed data points. 
• You’ll see us at both the Kick-Off Conference Orientation and Expo Opening Reception on Sunday, June 11, and hopefully we’ll have the chance to watch the iconic Janet Jackson perform at the SHRM23 concert on Tuesday evening. 

Of course, we’re also excited for the recently announced moderated Q&A conversation with 42nd U.S. President Bill Clinton on the Main Stage.

More about Finch

Finch allows you to securely access your customers’ employment data across hundreds of HRIS and payroll systems with a single integration.

Employment data includes:

• Employee directory information like name, contact information, date of birth, manager, salary, and start/end date
• Employee income information including hours worked, salary, wages, deductions, and taxes
• Company information such as legal name, address, taxpayer classification, EIN, and banking details

We recently raised $40 million in our Series B round, co-led by General Catalyst and Menlo Ventures with additional investments from QED, PruVen, and Altman Capital.

Finch is putting this capital to work by investing in both new and existing products—like our Data Refresh endpoint and recent upgrades to Finch Connect—and expanding our team to support customers and partners across HR, fintech, and benefits verticals. 

We were named one of 2023’s Best Places to Work by Built In and recently included on GGV Capital’s API-First Index. 

Follow us on Twitter and LinkedIn for our latest takes on the future of work.

Finch is thrilled to share that it’s been named the Best Innovative or Emerging Tech Solution for the Core HR/Workforce category by the Lighthouse Research & Advisory 2023 HR Tech Awards program.

Now in its fourth year, the HR Tech Awards program highlights HR technology companies that serve employers and employees with entries from North America, Europe, and Asia Pacific. The program has a rigorous judging component with a panel of independent practitioners, consultants, and educators who assess each submission.

Today, employment data is hosted across thousands of disparate systems and employers increasingly expect the tools they use to service their workforce to talk to each other with little friction. Given the fragmentation and rising expectations, employment applications are faced with the costly dilemma of either building 1:1 integrations in-house or losing business to competitors that offer compatibility. Finch helps solve the fragmentation challenge with a unified employment API, allowing businesses to cut costs and time spent on integrations, freeing them up to focus on value-added services that differentiate these applications instead.

Ben Eubanks, Chief Research Officer, Lighthouse Research & Advisory has this to say about Finch:

"Integration of systems and data is one of the most common complaints for HR software today. Finch is helping to turn complicated and technical into the possible, enabling the seamless passing of employee data among 200+ different systems via a single powerful integration.”

According to Lighthouse Research & Advisory data, more than 5,000 providers exist across the HR technology landscape, with more startups and innovators entering the industry every single day. This year, the HR Tech Awards recognizes approximately 1% of those firms for creating solutions that solve problems their customers care about.

The world is moving towards more standardized, open, and interconnected data systems. However, employment data infrastructure remains complex, closed, and fragmented. Finch is dedicated to bringing forth a connected future of employment and is honored to have its technology recognized.

To get a free consultation regarding what Finch can do for your business, talk to our sales team, or if you’d like to test it out on your own, you can sign up for a free account today.

‍

We’re excited to announce that On Deck ranked Finch #2 on its Top 40 Companies of 2023 list, reinforcing our vision to build a future where employment is connected and programmable. 

About On Deck and its annual list of top companies

On Deck launched its first fellowship in 2019. To date, the organization has helped start and accelerate hundreds of companies, which are now worth over $9 billion. What started as a passion project has grown into a worldwide network and community of the most ambitious people around the globe.

In an effort to consistently showcase the best and most promising On Deck companies, every year the organization publishes its list of top performers. On Deck considers a number of factors during the selection process, including funding raised, valuation, and momentum over the last year. The nature and importance of the problems companies are tackling also factors into the team’s decision. This year’s list includes 40 companies that have demonstrated significant traction over the past 12 months.

The market need for an open employment data ecosystem

Being recognized as a high performer by On Deck underscores the market need for an open employment data ecosystem. 

The workforce is the backbone of the U.S. economy. From retirement benefits to health insurance to mental health, employers’ responsibilities have significantly increased over the years. Despite the challenges posed by the macro backdrop, U.S. employment has been growing steadily, with the unemployment rate at its lowest in 54 years. 

Unfortunately, the employment ecosystem faces significant challenges due to a lack of data accessibility. Over 580 million U.S. employment records and $15 trillion of funds are processed across more than 20,000 employment data systems, including payroll, HRIS, benefits administration, ATS, and others. The ecosystem also lacks connectivity, with sensitive records mostly passed via manual data entry, SFTP, and unsecured emails. 

We are here to change that by making it easy to read and write employment data at scale with our unified employment API. With Finch, applications can instantly integrate with over 200 employment systems to provide products and services to employers. To learn more, visit tryfinch.com.

Finch and Personio are working together to power the next wave of innovation with real-time employment data. 

Together, we’re making it easier than ever for innovators to build incredible, integrated experiences.

Our goal is to unify the employment data ecosystem by providing access to hundreds of HR and payroll systems with a single, streamlined integration. One way we do that is through partnerships, which allow us to revolutionize how B2B innovators leverage the power of employment data to build next-generation solutions for employers.

Today, we’re excited to announce our new strategic partnership with Personio. 

Personio: all-in-one HR software

Personio is the people operating system that automates and simplifies HR tasks, from recruiting to offboarding, within a single solution. Personio alleviates employers’ administrative burdens, so they have time for more strategic work and can focus on what really matters: people.

To provide employers with the best possible experience and the widest breadth of choice when it comes to customizing their tech stack, Personio integrates with 150 business systems (and counting), including applicant tracking, time management, benefits, compensation, learning and development, and performance management solutions. In turn, Personio customers can quickly and seamlessly connect the apps they use every day to their Personio account, ensuring their Personio data syncs across systems and giving them back their valuable time. 

By partnering with Finch, Personio is taking its commitment to integrated experiences and employer choice to the next level by making it easier than ever for third-party developers to integrate with its API.

“Our new partnership with Finch promises to rapidly expand the number and range of third-party applications that function seamlessly with Personio, which will open up a world of integrative possibilities, particularly for our customers in Europe. In turn, we will be able to better serve our mission to streamline people workflow by further reducing the need for repetitive admin tasks across the employee journey.” 

Hugues Vincent, Head of Partnerships at Personio

What our partnership means for the future

Together, Finch and Personio aren’t just making people operations better and easier for Personio customers; we’re helping to address a much larger and far-reaching problem: the inaccessibility of business-critical employment data. The reality is, employment data is dispersed and siloed across thousands of payroll and HR systems, and that is impeding efficiency and software functionality across the business landscape.

Meanwhile, business users have grown accustomed to the seamless digital experiences they’ve experienced in consumer apps, and are growing to expect that the business applications they use are also  integrated from the start. The Finch-Personio partnership is an important step toward making that a reality for even more innovators.

“We’re thrilled to be working so closely with a developer friendly HR system like Personio that recognizes the importance of innovation and employer choice. Not only will our relationship give Personio customers more options, as we look to expand Finch’s international coverage, Personio will be an important partner in helping us (and, by extension, the developers who build with Finch) gain a better understanding of local markets and the nuances of building a global solution.”

Runae Lee, Head of Partnerships at Finch

How the integration works

Developers who build B2B applications with Finch can make it easy for their users to connect their Personio accounts in seconds. The process is easy: Users simply permission the Personio sync through Finch Connect, and our front-end UI that allows them to safely and securely grant data access through the use of an API token. Finch Connect can be displayed at any point in an application’s customer flow and handles credential validation, multi-factor authentication, and error handling for each system Finch supports.

Once a user has gone through the full authentication process, the application can sync real-time employment data within the user’s Personio account.

If you’re building a B2B application and want to leverage employment data to give your customers a deeply integrated product experience, sign up to get API keys today or reach out to our team with any questions.

‍

Finch's Industry-Leading Employment API Recognized in GGV Capital's API-First Index

Finch is excited to announce that we’ve been included on GGV Capital's API-First Index.

GGV Capital is a global investment firm with $9.2 billion under management. It tracks the activity of VC deals for 120+ private companies to find those with the most promising approaches to API commercialization.

The significance of the API-First Index

GGV’s API-First Index focuses on API-led startups whose primary goal is developing and delivering scalable APIs, so their clients can build better products and services while improving the agility of their development process.

GGV recently expanded the index to include those that have each raised over $50 million in funding.

The index underscores the critical role APIs play in shaping the future of business and technology by highlighting the increasing importance of APIs as drivers of innovation and growth.

“We are going all-in on API companies because they will fundamentally simplify software development. APIs will allow developers to offload lower-value and time-consuming components of application development so they can focus on higher-value work,” states GGV.

Funding trends from the API-First Index

The API-First Index delivers a valuable benchmark for companies that want to keep pace with the rapidly evolving API landscape, and provides insights into emerging API trends to help businesses and investors identify potential partners and investment opportunities.

In 2022, the companies listed on the API-First Index raised approximately $2.1 billion in total funding, a 70% decrease from 2021, but 19% higher than 2020 and 45% higher than 2019.

“2021 was an outlier year for the VC industry broadly, including API-first companies. We believe it’s important to establish that 2021—catalyzed by historically low interest rates and rapid digital adoption spurred by the COVID-19 pandemic—was a once-in-a-decade moment,” said GGV in its 2022 Year in Review.

The context provided around VC activity in 2021 is important. For example, the number of deals in 2022 also decreased, but the average size of deals increased to approximately $60 million—50% higher than deals in 2019 and 2020. It could be that investors are targeting more mature companies and later-stage funding rounds, since these companies require bigger investments to scale their operations.

While the startup ecosystem has continued to see more diminished funding since 2021, the increase from the preceding years is a good sign. VC funding certainly hasn’t dried up and could be poised for a slow rebound as investors focus on making more informed decisions about companies’ potential for revenue growth.

Employment data’s future role in the API space

Finch’s inclusion on the API-First Index demonstrates that the demand for employment data portability will continue to shape the future of the API space.

Employment data includes:

• Employee directory information like name, contact information, date of birth, manager, salary, and start/end date
• Employee income information including hours worked, salary, wages, deductions, and taxes
• Company information such as legal name, address, taxpayer classification, EIN, and banking details

An employment data API like Finch provides secure access to sources of employment data—human resource information systems and payroll systems—with a single integration.

Employment data APIs make it possible for B2B applications across a variety of industries to leverage employment data to fuel innovative products and seamless customer experiences. Here are just some of the ways B2B applications are deploying employment data to change the future of workforce management, business operations, commercial finance, tax, and insurance:

• Performance management—Monitoring employee productivity in real-time and providing feedback and coaching based on performance metrics
• Predictive analytics—Identifying which employees are most likely to leave the company then taking proactive steps to retain them
• Personalized learning and development opportunities—Recommending specific training programs to employees based on performance metrics and career aspirations
• Benefits administration—Automatically enrolling employees in benefits programs based on their payroll data
• Budget forecasting—Forecasting budgets with more accuracy by gaining a better understanding of their labor costs
• Tax compliance—Generating and streamlining reports on taxes, compliance, and other regulatory requirements to ensure compliance with all relevant regulations
• Underwriting and risk assessment—Utilizing up-to-date census and payroll data to actively assess risk, adjust premiums, and determine appropriate rates for insurance coverage
• Claims processing—Verifying claimants’ employment history and status to help prevent fraudulent claims

Employment data APIs will play an increasingly important role in shaping the future of business as companies of every size, shape, and vertical increasingly demand integrated, data-driven experiences from the B2B applications that serve them.

Learn more about Finch

Finch is a universal API for employment data.

We’re singularly positioned to provide you with mission-critical infrastructure for employment data across a wide range of verticals—including read-and-write compatibility with 200+ employment systems covering more than 88% of U.S. employers—and enable data transfers between employers and applications.

With more than five million API calls every day and tens of thousands of employer connections, Finch is the trusted HRIS and payroll API solution for discerning B2B applications. For more details, visit tryfinch.com.

In a recent webinar, Ansel Parikh, Co-Founder and COO of Finch, demonstrated how a unified employment data API can unlock multiple advantages for insurance providers, including pay-as-you-go premium models, and increase overall operational efficiency.

According to a recent study by Corinium, 65% of insurance executives aren’t fully confident in the data that’s being used for quoting and claims validation. When insurance providers don’t have timely access to accurate data—especially employment data—millions of dollars are left on the table. The problem is, traditional processes to access employment data involve manual, time-consuming tasks and a heavy amount of resources.

That’s where Finch comes in.

On April 4, 2023, Ansel Parikh, co-founder and COO of Finch, led the webinar Insuring a Future: Keep Your Insurance Product Cutting Edge in 2023 to demonstrate how insurance providers can improve operational efficiency, benefits coverage, premium collections, and customer experience through the use of a unified employment data API.

He covered the following topics:

• The definition of employment data
• How employment data is applied to different types of insurance workflows
• How insurance providers access employment data today
• How to automate access to customers’ employment data, specifically the data locked in payroll systems

Below, we provide highlights from the webinar. You can also watch the complete recording by filling out the form below.

What is employment data?

Employment data is the entire scope of information that sits in different systems of record across the entire employee lifecycle.

Employment data includes:

• Employee directory information like name, contact information, date of birth, manager, salary, and start/end date
• Employee income information, including hours worked, salary, wages, deductions, and taxes

Finch focuses on the employment data that's housed in HR and payroll systems. And this information—particularly the granular information in payroll records around individual pay statements, specific deductions, past wages, and tips—has the power to streamline the process of insurance workflows and open up new customer segments for different types of insurance lines.

3 key use cases of employment data for insurance providers

There are three prevalent ways insurance providers can use employment data to innovate their processes:

1. Determining the risk profile of a company to streamline quoting
2. Using employee information, like employment start and end dates, to validate claims
3. Checking if the right premiums are being charged during the policy, based on actual employees and their pay, to unlock pay-as-you-go models

We go further into the details for each use case below.

1. Streamline quoting

The insurance industry is always looking to improve the quoting process for different lines of insurance such as worker’s compensation, commercial, group life, and group health.

Typically, quoting for these lines includes asking prospects to complete 10+ manual forms that require them to log into different systems or pull detailed information like an EIN to find gross wages per employee for the last month. In total, prospects have to input over 25 lines of data—including location details, company information, and employee salaries—just to generate a quote.

This manual labor slows down the quoting process and prohibits the likelihood of conversion.

“We've talked to many insurance providers who see a considerable drop off…when people have to continually fill out form after form after form. At Finch, our goal is to turn it into a 30-second process, where that prospect syncs their employment data instead, specifically the information needed for quoting, [by pulling] it straight from the source of truth,” said Ansel.

Access to this data allows insurance providers to pre-fill many form fields, so they can deliver quotes faster using real-time data from the prospect’s payroll system. Because employment data from payroll systems goes to the IRS every three months, the information has already been validated, helping to produce more accurate quotes in addition to streamlining their delivery.

2. Validate claims

Similar to the quoting process, data collection for submitting a claim is onerous for the policyholder. Claims forms require dozens of different lines of data that need to be self-reported by the employer and the employee, which then have to be individually verified by insurance providers’ claims processing teams. All of that time adds up.

Alternatively, insurance providers can pull this information directly from payroll systems via API, including fields like date of employment to confirm that a claim is being made by a current employee. Having programmatic access to this data helps insurance providers verify claims eligibility quickly, seamlessly, and accurately by pre-filing forms to save time and reduce self-reporting errors.

In other words, when employment data comes directly from the HR or payroll system—the source of truth—it helps insurance providers determine if the claim is valid right from the start. The insurance provider knows exactly who the person making a claim is, that the date of the claim aligns with their actual employment dates, and if they’re even eligible to file a claim, all within minutes.

3. Unlock pay-as-you-go premium payments

When it comes to workers compensation, insurance providers often leave premiums on the table—especially for highly seasonal businesses—by waiting until the end of a policy to reconcile payments. This also creates surprise bills for customers and reduces customer satisfaction.

Alternatively, when insurance providers check to ensure the right premiums are being charged throughout the course of the policy, as opposed to the year-end audit period, they have the ability to change their customers’ payment structures when appropriate.

For example, if a ski resort’s policy starts in the summer, underwriting is based on the number of employees they have during that time. It takes a full-year cycle and a premium audit to notice the number of employees increased three-fold during the winter months. As a result, risk is mispriced, the ski resort doesn’t pay an accurate premium for their policy, and they receive an unexpected bill after the audit to shore up costs.

When insurance providers have the ability to unlock a pay-as-you-go model, real-time employment data creates more accurate premiums and more efficient cash collection throughout the policy’s term without mispricing risks for a large chunk of the year. Premiums can be adjusted as the risk profile evolves, the policyholder doesn’t receive surprise bills, and customer satisfaction increases. This becomes especially important during the renewal cycle, when insurance providers are looking to retain customers.

A pay-as-you-go program that utilizes automated employment data feeds provides a more efficient, cost-effective, and accurate solution for insurance providers, agents, and policyholders.

“When [employment] data is accessible, and the process is streamlined, it reduces friction for the policyholders’ renewal. The data also is processed in a much more standardized, ingestible format. But what’s most exciting about this pay-as-you-go model is that policyholders love it. It allows them to have more working capital, and that’s incredibly valuable,” said Ansel.

However, as valuable as employment data can be across the policy lifecycle, it’s a major problem to access this information even today.

What is the main challenge of accessing employment data?

The main challenge of accessing employment data is market fragmentation. There are over 5,700 HR and payroll systems being used by U.S. businesses today, and the top 10 payroll systems only account for about 55% of the market.

So, even if an insurance provider integrates with all 10 of these systems, the employment data of almost half of businesses in the U.S. would remain inaccessible. Ensuring proper coverage of an insurance provider’s target market means integrating with hundreds of HR and payroll systems. That’s no small feat.

3 ways insurance providers try to access employment data

There are three different ways insurance providers try to gather information from HR and payroll systems:

Build individual integrations one by one

The problem is, individual builds take up a lot of engineering resources, costing hundreds of thousands and even millions of dollars over the life of the integration.

“We've seen teams spend over a year just to build one integration, but then you still have to maintain that integration for the future. That’s a consistent resource drain,” said Ansel.

Set up a secure file transfer protocol (SFTP)

Other times, insurance providers will get customers’ IT teams involved to set up an SFTP. This means that the systems involved need to exchange flash files, which usually leads to a configuration problem, because every system has a different format.

“You're introducing a ton of friction for every single customer in order for them to share the key information you need to streamline these workflows,” said Ansel.

Manually upload different data sets

Asking customers to manually upload employment data from their HR and payroll systems isn’t just labor intensive. Manual uploads introduce more risk because there’s a chance that the data isn’t up to date. It also increases the chances of people misreporting data, not out of malice, but because the process itself lends itself to human error.

None of these options create seamless experiences for insurance providers or their customers, who expect systems to be able to talk to one another.

The top benefits of an employment data API

APIs allow secure data transfers between two or more systems to happen in real time, and different kinds of APIs exist to serve different datasets. An employment data API provides secure access to sources of employment data: HRIS and payroll systems. And they do it with a single integration, so it’s as easy for customers to transfer data as it is for them to sign into their payroll accounts.

Utilizing an employment data API like Finch for integrations leads to substantial material benefits that can boost return on equity (ROE).

Improve efficiency and reduce operational costs

Integrating with Finch’s standardized API schema unlocks programmatic access to hundreds of HR and payroll systems. Compared to building one-off integrations in-house, the time and cost savings are tremendous.

One Finch client, for example, now has direct employment data connections with more than 3,000 of their customers, and they were able to reduce their development costs by 75% by aggregating that access through Finch instead of building those integrations one by one.

Save on support resources

Without an API, accurately syncing data between systems via SFTP or manual uploads often requires an investment of at least 1.5 hours in support calls and dedicated support team resources to walk customers through the specific syncing instructions for different payroll providers. These approaches don't scale well, and they divert insurance providers’ resources away from core objectives like driving ROE and renewal rates.

In contrast, setting up API-enabled employment data feeds is quick and easy, reducing the number of support inquiries that policyholders make and requiring less support resources.

Unlock new customer segments

By allowing insurance providers to offer more customers seamless quoting, onboarding, and claims experiences, universal employment data APIs like Finch increase insurance providers’ potential to unlock new customer segments.

“There's a halo effect of saying, ‘I'm compatible with your payroll system,’ because customers trust that payroll system for very core pieces of information and operations. Your association and compatibility with that system extends that credibility to your product. Potential customers are more likely to trust your product because it talks to systems they already trust,” said Ansel.

Improved accuracy, transparency, and risk management

Unlike manual data entry, which is prone to human error, automated employment data feeds via API allow for improved data accuracy and visibility, both of which are crucial to the calculation of workers’ compensation premiums and claims payments. In turn, insurance providers can better manage risk and make more informed decisions.

A working example: Finch and InsurePay

InsurePay is a technology company that offers a cloud-based payment platform for workers' compensation insurance premiums. Their platform integrates with insurance providers, payroll providers, and brokers to automate and simplify the premium calculation and payment process.

Finch’s API ensures data is flowing compliantly and securely from the policyholder's payroll system of record to InsurePay as well as the insurance provider.

“We enjoy partnering with InsurePay, because they understand all the different pieces of the policy lifecycle and where improvements can come from. InsurePay wanted to partner with Finch, because we understand the value of automating payroll connectivity and unlocking a pay-as-you-go model,” said Ansel.

How Finch serves insurance providers

Our goal at Finch is to simplify access to HR and payroll systems with one simple, streamlined integration.

With Finch, insurance providers can map to one unified data structure, capture more edge cases, and expand their integration network anytime we add a new system. We’re singularly positioned to provide insurance providers with mission-critical infrastructure for employment data across a wide range of verticals, including read-and-write compatibility with 200+ HR and payroll systems used by more than 88% of U.S. businesses.

To learn how Finch can serve your insurance product, reach out to our team or have your developers sign up for a free account to begin building Finch today.

To learn more, visit tryfinch.com.

‍

Monitor Data Syncs Job History in the Finch Dashboard

Just a few weeks ago, we announced a new set of Jobs Management endpoints, which make it easy for developers to programmatically view the status of data sync jobs for any employer connection. Now, we’re excited to share a new user interface (UI) in the dashboard that empowers any user to do the same. We call it the Data Syncs UI.

The Data Syncs UI enables any Finch user to view the status of scheduled and requested data syncs through a user-friendly dashboard. This gives developers, support teams, and product managers alike an accessible source of truth for the status of data syncs across all connected customers.

Real-time visibility for your entire team

The Data Syncs UI is designed to make it easy for anyone in your organization, regardless of their technical expertise, to view and manage data sync job activity.

For example, product managers can now monitor the health of connections across their applications without the need for engineering support. The intuitive interface gives them visibility into every active and past connection, so they can proactively address syncing issues and provide timely information to customers (or our support team) as needed.

Meanwhile, the Data Syncs UI empowers support representatives to quickly assess the status of customers’ connections and efficiently field questions and requests. This helps them provide a best-in-class experience for your customers.

Get started with the Data Syncs UI

To access the Data Syncs UI, simply log in to your Finch dashboard and click on any of your individual customers under the 'Employers' tab to see a full list of syncs and their status. If you aren’t already using Finch today, but want to learn how employment data can help power your next product innovation, sign up for a free account, or talk to a member of our team today.

‍

Today, we’re excited to announce two major upgrades to Connect: authentication fallback and improved configurability. These enhancements give you more flexibility and control over how employers authenticate through Connect.

Increasing Connect conversion with auth fallback

Fallback is an alternative path to authenticate when your customers are having difficulty connecting with the primary authentication method. This enables employers to connect through Finch without the need to contact support.

How it works

If an employer attempts to authenticate through Connect and cannot complete the primary authentication method, Connect will display instructions for the employer to connect manually as a fallback option. Once Finch sets up the account, the data for this connection will flow through the Finch API as usual. Check out our docs for a complete list of providers and more implementation details.

Improved configurability of Connect

Finch may display various authentication methods to employers depending on different providers. Several common examples of authentication include credential auth, OAuth, and API keys. Each authentication method has its pros and cons, some of which include friction to connect, cost to employers, and data refresh frequency.

The new and improved authorization configurability allows you to decide what configurations to enable in Connect across providers, including:

• Which methods to show as the primary method in Connect
• Which methods to disable in Connect
• Which providers to hide in Connect

To learn more, read the configuration docs for more details.

Getting started

Both Connect updates are immediately available. Please reach out to Sales or your Account Manager to enable authentication fallback and config. If you don’t have API keys yet, you can sign up for a free account today!

We are thrilled to announce the launch of our new Data Refresh endpoint, allowing you to request new data whenever you need it.

The Finch API syncs data with providers on a set cadence. This enables Finch to provide developers a reliable, low-latency API. But, we know sometimes you need to refresh your data sooner than Finch's retrieval schedule.

Kick off a new sync any time with Data Refresh

Data Refresh is a new endpoint which lets you enqueue a new job on demand without waiting for the next scheduled sync.

We are excited about enabling use cases where near-real-time data is critical. For example:

• A health insurance provider that needs to check for qualifying life events on employee payroll data to ensure accurate coverage
• A retirement company that needs to knows when its customers run payroll, and check for new pay runs in a time-sensitive use-case (e.g. confirming deductions)
• A compensation application services a customer undergoing a tender offer and needs to see updated employee directory information in short order
• A financial planning application services a customer making changes to their payroll system while doing financial modeling, and wants to see the changes in near-real-time.

How it works

First, you’ll need a way to trigger a refresh in your application. This is typically triggered by a refresh button built into the product or through some backend workflow. Then you can use this workflow to send a request to our POST /jobs/automated endpoint and we’ll kick off a new job to fetch any new updates. While the job is running, you can use our GET /jobs/automated endpoint to check on the status of the job. After the data is updated, you can call each individual data endpoint to retrieve the latest data. Check out our docs to learn more.

Improved Data Syncs management for better visibility

But that’s not all—we’ve also released new Jobs Management endpoints to give you more visibility and control into jobs run by Finch. With these endpoints, you’ll also be able to view the status of a data sync job, as well as timestamps related to key lifecycle events by sending a request to GET /jobs/automated. Use this endpoint to understand and communicate with your customers the last updated time, status of the current sync, and more.

Getting Started

The /jobs endpoint is available to everyone today. Anyone with API keys, please reach out to Sales or your Account Manager to enable the feature in production. If you don’t have API keys, sign up for a free account!

Finch is proud to be a sponsor of the Transform 2023 conference. Hear about what we’re most looking forward to at this year’s show.

Transform 2023, the premiere HR conference for business and people leaders, entrepreneurs, and investors, is running from Monday, March 27 to Wednesday, March 29 at the MGM Grand in Las Vegas, Nevada.

Previously known as HR Transform, this year, the conference has expanded the experience to include global leadership, entrepreneurs, and investors. Transform 2023 will offer opportunities to foster more in-depth relationship building, inform modern enterprise policies and programs from a broader perspective, and increase the scale of tech innovation and business transformation. Their goal is to “transform the workforce, workplace, and work of the future.”

Finding Finch at Transform 2023

We’ll be set up at Booth 501. Come say hello, and grab some limited-edition swag while you’re there!

Our universal API integrates with hundreds of HR, payroll, and benefits systems to help employers streamline onboarding, optimize employee benefits, and unlock tax savings, among many other use cases.

With more than five million API calls every day and tens of thousands of employer connections, Finch is the #1 employment data API.

What the Finch team is looking forward to

We’ve browsed through all the inspired offerings on the Transform 2023 Agenda and highlighted events the Finch team is most excited about below:

• We’re looking forward to the session “Funding the Future of Work: The Venture Capital Perspective.” Employee data provides unique insights into budget allocation, and we’re curious to see if this comes up in the conversation.
• The panel on “Using Data to Embrace an Employee-First Approach to Compensation Planning” is calling out to us. At Finch, we know compensation data can inform and shift the thinking around important decisions and processes regarding employees’ salary payments. (We also know this data can be difficult to access, and we’re here to help.)
• We plan to catch the panels on “Using Data to Develop Truly Inclusive Employee Leave Policies” and “Human Centric Design: Building Together,” to gain even more insight into new use cases for employee data.
• Both “Data-Driven Storytelling for HR: Navigating Growth with Operational Insights” and “Should HR Own the Workplace Tech Stack?” promise to be lively discussions. We’re excited to see more HR teams looking to access and use data to drive their impact on business objectives.
• We’ll also be at the official kickoff reception on Monday evening to celebrate the Transform 10 alongside all the forward-thinking organizations who are being recognized this year. (There’s no way we’d miss the official after party either.)
• Finch will be hosting a VIP event at Topgolf the evening of Tuesday, March 28. If you’re interested, please submit a contact request. Space is limited.
• 💡Insider Tip: Don’t forget that PACE 2023 is taking place alongside Transform 2023 on Monday, March 27 as well.

More about Finch

We recently raised $40 million in our Series B round, co-led by General Catalyst and Menlo Ventures with additional investments from QED, PruVen, and Altman Capital.

Finch is putting this capital to work by investing in both new and existing products, and expanding our team to support customers and partners across HR, fintech, and benefits verticals. Follow us on Twitter and LinkedIn for our latest takes on the future of work.

We’re excited to announce Built In has named Finch to its 2023 Best Places To Work! Finch earned 12th place among Built In’s 50 Best Startups To Work for in San Francisco 2023.

The annual awards program includes companies of all sizes — from startups to those in enterprise markets — and honors both remote-first employers as well as companies in large tech markets across the U.S.

“At Finch, we put employee wellbeing first because we believe life and work should fit together. That’s what sets us apart and what has earned us this recognition,” said Jeremy Zhang, CEO at Finch. “We’re proud to have built a culture founded on empathy, meaningful work and opportunities for growth, creating a workplace that allows our employees to show up as their best, most authentic selves — inside and outside of the office.”

Being recognized as one of the Best Places to Work in San Francisco is a clear demonstration of Finch’s people-first culture. Here’s how we help our people do their best work:

• Our core values — execution, curiosity, humility and empathy — serve as the foundation of our culture. These values reflect what we expect from each other and inform all of our decisions, encouraging outside-the-box thinking, teamwork and respect for every voice to create a workplace we love.
• Consciously building a smart, diverse and driven team. We are as passionate about our lives outside of the office as we are about the work we do together.
• Benefits that support employee wellbeing including generous stipends ($1,000 work from home and $200/month flex), covering 100% of health insurance plans for employees, and unlimited PTO (mandatory 15-day minimum per year).
• A remote-first work environment so employees have the flexibility to prop open their laptop wherever life takes them.
• A fast-paced environment offering lots of opportunities for growth and development.

Built In determines the winners of Best Places to Work based on an algorithm, using company data about compensation and benefits. To reflect the benefits candidates are searching for more frequently on Built In, the program also weighs criteria like remote and flexible work opportunities, programs for DEI and other people-first cultural offerings.

“It’s my honor to congratulate this year’s Best Places to Work winners,” said Sheridan Orr, Chief Marketing Officer at Built In. “These exemplary companies understand their people are their most valuable asset, and they’ve stepped up to meet the modern professional’s new expectations, including the desire to work for companies that deliver purpose, growth and inclusion. These winners set the stage for a human-centered future of work, and we can’t wait to see that future unfold.”

Find out what Finch’s award-winning culture is all about. Apply to one of our open positions!

Today, we're excited to announce that Finch has raised $40M in our Series B round, co-led by General Catalyst and Menlo Ventures, with additional investments from QED, PruVen, and Altman Capital.

The workforce is the backbone of the U.S. economy. From retirement to health insurance to mental health, the responsibilities of employers have increased significantly over the years. Despite the challenges posed by the macro backdrop, U.S. employment has been growing steadily, with the unemployment rate at its lowest in 54 years.

However, the employment ecosystem faces significant challenges due to a lack of data accessibility. Over 580M+ U.S. employment records and $15T of funds are processed across 20,000+ employment data systems, including payroll, HRIS, benefits administration, and others. Moreover, the ecosystem lacks necessary connectivity, with records mainly passed via manual data entry, SFTP, and emails filled with sensitive information. We are here to change that by making it easy to access data and direct payments across the sector with our unified employment API.

We've made significant progress since announcing our Series A just eight months ago—

• Several months of positive cash flow and a 12x increase in revenue since the company's Series A round announced in June 2022.
• Over 2 million employees connected through the Finch platform.
• Over 60 employees globally, representing 4x Y/Y growth
• New partnerships with leading employment platforms, including BambooHR, HiBob, and others yet to be announced.

With this funding, we will accelerate connectivity across the employment data ecosystem and help employers and employees use the products and services they need to grow and thrive. We're putting this capital to work by investing in new and existing products and expanding our team to support customers and partners across the HR, Fintech, and Benefits verticals.

Our vision is to build a future where employment is connected and programmable. With Finch, applications can instantly gain compatibility with 200+ employment systems to provide products and services to employers.

Join our team to help shape the future of employment!

SECURE Act 2.0’s auto-enrollment and escalation rules

With the passage of the SECURE Act 2.0, automatically enrolling employees in sponsored retirement plans—and automatically increasing their contributions—is now a legal imperative. In response, retirement plan providers are implementing API technology to quickly and easily auto-enroll 401(k) and 403(b)participants and meet the new requirements.

In December 2022, the Securing a Strong Retirement Act (SECURE Act 2.0) was signed into law. Among the provisions outlined by SECURE 2.0 are new requirements for automatic plan enrollment and contribution escalation. Effective for plan years after December 31, 2024, they compel retirement plan providers to automatically enroll employees upon eligibility in new 401(k) and 403(b) plans and automatically increase the contributions of enrolled employees to that plan every year.

While these updates are exciting from a participation standpoint, the new requirements also come with the potential to create incredible administrative burdens especially in cases where employers are rapidly growing their workforce. In response, innovative retirement plan providers are implementing API solutions that integrate with employers’ HR information systems and payroll systems to ensure seamless SECURE 2.0 compliance. In this article, we explore the SECURE Act 2.0’s auto-enrollment and auto-escalation requirements plus the API technology that retirement plan providers are turning to make true automation a reality.

A SECURE Act 2.0 Summary

Building on the work of the Setting Every Community Up for Retirement Enhancement Act of 2019, SECURE Act 2.0 lays out widespread changes to the U.S. retirement system. The act is intended to make it more affordable for employers to sponsor retirement savings plans, and easier and more attractive for employees to participate.

The provisions of SECURE Act 2.0 include but aren’t limited to:

• An increase to the credit small businesses can receive for starting a pension plan
• Authorization for 403(b) plans to participate in multi-employer plans and pooled employer plans
• Higher “catch-up” contribution limits for individuals over age 50
• Permission to treat student loan payments as elective deferrals for purposes of matching contributions
• Permission for employers to incentives like gift cards to encourage plan participation among employees
• Allowance to withdraw emergency funds of up to $1,000 from retirement plans without text penalty
• An increase in the required minimum distribution age to 73
• The requirement that employers allow long-term, part-time workers to participate in sponsored retirement plans
  
  

In total, the plan details dozens of new rules and regulations. Retirement plan providers as well as employers should consult qualified legal counsel to understand the full extent of the impact of the law on their operations.

Read our new whitepaper: The Changing Retirement Landscape: How 401(1) Recordkeepers Can Thrive Under SECURE 2.0.

SECURE 2.0 auto-enrollment and auto-escalation

One of the most broadly impactful provisions of SECURE 2.0 is detailed under Section 101 of the law, which stipulates that new 401(k) and 403(b) plans must now automatically enroll employees upon eligibility. According to a summary issued by the Senate Committee on Finance, the decision to require auto-enrollment a matter of financial equity:

“One of the main reasons many Americans reach retirement age with little or no savings is that too few workers are offered an opportunity to save for retirement through their employers. However, even for those employees who are offered a retirement plan at work, many do not participate. But automatic enrollment in 401(k) plans…significantly increases participation. Since first defined and approved by the Treasury Department in 1998, automatic enrollment has boosted participation by eligible employees generally, and particularly for Black, Latinx, and lower-wage employees.”

Per SECURE 2.0, employees must be initially enrolled at a minimum of 3% of their gross pay but not more than 10%. Plans are also required to increase the distribution of enrolled employees each year by 1% until contribution reaches at least 10%, but not more than 15%.

Exceptions to the provisions include all current 401(k) and 403(b) plans, which are grandfathered into pre-SECURE 2.0 rules, as well as businesses with 10 or fewer employees, businesses under 3 years old, church plans, and government plans. Employees also have the right to opt out of enrollment or distribution escalation at any time.

What SECURE 2.0’s 401(k) auto-enrollment means for plan providers

Automatically enrolling all employees to a retirement plan upon eligibility is a significant undertaking. By SECURE 2.0’s definition, “automated” enrollment simply means enrolling those employees on an opt-out rather than an opt-in basis.

But that definition of automated doesn’t necessarily translate to a simpler, less manual process. A plan still needs to be notified of newly eligible employees and provided with the employee census data and payroll authorization it needs to process enrollment and manage recurring plan deductions. Without the right technology in place, employers and plans are forced to communicate all of this information by email, phone, spreadsheet, or secure file transfer. Not only is the back-and-forth time consuming, it increases the risk of error and noncompliance with SECURE 2.0’s provisions, and the potential of penalties and fine.. The hassle and risk only compounds in cases where employers are rapidly adding new employees.

How to auto-enroll 401(k) participants

To avoid this drain of resources and to eliminate the risk of SECURE 2.0 noncompliance, true automation is critical. Retirement plan providers are now turning to API integrations with employers’ HR information and payroll systems to eliminate the manual steps historically needed to enroll employees and manage their deductions on an ongoing basis.

With an API integration, retirement plan providers have a direct, permissioned data connection to employment systems of record. This allows plans and employers to quickly and seamlessly exchange the data needed to enroll employees in 401(k) and 403(b) plans and manage their retirement deductions. What’s more, these data exchanges can be triggered by events without manual intervention, which means no person has to shoulder the responsibility of ensuring newly eligible employees get enrolled. The API integration takes care of it automatically in the truest sense of the word.

Consider this example:

1. Company A is growing quickly and hires and onboards 7 new employees on the same day.
2. As a matter of course, those employees are added by Company A to their HR information and payroll systems of record, which Company A’s 401(k) plan is integrated with via API.
3. In turn, the 401(k) plan is automatically made aware that newly eligible employees have joined the company, which triggers an instant exchange of real-time data.
4. With the information it retrieves from the HRIS, the 401(k) plan is able to automatically enroll all 7 employees. Via its direct payroll system connection, it is also able to make direct payroll changes to initiate recurring retirement contributions—no forms, emails, data entry, or spreadsheets required.
   

As a result, both the employer and the retirement plan provider save hours of administrative work and avoid delays to plan enrollment.

Implementing an API integration to auto-enroll participants and manage deductions

Retirement plan providers looking to enable HRIS and payroll system connectivity have a couple of options: build one-to-one integrations with all of the HRIS and payroll systems their customers use or partner with a turnkey, universal API that integrates with hundreds of HRIS and payroll systems at once.

Learn more about both approaches to HRIS and payroll integrations in our build vs. buy report.

The first approach offers plan providers ultimate control over their integration strategy but requires niche payroll expertise and a significant, ongoing investment of development resources. The second option turns over some of that control to a integrations partner but also comes with distinct advantages:

• More coverage, quicker—a universal API provides connectivity to many systems at once
• Faster go-to-market timeline—implementation takes weeks instead of months or more
• Fewer resources—the integrations provider does all of the heavy lifting, freeing up a plan’s internal team to focus on other priorities
• Worry-free maintenance—the integrations provider ensures the connections are working smoothly even as HRIS and payroll systems make updates

How Finch helps ensure SECURE 2.0 compliance

Finch makes it easy for retirement plan providers to integrate with 200+ HRIS and payroll systems with a single integration. Not only does our universal API enable the instant retrieval of real-time employee census data needed to automate 401(k) and 403(b) enrollment, it also allows plan providers to push changes directly to payroll. Using Finch’s Benefits endpoint, plan providers can initiate and manage pre-tax, post-tax, recurring, and one-time payroll deductions as a dollar amount or percentage of employees’ gross pay, ensuring easy compliance with the SECURE Act 2.0’s auto-escalation clause.

Meanwhile, the employer sponsoring the plan doesn’t have to lift a finger to upload deduction files or manually enter changes, saving them from hours of ongoing administrative work and avoiding countless potential human errors and potential fines.

Learn more about how retirement plan providers use Finch to build best-in-class customer experiences.

Get SECURE 2.0 compliant with Finch

The auto-enrollment and auto-escalation provisions of the SECURE Act 2.0 will drive retirement plan participation, but not without potential challenges and hurdles. Luckily, retirement plan providers who want to stay compliant while avoiding hassles and potential fines can leverage Finch’s universal HRIS and payroll system API to make true auto-enrollment and contributions management simple and secure. Register for a free test account to explore how to leverage Finch’s HRIS and payroll integrations today.

Tax credit service providers offer a critical lifeline

As the world braces for a potential recession, many small and medium-sized businesses are still grappling with the lingering effects of quarantine regulations, pandemic-related shutdowns, and subsequent declines in revenue. Fortunately, some of the relief programs the U.S. government introduced during the pandemic are still in effect, including the Employee Retention Credit (ERC)—and many SMBs are relying on tax credit service providers more than ever to help them make the most of the assistance available.

But as more service providers enter an already crowded space, they are quickly finding that they can’t compete for SMBs’ business if they don’t offer the modern, automated experiences that SMBs have come to expect. Among the most important automations that tax credit service providers can provide is leveraging SMBs’ own accounting and employment data to seamlessly determine eligibility and apply for ERC and other programs. The key—and challenge—is accessing that data.

In this article, we’ll walk you through how high-quality integrations with SMBs’ accounting and employment systems are helping tax credit service providers like yourself retrieve the real-time data needed to make fast, accurate ERC eligibility determinations, auto-fill application forms, and provide a best-in-class experience to SMBs when they need it most.

Automate the collection and processing of accounting data

One of the methods of determining ERC eligibility is demonstrating a significant decline in gross receipts compared to the same quarter of the previous fiscal year. Meanwhile, the ERC application calls for company financial data, including data from profit and loss statements, balance sheets, cash flow documentation, expense reports, and income statements for the period in which the SMB is seeking relief.

In other words, determining eligibility and applying for ERC is highly dependent on providing detailed, accurate accounting data. Without the right technology in place, obtaining said data is a laborious undertaking that requires digging through financial paperwork, exporting and uploading piecemeal datasets, and/or manually entering data field by field. Not only does this put undue strain on resource-strapped SMBs, it comes with a high risk of human error, which may mean having to repeat the application process or worse: being denied the tax credit altogether.

Tax credit service providers can mitigate these pain points by implementing API integrations with SMB accounting systems like QuickBooks, Xero, Sage, and NetSuite. In doing so, you can instantly and automatically retrieve all of the historical and real-time data points needed. In turn, SMBs get faster eligibility determinations, quicker access to funds, and are relieved of the burdens of tracking down the information themselves.

Streamline the sharing of HRIS and payroll data

In addition to accounting data, the ERC application requires businesses to provide robust employment data—a catchall term for the employee directory and payroll information stored in SMBs’ HR and payroll systems like ADP, Gusto, Paychex, and more. Like accounting data, manually pulling and uploading employment data into an application is a tedious resource-drain for SMBs.

Through API integrations with SMBs’ employment systems, you can meet the requirements of the ERC application while relieving SMBs of the friction and hassles of manual data retrieval. Built properly, integrations with employment systems can instantly retrieve:

• Gross wages per employee
• Benefits enrollment status, employer contributions, and benefits-related payroll deductions per employee
• Employee eligibility status

And because this data is coming directly from the system of record, you can rest assured that the data retrieved is accurate.

What to consider in your integration strategy

Tax credit service providers have two choices: you can build integrations to accounting, HRIS, and payroll systems yourself or outsource the integrations to trusted integration partners. Before determining which approach to take, it’s important to consider the following factors:

Market fragmentation

‍The U.S. alone is home to over 5,700 HRIS and payroll providers, and the top three systems only have a 44% share of the market. That leaves a huge long-tail, with each other provider accounting for no more than 4% of the market. U.S. accounting software is less fragmented but is likewise seeing increased competition and an expanding long-tail. In other words, covering your customer base in a meaningful way will mean building integrations with potentially dozens or hundreds of systems.

Your internal capacity‍

When integrating with an employment or accounting system, you can expect the project to take a minimum of three months for a basic data pull and anywhere from six to nine months to achieve full read-and-write access. Before you set out to build, you’ll want to make sure you have the capacity to take on the work as well as flexibility in your go-to-market timeline—keeping in mind that time spent on integrations is time you could otherwise devote to perfecting and evolving your core product.

The complexities of data mapping

‍Every accounting platform runs on a different dataset, each with its own approach to naming and structure. Standardizing this data so that it is usable by your application is one of the more intricate and important aspects of integrations, and it’s easy to get wrong.

The cost of building

‍Integrations come with a hefty price tag when you consider the average engineer’s salary and the hours they spend establishing data connections. If you assume that three engineers will work on an integration for three months, that puts the soft costs of just your initial buildout in the ballpark of $200,000. Then, there are the ongoing costs to consider, like the fees many employment and accounting systems charge to use their API.

The benefits of outsourcing system integrations

Outsourcing integrations allows you to avoid these barriers and complications. Universal APIs, a type of integration partner, offer a one-to-many solution that can get you to market faster and more cost-effectively. In effect, a single integration with a universal API connects you to a multitude of systems at once, saving you the hassle of building and maintaining each connection yourself.

Implemented together, Codat’s universal Accounting API and Finch’s universal API for employment systems offer tax credit service providers a distinct advantage. Because we are experts in our respective fields, we understand the nuances and complexities of employment and accounting systems like no one else. In turn, we pull, map, and standardize higher quality, more actionable data and offer deeper data coverage that meets all of your data requirements—for the ERC and beyond—without compromise. Perhaps most importantly, Codat and Finch afford you turnkey accounting and employment integration solutions that meet your tax credit data needs in a fraction of the time it would take to build in-house, allowing you to invest more time, money, and focus on your application and the exceptional experiences you’re offering your customers.

In the end, building with Codat and Finch gives you the tools you need to get to market faster, onboard SMBs faster, cover more of the accounting and employment systems your customers use, and, ultimately, help your customers claim the tax credits that are so crucial to their growth.

If you’re interested in learning more about market-leading accounting integrations, contact Codat today. For the most reliable employment system integrations, sign up to retrieve your free sandbox API keys or reach out to Finch with questions.

We’re excited to announce that GGV Capital, in partnership with Crunchbase, has named Finch to its inaugural Embedded Fintech 50, a list recognizing the most promising fintech companies in the eyes of startup investors.

GGV Capital convened 57 other investment firms to nominate and vote on the 50 honorees. Having raised more than $12 billion collectively, the Embedded Fintech 50 demonstrates the enthusiasm of venture capital investors in the growth and innovation of this sector. In celebration, honorees will ring the Closing Bell at Nasdaq MarketSite today.

People are the most important component of an organization, yet the data required to understand a company’s investment in its workforce is siloed across payroll, HR and benefits systems,” said Jeremy Zhang, CEO at Finch. “Our technology is addressing an important challenge in the employment data ecosystem as companies have been unable to easily derive and act on insights from those disparate data sources, until now. We are grateful to be recognized in this inaugural list and look forward to driving the next generation of automation in a space that has been underserved thus far by the technology industry.

For the inaugural list, 175 companies were nominated, and 50 were selected through a voting process that required the nomination of portfolio and non-portfolio companies. Nomination criteria included companies with a primary product focus on fintech, U.S. as a primary market, and Series A stage. Embedded fintech is defined as financial service platforms or financial service providers that integrate into commercial or financial service platforms.

Embedded fintech is a bright spot in today’s market, and it is exciting to see how companies are democratizing access to financial services through technology,” said Hans Tung, managing partner at GGV Capital. “We are excited for the continued development of the embedded fintech landscape and further creative innovations to come. Congratulations to the Embedded Fintech 50 honorees!

To see the complete list of the 50 honorees, visit embeddedfintech50.com.

To get started with our award-winning API platform, sign up for a free account at https://dashboard.tryfinch.com/signup.

Sam (he/him) brings over 10 years of experience building and leading post-sales organizations from customer success to account management. He was most recently a Senior Director of Customer Success at Mezmo where he tripled the team and contributed to a 3x increase in ARR in 3 years. During his tenure he was responsible for unlocking functional value and growth for customers across their journey with Mezmo. He oversaw Customer Success Management, Renewal Operations, and Solutions Architects.

I’ve been lucky to work at stellar companies at various stages that prioritized customer trust, from AdRoll to Segment to Mezmo. Finch fit that pattern and I’m excited to build best-practices and a world-class team so we can scale trust at this key inflection point for the company’s future. I look forward to working with an amazingly dedicated team and pushing the organization to deliver the best customer experience possible.

At Finch, Sam is focused on building and overseeing a world-class technical success and support team. For him, that means cultivating clear processes to handle customer issues and feedback, hiring and retaining people who deeply empathize with developers, and unlocking new insights into how customers use our product so we continue to build for evolving workflows.

Pairing his east coast grit with west coast creativity, Sam is a proud New Jerseyan, who has called San Francisco home for the past 15 years. In his free time, he loves playing and watching basketball, taking to the mountains, and traveling with his wife.

Interested in joining Sam at Finch? We’re hiring! Head over to our careers page to check out our open positions.

HR Tech

Workplace connectivity and digital employee experience (DEX) will be a major focus for organizations in the coming year, as many incorporate learnings from experiments with remote/hybrid budgets and policies since the beginning of the pandemic.

Verticalized intranet

• 57% of employees see no purpose in their company intranet. Company intranets developed in the ‘90s, mainly to broadcast company-wide information and display employee data. While these platforms have evolved to include knowledge bases, different industries utilize various communication tools to surface company insights to the right people. A vertical-specific approach to this problem that embeds into existing knowledge-sharing workflows can drive greater employee collaboration.

Workplace scenario analysis

• 44% of U.S. employees prefer a hybrid work model, compared to 51% of employers, but there’s no one size fits all approach. Many tools help companies with office management, remote collaboration, and hybrid work, but it’s still difficult to identify the implications of each model. A platform that connects to productivity tools and layers on assumptions like a financial model can offer scenarios for leadership to evaluate as their workplace structure evolves.

Employee resource group enablement