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When HR tech meets fintech: 5 exciting prospects

The challenges HR teams face have already been extensively documented. Attractive rewards, the war for talent and poor employee retention being just some of them. “There’s no panacea to these challenges”, says Nils De Bremaeker, CFO at WorxInvest. “But help is on the way from an unexpected angle: fintech can boost the added value of HR tech.”

    On-demand payroll

    “With inflation rates skyrocketing in many countries, an increasing number of workers are living from payday to payday. And for most people, that day only comes once a month. What if there was a solution to pay employees on demand, so they can access their hard-earned cash whenever they need it? Well, there is.”

    “Instead of simply logging hours worked, time-tracking tech can facilitate a range of financial services for employees. Obviously, a service like instant pay implies fiscal challenges as a month’s pay pushes workers into a higher tax bracket than, for example, a three-day’s pay. That’s where a good payroll services provider comes in. It can accurately determine tax withholding and salary calculation, while the money is wired to a prepaid card – linked to a bank or not. For many workers, this could greatly benefit their financial wellbeing – in particular people who are stuck in gig jobs or short-term temp work.”

      Next-level flexible rewards

      “The idea of a flexible reward system is that you offer employees the chance to spend a fixed part of their salary on benefits they choose, such as additional vacation days, insurances, mobility options, electronics and wellbeing programs. An excellent way to offer more pay value without extra costs – a win-win deal. But you could go much further.”

      “Combined with fintech, a flexible reward system could enter a whole new level. To illustrate, you could offer part of the salary in separate digital coins, which are not or only minimally taxed. These coins can then be used to buy local products, healthy food, and other goods with a certain purpose. Mind you, this concept hasn’t been rolled out yet, but if governments would be on board, plenty of opportunities arise.”

        Employee gateway for life and work

        “There’s quite literally an app for everything. But now, more and more organisations try to bundle different app functionalities on a single platform. Banks are a telling example as many banking apps go beyond basic financial transactions. You can also use them to watch football, or to rent a city bicycle. HR can learn from this.”

        “SD Worx is taking the lead with mysdworx, a platform on which not only HR services are offered, but also third-party life services. After all, life and work are heavily intertwined nowadays. More concretely, this gateway – which is under construction – will allow employees to take out insurances, manage their pension savings, subscribe to health programs, buy rail season tickets, and much more. This way, fintech solutions become a part of HR.”

          Interest-free or cheap employee loans

          “Helping your employees get through difficult financial situations by lending them money on more favourable terms than a bank and lining up repayment dates with pay dates can mean a big difference for them. Simply put, you’ll ease their overall stress level. Moreover, financially committed workers are less likely to leave. And fintech can sort out tax issues for you.”

          “Employee loans with low or even no interest are liable to tax. All calculations regarding this taxable benefit may be handled through fintech solutions. You’ll also be able to check, for example, how many outstanding loans there are and if repayment conditions are met. This makes it hassle free for you to manage and follow up on salary-backed employee loans.”

            Share purchase plans

            “An employee stock purchase plan – or ESPP – is a company-run program in which participating employees can purchase company stock at a discounted price. This is one of the few benefits which can easily be made available to all your employees, no matter which department or country they’re in. Again, fintech helps with the administrative side.”

            “Although ESPPs have many upsides, including higher employee engagement and stronger employer branding, it’s easy to become a victim of your own success. What do you do when hundreds of workers sign up for a varying number of stocks? Two options: drown in the overwhelming administration or rely on a digital tool. Well, SD Worx is developing such a fintech-based tool to give organisations peace of mind.”

              Didn’t make our list of exciting prospects: crypto payments and decentralised finance

              “Even though the concept of smart contracts is promising, the whole concept of crypto salaries and decentralised finance seems like a stretch today. First, this idea comes with many complex legal constraints as crypto is no official currency and has very limited to no regulation. Second, the currencies, even so-called stable coins, have recently proven to be too volatile. Third, although blockchain is very secure, it

              remains a cumbersome technology which is not always the most cost-effective and flexible to operate. Lastly, places where you can pay with crypto currencies are limited. So, don’t expect this to become reality anytime soon.”

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                  Nils De Bremaeker

                  CFO Worxinvest