FinTech + HRTech: Building A Better Employee App

Overview


Covid-19 has profoundly changed the workplace in two fundamental ways: remote or hybrid working arrangements are likely to predominate in the years to come and employees, more than ever, need to feel a connection with their employer and fellow employees to be happy, financially secure and productive in what they do.


These two employment dynamics are laying fertile ground for a much faster uptake of mobile-first employee communication apps than before the pandemic. These HRTech tools help companies foster employee engagement, communicate with their multi-generational employee base, build on and sustain their corporate culture and connect with peers anytime, anywhere.


Their power lies in the fact that companies can engage with their employees and deliver information on the one instrument that is ubiquitous in society today – mobile phones. According to the Pew Research Center, 92% of Millennials, 85% of Gen-Xers and 67% of Baby Boomer's smartphones. CareerBuilder found that of the 8 in 10 workers that have mobile phones, 82% of workers keep them within eye contact at work.

Companies that have recognised that they need to communicate with their employees differently – even more so in a post-pandemic world – are thus putting a lot of effort into building employee apps to interact with their multi-generational workforces distributed across many countries and time zones. These apps also enable companies to connect with their blue-collar workers who don’t sit at a desk and work on a desktop but are as important as office-bound workers to the company’s success.


The Vi2Go app, developed by Viessman, which is an international manufacturer of heating, industrial, and refrigeration systems, is an impressive example of what can be achieved with an employee app. Given the nature of its business, employees are located around the world and there is “an enormous” number of non-desk workers. The app was launched in February 2016 and within two years had about 7200 users creating more than 3000 posts a year – 12 to 15 posts a day.


On the importance of the app in the business, Viessmann Head of Digital Communications Projects Carsten Lucaßen says: “We can no longer do without the app. It’s become the main hub for all internal communications, far surpassing our intranet use”.


But employee apps’ capabilities extend far further than as a means of employers communicating internally with employees. They allow employees to chat with each other, share content, recognise employees with digital awards, manage travel arrangements, claims and reimbursements, integrate timesheets, manage leave requirements, and provide static company information, like phone directories and safety information.


What is often missed in such apps, however, is the financial functionalities that could be so useful and of such value to employees. These include company-branded cards, personal finance tools, payday loans, 401k savings and be embedded in employee apps, bringing HRTech and FinTech innovation together. This is what Uber and other ground-breaking companies provide to their workers, making their financial lives richer and more convenient while maintaining the company engagement.


Furthermore, the financial tools can uplift and entrench the adoption of a company’s corporate values among the employees. In addition to instilling the desired corporate culture, companies can also rely on employee apps to encourage employees to make decisions that have a positive impact on the environment. For instance, companies’ carbon footprints can be effectively traced using the behavioral data of their personnel, which could also lay the foundation for aligning corporate incentives with company values. Cloverly is an app that allows companies to calculate and offset their activities and choices in real-time. It monitors hotel reservations, credit card transactions and freight bookings and calculates an employee’s carbon emissions and offsets because of new types of activities.


Employee FinTech apps

Some of the many solutions that are focused on enhancing employees’ financial situations that have gained popularity in the recent years include:


1. Payday loans

FinTechs are disrupting the traditional pay-day loan industry, with short-term lending solutions that allow sub-prime borrowers who are strapped for cash and have little alternative but to turn to lenders who charge sky-high fees or interest rates when they borrow money against their salary.


FinTech startups are set up to extend pay-day loans at a far lower cost to the borrower, adding financial literacy to help the borrower avoid getting into a debt trap. According to a Crunchbase article, Beyond Payday Loans: More Startups and VCs Bank on Subprime Lending Alternatives, lending fees can be as high as $50 on a $100 two week loan, whereas payday loans extended by FinTech companies are extended at no cost to the customer or less than $5.


2. Retirement savings

FinTechs, like Lendtable, which describes itself as “specialising in providing income-constrained individuals with wealth-building cash advances”, offers employees advances on their 401k contributions. The employee is expected to pay back the money and Lendtable also takes a percentage of the money owed from the employer’s contribution as repayment for extending the cash advance to the employee.


3. Personal finance

The number of FinTechs offering personal finance services is growing exponentially. These start-ups are offering individuals a wide range of solutions including banking and payments, investment and wealth management, insurance, currency exchange, and lending and financing.


Many of these services are currently being provided to employees and contractors and there is clearly a high demand for them. However, corporates could gain an even greater advantage by embedding these services into their employee apps and, in so doing, show that they are responding to their employees’ needs and interests. This could be an effective way to improve employee retention, boost performance levels and take corporate responsibility to the next level.


Augmenting HRTech with Embedded Finance

Financial services regulatory frameworks and the evolution in financial technology allows non-bank companies to offer financial services, such as bank accounts, deposits, lending and even card programs embedded in employee apps. Many are currently offering these services to their clients and could easily extend these to their employees too.

At Velmie we facilitate embedded finance by offering:

  • Modular and scalable software

  • Vendor-agnostic systems that enable integration with any bank or a service provider

  • An ecosystem of partner banks and service companies

  • End-to-end delivery and support


Embedded finance has huge potential as a value-added service that employers can provide their employees. By streamlining their salaries, beefing up there compensation and benefits, recognising them for their exceptional performance, simplifying the process of claiming travel expenses and extending much-needed loans, companies can foster loyalty, build a financially-healthy and stable employee base and improve retention at a time when labour markets are extremely tight and skilled workers hard to find.