Pinwheel’s partnership with payroll provider Workday company OneSource Virtual (OSV) ushers payroll into the same convenience levels as other areas of finance. It will also help banks achieve primacy with their customers.
Partnerships lead Brian Karimi-Pashaki said the move is a response to the growing consumer demand for more transparency, control and portability over their relationships. It lets customers quickly move their money to the Pinwheel customer with the best rates and products, including American Express, Citizens and Cash App.
Banks know that connectivity brings increased primacy. Karimi-Pashaki said the account where customers deposit money is where they’re most likely to do many other transactions. Other accounts are more single-specific.
How the payroll integration works
Banks and payroll providers capture unique identifiers like social security, telephone numbers, and zip codes. Pinwheel automatically encrypts those data points and matches them between the banks and payroll providers. That eliminates the common drop-off point of customers manually retrieving that data.
Once an account is identified, end users complete a quick, multi-factor identity verification on their mobile, eliminating the log-in chokepoint. Users can then configure their direct deposit allocation preferences. Between eliminating manual information retrieval and login process, Pinwheel estimates it eliminates roughly half of the customer journey drop-off points while doubling conversion rates.
Why it’s important
Karimi-Pashaki said the first integration agreements between apps and large banks were an industry turning point. It showed that banks deemed consumer accessibility a priority.
“It’s really important that I’m able to get my debit and credit card transactions into another app or service because that’s my data,” Karimi-Pashaki said. “And they should be portable and usable by me in any way I want because it’s my data. This is the start of us seeing that happen in payroll.”
There are a couple of reasons why bringing this portability to payroll has taken this long. Karimi-Pashaki said there are other ways for underwriters to get data from secondary markets. That’s not the case with banking.
Credit the fintechs, too. They’ve created an assumption of convenience where people expect to conveniently complete direct depositing and account switching while getting immediate access to wages. As more use cases arise, so do consumer demands.
Karimi-Pashaki said OSV was a perfect choice. He said they are a young company that’s grabbed 10% of ADP’s market share in just a few years. OSV is cloud-native, leaner and smaller. The agreement provides a window to up to 20 million Workday users.
“Their executive team got that deposit switching will be a standard feature at every bank in America,” Karimi-Pashaki said.
Helping the underserved
This is also an essential step for underserved groups. Karimi-Pashaki said they are the ones most affected by fees. Financial inducements to switch providers will most appeal to them.
“People at the higher end of the income spectrum stay with their bank,” Karimi-Pashaki said. “Not because they’re in love with their bank, but because it’s too complicated. The larger banks and ones that rely on older tech stacks and fees will have to improve their user experiences to retain them. Their rates are going to have to improve to retain us.”
Recent government moves have made it easier to switch banks. Karimi-Pashaki said that providers must fight to attract and retain customers. That’s good for them.
Increased consumer awareness about owning and controlling personal data is empowering. Consumers must be able to grant and revoke access to their data whenever they want.
“In the secondary market, where all of our income data is bought and sold between companies, there’s no consent in the first instance, so there can be no revoking the consent in the second. That’s a huge flaw in the system.
“We think that over time, that whole market of being able to sell data that relates to me without my consent will hopefully end; everything will be consent-based, and you’ll have to re-up on that consent. And you’ll be able to withdraw that consent once the data sharing you’ve previously allowed no longer serves you.”
More agreements, earned-wage access trends for 2024
As he looks into 2024, one certainty for Karimi-Pashaki is more deals with payroll companies. He also expects earned-wage access to gain momentum. That will bring additional innovation.
“You’ll see payroll companies act more and more like financial services companies,” he predicted. “What Americans don’t realize is that payroll companies move trillions of dollars of money through our ecosystem. They’re ripe for all the same fintech innovations you see in the banking market.
“We’ll also probably see more wallets. Many of these payroll companies have their wallet, where you can get paid early by using it, and that whole ecosystem of money is kept internal to them. You see a lot of tech companies doing that, too. So we think that will probably continue, and you’ll see payroll companies act more and more like financial services companies.”
Tony is a long-time contributor in the fintech and alt-fi spaces. A two-time LendIt Journalist of the Year nominee and winner in 2018, Tony has written more than 2,000 original articles on the blockchain, peer-to-peer lending, crowdfunding, and emerging technologies over the past seven years. He has hosted panels at LendIt, the CfPA Summit, and DECENT's Unchained, a blockchain exposition in Hong Kong. Email Tony here.