In the new-age world of human resources, incorporating financial services within HR platforms, termed as embedded finance is transforming into a game-changer. HR professionals in 2025 seek streamlined, data-backed solutions that not only automate payroll for employees but also streamline the employee experience overall. With growing demand for innovative HR technologies, integrating financial features within HR platforms is no longer a trend but a need.
65% of HR leaders view embedded finance as a crucial component of their future HR system strategies, as per PwC’s 2024 HR Technology Survey. These tools increase efficiency, lower administrative loads, and supply employees with access to financial products that can drive engagement and retention. Seven must-have embedded finance features that HR systems need to provide by 2025 are discussed in this article.
Finance Features in On-Demand Pay and Instant Payroll
One of the most dramatic changes in HR technology is the emergence of on-demand pay. Workers no longer have to wait until the end of the month to get paid. Instant payroll enables employees to access their accrued wages at any time, without having to wait for a standard pay period.
Indeed, TrueLayer’s 2023 Global Payroll Report revealed that 73% of workers prefer employers with on-demand access to their pay. This functionality increases financial flexibility and stress reduction for workers. Employers gain from higher worker satisfaction and lower turnover rates.
Amanda Stewart, Chief People Officer at a leading tech firm, notes, “On-demand pay is a revolutionary benefit for our employees. It empowers them with better financial control, and we see higher retention because of it.”
Integrated Employee Benefits Management
Worker benefits are an integral part of HR systems, but organizations continue to wrestle with handling them proficiently. Introducing financial services into HR systems, however, can enable the delivery of workforce with an easier experience as they deal with benefits like healthcare coverage, pensions, and stocks.
As per ADP’s 2024 Workforce Trends Report, 78% of workers indicate that they want HR systems that integrate benefits management into a single platform. Integrated benefits platforms allow HR managers to monitor employee choices, process changes in real-time, and streamline compliance reporting. For workers, a single view of their benefits helps them manage their financial futures more easily.
Finance Features in Well-being Programs
In 2025, HR systems will have to do more than salary and benefits. Providing financial wellness programs will be a major differentiator. These programs provide employees with access to tools and resources that assist them in managing personal finances, saving for retirement, or even saving for significant life events such as the purchase of a home or the elimination of debt.
Wells Fargo‘s 2023 Employee Financial Wellness Survey shows that 62% of employees wish to include financial education as a benefit package. By building these features directly into HR systems, employers can enhance their employees’ financial wellness, which can lead to enhanced productivity, decreased stress, and overall higher job satisfaction.
Clara Robinson, Senior HR Manager at a global retailer, shares, “Our financial wellness program is one of the most appreciated benefits we offer. It shows our employees we care about their well-being beyond just the paycheck.”
Computerized Taxation Calculations and Reporting
Tax compliance is an essential part of payroll administration. Baking in automated tax calculations and reporting into HR systems makes this an easier process for HR staff to maintain. By incorporating tools that automatically compute federal, state, and local tax rates, businesses can guarantee they are compliant and lower the risk of expensive mistakes.
A 2024 report by KPMG noted that 55% of businesses are looking to automate their tax reporting process. Embedded finance capabilities that undertake tax calculations free up time for HR departments and assist in minimizing administrative burdens. The tools also create required forms and reports, making HR’s other strategy-focused areas easier to direct attention to.
Savings and Investment Instruments
In 2025, providing workers with savings and investment opportunities within their HR platform will become critical. Using embedded finance capabilities, HR software can offer workers access to savings accounts, retirement savings, and even investment capabilities.
A Bankrate study in 2024 reported that 48% of employees are unable to save for retirement due to restricted access to financial products. By incorporating these features into HR platforms, employers can facilitate employees to plan and save for the future. This also provides a platform for HR teams to provide tailored financial guidance and resources within the platform itself.
David Lee, Head of HR Technology at a leading fintech firm, states, “Offering investment tools within our HR system has been incredibly beneficial. Employees are more engaged in their financial health, and we’ve seen increased participation in retirement plans.”
Embedded Lending Solutions
One of the new trends in embedded finance is the integration of lending facilities into HR systems. Whether for employee loans or payroll advances, this facility enables companies to extend financial assistance to employees during times of need. By providing lending facilities, organizations can assist workers with unforeseen expenses without resorting to external, usually high-interest, loan providers.
As per a 2024 survey conducted by FinTech Future, 49% of workers would welcome access to low-interest loans via their employers. HR platforms with lending features offer a financial safety net while fostering employee trust and loyalty.
Seamless Payment Integrations
Seamless payment integrations will be the norm in 2025. Contemporary HR systems will enable workers to pay directly for benefits, savings, or even salary loans from within the system. The integrations will also facilitate simple reimbursement procedures, minimizing friction and enhancing the employee experience.
A study by Deloitte indicates that 66% of workers desire quicker, more convenient payment terms. HR systems allowing employees to view, manage, and transfer their money will increase total satisfaction and engagement, and the HR process will become easier and more convenient.
Future-Proofing HR with Embedded Finance
As we come closer to the year 2025, embedding finance features within HR systems will be a must-have aspect of workforce management. Providing instant payroll, wellness programs, and embedded savings helps employee financial welfare and boosts operational effectiveness.
HR leaders must adopt these cutting-edge technologies to remain competitive, attract talent, and create a more engaged workforce. Looking ahead, organizations that invest in embedded finance now will be poised for success in the dynamic business world of tomorrow.
FAQs
1. What is embedded finance, and how does it benefit HR systems?
Embedded finance refers to the integration of financial services directly within non-financial platforms, such as HR systems. Offering on-demand pay, wellness tools, and automated tax helps HR systems deliver better financial resources and seamless experiences. For businesses, embedded finance reduces administrative work, boosts employee satisfaction, and helps attract and retain top talent.
2. How does instant payroll impact employee satisfaction?
Instant payroll allows employees to access their wages whenever they need them, instead of waiting for the traditional monthly pay cycle. This flexibility reduces financial stress and provides workers with more control over their finances.
3. What are financial wellness programs, and why should HR systems offer them?
Financial wellness programs are initiatives that help employees manage their finances, plan for retirement, or save for major life events like buying a home or paying off debt. Integrating these programs into HR systems enables employees to access resources like budgeting tools, savings plans, and financial education within the same platform where they manage their work-related activities.
4. Can HR systems with embedded finance help with tax reporting and compliance?
Yes, embedded finance features that automate tax calculations and reporting simplify the compliance process for HR departments. These systems automatically calculate tax deductions based on the employee’s location and earnings, ensuring accuracy and reducing the risk of errors.
5. How do savings and investment tools within HR systems benefit employees?
Savings and investment tools integrated into HR systems give employees easy access to financial products, such as retirement savings accounts or investment portfolios. These tools empower employees to plan and save for their future directly through their HR platform, improving overall financial wellness.
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