API

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 What’s more, 56% of HR pros report finding incorrect or outdated information in employee data at least weekly—often a result of having to manually enter and move data between systems of record.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.

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.

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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. 

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. 

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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.

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.

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'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.

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.

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 it 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.

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.

3 trends driving fragmentation in the SMB payroll market

To best serve their SMB customers, technology-first companies are looking to leverage the power of payroll and HR data—but with nearly 6K payroll systems on the market, that can mean building out many tedious integrations. Fortunately, there’s a better way.

After the unprecedented challenges wrought by the global pandemic, many SMBs are bouncing back—and many others are first opening their doors—to a dramatically different landscape.

Most notable is the seismic shift in focus from productivity to people as employers look to recruit and retain talent amid the Great Resignation, strengthen their work culture and benefits, and foster better relationships with their employees. For innovative companies serving SMBs, meeting these needs requires careful analysis and considerable support from the data tied up in SMBs’ payroll systems.

Unfortunately, comprehensive payroll data is getting harder and harder to access. There are almost 6,000 payroll providers in the U.S. alone, and recent trends are causing that number to grow.

For SMB-focused companies to keep up, they need to understand what the current payroll market looks like, which factors are driving diversification, and how using APIs that span multiple systems can help them access more data, build smarter and faster solutions for SMB customers, and ultimately boost their business. In this post, we break it all down.

A heavily fragmented market

The latest data indicates there are approximately 5,700 payroll providers in the U.S., with a combined annual revenue of around $48 billion.

The top three payroll providers—Intuit Quickbooks, ADP Run, and Paycheck Flex—cover almost half (45%) of SMB employers nationwide. But extending to the top 10 only increases that coverage to 55%. For comparison, the top 10 accounting systems collectively cover 95% of the SMB market.

What’s more, beyond the top three, all other payroll providers each have less than 4% of the total market share, with coverage quickly tapering off. A number of these are newer platforms—like Gusto, Zenefits, and Rippling—that have appeared over the last decade to satisfy evolving SMB needs and a growing demand for self-serve products with transparent pricing.

That means we can expect the industry to grow even more fractured in the coming years, as innovators continue to emerge and respond to changing market conditions.

In particular, there are three trends to watch that are spurring fragmentation in the U.S. payroll market. Let’s take a closer look at each.

1. SMBs typically pick a payroll provider based on their demographics.

A business’s payroll system plays a critical role in its operations, and switching platforms comes at a high cost—so picking the right provider is essential. Still, SMBs often select a payroll provider based solely on demographics, including factors like:

• Number of employees: As an organization grows, it encounters a broader and more complex range of compliance requirements and payroll schedules.
• Industry: Different industries hire different types of workers (e.g., seasonal, temp, salaried, hourly, apprentice, and interns), each with its own HR workflows.

Only secondarily will SMBs look to the core capabilities and key features of the platform itself—such as options for customization, time tracking, benefits, insurance, and customer support. That means SMBs may not look for the best provider overall, but the best fit for their business.

2. World events are reshaping SMB purchasing decisions.

External circumstances—above all, the lingering effects of the pandemic—also impact how SMBs think about payroll and the support they need from their payroll providers.

Some of the most pressing considerations include:

• The competitive labor market, which has made it difficult for SMB employers to attract and keep high-performing employees. Some providers offer a suite of recruiting and retention tools like pay analytics and talent sourcing services to help hire in a tough environment.
• Hybrid work models, which are becoming common, especially in white-collar industries where being on-site is less essential to productivity. Some payroll providers offer a range of remote workforce management solutions to onboard and oversee dispersed employees.
• New regulations that are emerging to protect employee and contractor rights and bolster workplace safety requirements. Some payroll providers build compliance tools into their platforms, so employers can easily adapt to new rules and avoid hefty penalties.

Industries that have their own regulatory bodies and in-person staffing needs—like food service, hospitality, construction, and agriculture—are particularly vulnerable to shifting conditions and face an even more complex decision when choosing a provider to accom modate them.

3. White-labeled and embedded solutions are powering new, tech-forward platforms.

White-labeled and embedded solutions allow other companies to build payroll capabilities into their existing systems—essentially enabling any platform to become a payroll provider.

• White-labeled platforms like iSolved and PrismHR allow HR systems, service bureaus, and professional employment organizations (PEOs) to keep their current branding and service models while providing the underlying infrastructure to power a range of human capital management (HCM) solutions.
• Embedded payroll platforms—such as Gusto, Check, Zeal, and Salsa—use an API to embed a payroll application into an existing product. While still nascent, this market has the potential to expand across vertical SaaS, the gig economy, HR tech, and fintech.

As this technology advances, it’s becoming easier for new companies to add payroll to their list of services and capabilities—and harder for a single provider to win a market majority.

The problem with payroll fragmentation

Market fragmentation means businesses serving SMBs have to integrate and coordinate with multiple payroll providers to cover a sufficient swath of their customers. It’s hard enough to build and maintain an integration with one platform—let alone hundreds or thousands.

Integrating with the top one, three, or ten payroll providers might allow a company to cover half of their customer base. But to efficiently serve the other half—or tap into new regions and industries—would require many incremental builds, draining time and resources.

To tackle this coverage issue, many fintechs, benefits platforms, and other B2B companies are turning to digital solutions that take a more comprehensive approach to payroll data and roll hundreds of payroll integrations into a single platform. That’s where Finch comes in.

How Finch can help

Finch’s universal API connects to an extensive network of payroll systems, and we are continually adding new integrations. Right now, we have compatibility with over 150 systems, and that number is always growing.

That means, with Finch, product teams designing solutions for SMBs don’t have to worry about building any integrations in house or reconciling inconsistent data outputs from different systems—they get secure, standardized, and effortlessly scalable access to the fragmented payroll market right out of the box.

To start building with Finch, click or tap “Get API keys” on our homepage.

We’re excited to announce our latest whitepaper, Build vs. Buy to address the question:

Should I build employment integrations in-house or outsource them?

If you’re asking yourself this question, you already know that data connectivity has the power to transform every industry in the world—and few businesses are in the dark when it comes to understanding the importance of breaking down the data silos currently impeding their productivity and innovation. In turn, B2B applications are hurrying to bridge the chasms between the systems in their customers’ tech stack. Their goal? To create superior user experiences and unlock automation and insights that set them apart from their competitors.

Increasingly, the basis of those bridges is API integrations, and one of the most important datasets to access is housed in employment systems like HRIS and payroll. Determining how to approach employment system integrations is a critical decision for any business, and different business scenarios dictate different considerations as you explore your integration options.

Maybe you’re at one of the following stages:

• Launch — You are starting from ground zero and need to decide whether to buy or build in the first place.
• Scale — You already built a few key integrations in-house and are trying to determine if outsourcing remaining integrations and their maintenance would be a more prudent next move.
• Status Quo — You already have an adequate data sync solution, fueled by a flat-file feed and hodgepodge of APIs, that meets your basic needs and are wondering why you should entertain the idea of outsourcing integrations at all. Or perhaps you even recognize that digital transformation is ultimately necessary but wonder if it’s an initiative you can keep internal.

In Finch’s latest whitepaper, Build vs. Buy we explore all of the considerations at each stage and more to help you arrive at the best integration approach for your B2B application.

Team up with 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 API offers read-and-write access and abstracts away inconsistencies across systems for optimal usability no matter the source.

Finch is quickly becoming the API of choice for employment system integrations because we are:

• Developer-friendly: We focus on developers and empower them to create world-class solutions.
• Reliable: Our API does the best job of interacting with and maintaining connectivity with employment systems.
• Secure: Finch is a pass-through system, and is SOC2 Type 2, CCPA, and GDPR compliant.
• Efficient: Finch connects you with 150+ HRIS and payroll systems through one API, 4x more than any other platform.
• Enterprise-ready: Our technology is built for large-scale synchronization with thousands of employers.

Reach out to our team to explore ways to access employment data with our unified API by contacting us here.

In our latest whitepaper, we explore SFTP vs API integrations and discuss which is right for your business.

It’s no secret that data connectivity has changed the way businesses operate.  It seems that every week, there is a new app that plugs into the systems businesses use every day. These innovations have changed the game for users, making interoperability between systems a need-to-have. For software providers, flexible and plentiful integrations are more essential than ever. 

Why Employment Data Transfer and Integration Methods Matter

Employee and HR data has traditionally been one of most challenging use cases for data transfer. Employment data, the bulk of which is usually stored in HRIS and payroll systems, must be handled carefully and securely in order to abide by compliance rules and regulations protecting the collection, storage, and usage of sensitive, personal data. 

So what is considered employment data? Employment data is any information about a company and the individuals within it. More specifically information about the company itself (EIN, legal name, HQ address), the company org chart (employee count, managers, departments), or about individuals (preferred name, contact information, employment status, income and pay history, benefits data, etc.).

Businesses rely on employment data to manage their workforce effectively. It’s essential for them to keep this data up-to-date and organized throughout all of the systems they use each day. Any software providers that want to sell to businesses must think strategically about how to collect this employment data from various sources of truth in an organization. While the majority of this data is housed in HRIS and payroll systems, there are thousands of potential systems to consider. There is also no standard way of categorizing or sharing data between systems, which means the transfer of this data is usually (at least partially) manual.

B2B applications looking to leverage the power of this employment data often consider two integration approaches—SFTP vs API. While SFTP has been more ubiquitous historically, an increasing number of platforms are looking to APIs for their scalability, security, and speed.

SFTP vs API vs Integration: Which is Right for You?

SFTP and API are two possible methods of integration between systems. Before diving into the benefits of an SFTP integration vs an API integration, let’s quickly define each method.

What is SFTP? 

In order to understand SFTP, you need to understand what FTP is. FTP stands for a file transfer protocol, which supports the transfer of files between a client and a server. SFTP, or Secure File Transfer Protocol, is a process that uses shell encryption to allow businesses to send and receive sensitive information such as employment data in confidence. SFTP emerged in 1997 as a way of transferring data between parties securely. It requires data to be updated manually (via flat file, CSV, JSON, etc.), encoded, then transmitted through a secure channel between two platforms. You receive an email notification when the file is ready to download. 

Because an SFTP integration is convenient for processing many files quickly, it’s often used for bulk file transfers. It also allows businesses to send and receive a wide variety of files. SFTP integrations only need a single connection to initiate the file transfer, and an internet connection is unnecessary.

However, SFTP has its downsides. First, it relies on manual data entry, which must be constantly validated to avoid errors. This is a tedious process that wastes time and resources. Additionally, SFTP doesn’t allow for the transfer of data in real time. The moment a file is uploaded to the server, it is theoretically out of date. Depending on the use case, this can limit the usefulness of data sharing altogether. If accuracy, timeliness, and speed are essential, SFTP falls short. 

What is an API ? 

APIs, or Application Programming Interfaces, are ways for two applications to communicate with each other. APIs standardize a communication pathway between software to exchange data and other information regardless of the underlying programming languages they are built on. APIs make it easy to push and request data instantly, providing real-time visibility into data shared between systems. Once an API is implemented, there is no manual download, restructuring, or error checking that needs to be done. If implemented correctly, the data flows seamlessly between systems.

The Downsides of SFTP vs API Integrations

So why API vs SFTP for the transfer of data? We outline just a few reasons below. For the full explanation, make sure to download our whitepaper. 

SFTPs and APIs both make it possible to transfer data between systems securely, however, APIs have a few key strengths over SFTP, especially when used to transfer employment data. Here are 3 reasons to consider API vs SFTP:

1. Improve data security

Even SFTP lacks security controls to handle today’s cyber threats. Recent research reveals that more than 400 million files from FTP servers are publicly available online, and the average cost per lost or stolen record is $146 USD. When files are exposed, SFTP does not log security violations or authenticate users – basic capabilities you need to help detect and stop breaches. Encryption is also an afterthought requiring extra steps and IT expertise, making it difficult, expensive and time-consuming to send files safely.

2. Gain real-time access to employment data

With APIs, you can get instant access to all the information you need. A live and continuous connection means that your application can constantly refresh the sync, meaning that you will always be working with the most recent version of your data. This way different teams within your company can collaborate effectively since they have access to the same set of information.

3. Improve the customer experience and reduce errors

One of the key downsides of SFTP is the need for employees to manage sensitive data manually. When downloading, updating, and re-uploading data files, there are many opportunities for errors to be introduced to the system. SFTP then allows crucial issues to perpetuate. When and if errors are found, they require several calls and emails with multiple parties to correct. This is not only frustrating for customers, it drains your HR administrators time and resources, and introduces errors that can wreak havoc on your systems.

Which Method is Best for You?

Download our SFTP vs API whitepaper for details on which method is best for you based on your unique business needs.

In it, you’ll find:

• The differences between SFTP integrations and API integrations
• Pros and cons of implementing each
• Ideal scenarios for implementing SFTP integrations
• Examples of innovative use cases powered by APIs

How Finch can help

If you’re interested in exploring an API integration for your application, Finch’s dynamic, unified API offers read-and-write access and abstracts away inconsistencies across systems for optimal usability no matter the source. We also handle routine maintenance, bug fixes, and the hard work of keeping up to date with the latest HRIS and payroll platforms, allowing your engineering team to focus on developing the differentiating features that set your application apart from the competition.

Finch is the API of choice for employment system integrations because we are:

• Comprehensive: Finch integrates with over 200 employment systems (more than 4x the competition)
• Developer-friendly: We focus on developers and empower them to create world-class solutions.
• Reliable: The Finch API does the best job of interacting with and maintaining connectivity with employment systems.
• Secure: Finch is a pass-through system, and is SOC2 Type 2, CCPA, and GDPR compliant.
• Efficient: Finch connects you with 180+ HRIS and payroll systems through one API—4x more than any other platform.
• Enterprise-ready: Our technology is built for large-scale synchronization with thousands of businesses.

Register for a test account now to explore innovative ways to leverage employment data with Finch.