UK-based payroll provider PayCaptain has launched real-time payroll payments and savings accounts through a partnership with infrastructure provider ClearBank (Crowdfund Insider).
Before any of you call me out, I haven't used the words 'embedded finance' for this use case. Why is that? A payroll provider isn't the usual kind of non-financial brand, like a retailer or vertical SaaS, as payroll is closely related to payments and, thus, financial services. On the other hand, payroll software isn't really a core offering from most banks, especially when we focus on the 'software' aspect. So I hope you agree with me that there's some relevance for the embedded finance ecosystem, even if it sits in a grey zone.
What really caught my eye here is the savings account feature. Real-time payroll is great, but the savings account is where things get interesting. Employees at companies using PayCaptain can now open savings accounts with competitive interest rates directly through the platform. It reminds me of what Gusto is doing in the US with their embedded investment solution through pension savings.
The potential here is significant. A savings account embedded in payroll software could reach customers that financial institutions struggle to access on their own. The key question is integration. How well is this embedded into the actual customer journey? If PayCaptain gets this right, I could see other players jumping in. HR software companies (e.g. Personio from Germany) or employee of record service providers (e.g., Deel from the US) could follow suit and start adding similar financial features to their platforms. It's a space worth watching.
