At first glance, it may seem odd to suggest that payroll firms, the platforms that process your salary and that you’ve likely never heard of, are leading the evolution of embedded finance. However, recently, these firms have evolved beyond their traditional role, and today, many are integrating innovative banking services directly into their platforms. This shift is reshaping how businesses support their employees’ financial well-being and redefining the value proposition of payroll providers.  

But how and why? 

In this article, I’ll examine how payroll firms are helping clients with new banking features, some of the leading firms in this sector, and what these changes mean for businesses and their teams.

An emergency savings buffer can provide a safety net when unexpected expenses arise. Having a few hundred pounds available if the boiler breaks or the roof leaks can make a huge difference.  

According to research by Finder, 23% of UK adults have £200 or less in savings, while 1 in 6, equating to around 8.4 million people, have no savings. Without that safety net, individuals can turn to costly solutions such as loans, overdrafts, or credit cards for emergencies.  

This buffer can improve employee financial well-being. When people have a pot of savings they can draw on, it can reduce levels of problem debt and anxiety and build resilience and confidence.  

One potential way to deliver this is for employers to support employees through workplace savings schemes. These schemes can be delivered through two models: 

• An ‘opt-in’ model, where employees choose to save via payroll.
• An ‘opt-out’ model, where employees are automatically enrolled in a workplace savings scheme but can choose to leave. 

The potential of the workplace savings model was highlighted by a UK Financial Conduct Authority statement. It sought to provide employers, employee benefit platforms, payroll providers and savings providers clarity and reassurance that workplace savings schemes can be successfully set up and implemented to comply with current rules and legislation. 

Payroll has always been a critical business function, but has historically focussed on calculating wages, deducting taxes, and ensuring timely payments. However, the rise of embedded finance, BaaS and fintech partnerships, and a growing focus on employee financial wellness have led payroll companies to expand their offerings.  

Today, innovative payroll platforms and adjacent firms are helping employees get paid, save, budget, and build financial security by partnering with credit unions and fintechs to deliver payroll-deducted savings.  

There are multiple reasons why these firms have looked to extend their platforms through the addition of embedded financial services:  

• Financial well-being: Employers increasingly know that financial stress impacts productivity and retention. Payroll-integrated savings accounts make it easier for employees to build emergency funds.
• Convenience: Employees can automate savings directly from their pay, removing barriers and encouraging healthy financial habits.
• Competitive differentiation: Payroll providers offering integrated banking features stand out in a crowded market, attracting employers and employees. 

However, even when there is a good workplace savings offer, take-up is usually low if employees need to sign up to save actively. Most people say they need and want to save more, but few set up workplace savings accounts. Inertia, a lack of time and headspace, and low confidence all get in the way, as our research with YouGov shows. 

In the UK, Suez, a recycling and recovery firm, partnered with credit union TransaveUK to implement a trial payroll autosave scheme. New Suez employees are automatically enrolled to have a portion of their pay deposited into a TransaveUK savings account unless they opt out. This trial dramatically increased participation rates and average savings balances among employees and reduced the effort required to build a financial cushion. 

This isn’t conceptual, with numerous innovators helping employers to offer embedded savings accounts.  

Notable examples include:  

• PayCaptain: Payroll-integrated savings pots  

PayCaptain has emerged as a leader in payroll innovation by embedding savings features directly into its platform. Employees can set aside a portion of their net pay for automatic transfer into a savings account before they receive their salary. If an employee doesn’t have a savings account, PayCaptain allows them to set up a “savings pot” through its mobile app. These pots can be earmarked for specific goals, such as holidays or emergency funds, and are accessible instantly with no charges.  

Key features:  

• Automated, “set and forget” savings deductions from payroll 
• SmartPay AI-powered suggestions to help employees budget and save 
• Visual savings pots for goal-based saving 
• Instant access to funds via the app or branded debit cards   

Impact: Employees report that the tool makes saving effortless, reduces reliance on credit, and improves overall financial well-being. 

• FAIRshare Payroll Savings: Credit union partnership   

FAIRshare Credit Union offers a payroll savings scheme as a free employee benefit. Employers partner with FAIRshare to allow staff to save directly from their pay into a credit union savings account. The service is simple: employees choose an amount to save each payday, and after three months of regular saving, they become eligible for affordable loans from the credit union.  

Key features:  

• Regular, manageable savings deducted from payroll 
• Access to affordable credit union loans 
• “Save as you borrow” feature, combining loan repayment with savings accumulation  

Impact: Employees can build savings passively, creating a financial safety net for emergencies or special occasions. 

• Stream (formerly Wagestream): Automating employee saving 

Stream began as a payroll firm in 2018 and has since evolved into an employee benefits platform. It offers Workplace Savings, enabling employees to save automatically from each pay cycle. Over half a million UK workers are currently using stream’s savings product to save for the first time. 

Key features:  

• Enrols employees by default, but they can choose to stop contributions at any time
• Savings can be activated in as few as three taps, lowering the barriers to saving
• The user can set a savings goal and a deadline. Wagestream then calculates the monthly contribution and automatically moves it to the user's savings pot on payday 

Impact: Employees can build savings with the flexibility to opt out if needs change, while accessing tools supporting enhanced financial education, resilience and well-being. 

There is evidence that poor financial health affects employees’ physical, mental and social well-being, which can cause reduced effectiveness, productivity and absence from the workplace. PwC has estimated that there’s a 4% loss in productivity for every £1 million of payroll due to poor employee financial well-being.  

Employers have an opportunity to close the gap between what employees say they need and what is traditionally offered in a benefits package. According to MetLife, 40% of employees said that they would move to a company that prioritises their financial well-being, while 59% of UK employees say financial well-being support is the area where they want the most help from their employer over the next three years.  

The platforms referenced above, and many others, use automation to make saving easy, routine, and accessible for employees. The aim is to boost participation and improve financial well-being across the workforce. The trend is growing, with traditional payroll providers and fintechs embracing partnerships to deliver these integrated financial wellness features. 

For example, accounting platforms with payroll solutions such as Sage and Xero use open banking APIs to connect payroll data with bank accounts, simplifying reconciliation and automating payment workflows. While not directly offering savings accounts, these integrations pave the way for future embedded banking and finance features. 

Integrating embedded finance into payroll is set to accelerate, offering savings accounts, loans, investment products, and real-time financial insights. That requires innovative platforms and providers to embrace embedded finance's opportunities and empower employees to take control of their financial future. 

It also requires a partner with a proven track record, regulatory permissions, and controls to deliver a safe, secure product. ClearBank provides this through our Embedded Banking proposition, which includes embedded accounts, both current accounts and savings accounts, and embedded payments. 

By building on top of a regulated bank’s proven infrastructure, payroll providers can deliver compliant services and the associated features, such as protection on eligible deposits, without incurring the substantial cost of applying for a bank licence. ClearBank also allows its clients to manage the customer-facing aspects, enabling them to oversee and interact with their customer base in an approach consistent with their existing user and brand experience. 

We’re also proven to deliver significant return on investment (ROI) to our partners according to leading consultancy firm Forrester and its Total Economic Impact (TEI) model, which considered the various factors that contribute to an ROI. You can read its in-depth assessment here.