The world is moving towards more open data and interoperability between platforms. We have seen this movement in industries ranging from public health to government to financial services in multiple countries across the globe. Unleashing consumer banking data, for example, has created businesses and use cases that we couldn’t have foreseen ten years ago and continues to drive innovation in a diverse range of industries today. Governments around the world have taken note of this powerful growth engine and begun creating frameworks that ensure data isn’t siloed but must be accessible in a secure and permissioned manner. Last October the head of the Consumer Financial Protection Bureau unveiled his initial proposal for U.S. open banking regulations that would apply not only to banking data but also credit card and digital wallet data as well. Whether advanced by governments or private industry, we think more industries should also head in this direction towards a world of data interoperability.
One industry where we are in the early innings of data interoperability is employment data1. Payroll providers, HR platforms, and benefits systems offer an incredibly rich dataset of employee information spanning basic directory data to compensation information and even t-shirt size! This data is not easily accessible for businesses or consumers. There are 155 million employees in the US covered by 5,700 payroll providers and many other systems that store employee data. Building the connective tissue between existing systems and the myriad of companies that seek to consume and make this data useful and actionable should be a massive value unlock. This is why we led the seed round in Finch in 2020 and why we are excited to deepen our partnership with the Finch team now.
Finch’s mission is ‘To Make Employment Data Connected and Programmable’. To do this, Finch connects with over 200 employment providers covering nearly 90% of U.S. employers and standardizes access to their data in a secure and permissioned environment. Finch then makes this data accessible to their customers. The Finch team took a differentiated approach vs. others early on and decided to work mostly with customers serving b2b clients. Companies like Carta, Mainstreet, and Lane Health use Finch to help businesses automatically detect tax credits, seamlessly onboard new employees, provision employee spend and b2b SaaS applications, and automate payments operations of benefits administrators. What’s more exciting is that new use cases are emerging all the time. Working with b2b clients has also helped Finch build a valuable data asset from over 20K employers who give Finch access to over 1.5 million employee records (and growing rapidly)! Finch works with forward-looking payroll providers and HR systems like HiBob and BambooHR who understand the value of turning these platforms into a source of record that can have third party solutions built on top. Finch has seen such remarkable growth thus far because it creates value for all participants in the ecosystem: its customers (who use this data to innovate), the data providers (who get to compound value of their data and create stickier platforms), employers and most importantly employees (who get to be served better).
The company is just beginning. If act one is reading data from these employment platforms; act two is writing to them creating a bi-directional flow of information. One example of the usefulness of bi-directional capabilities can be found in Finch’s push into the benefits space to significantly improve manual processes and enable completely novel use cases. Today some employer admins have to download and format employee changes to their benefits (such as increasing a 401(k) contribution) and then upload them to their provider. The operations team at the benefits provider then has to log into the payroll platform and make the relevant deductions, tax calculations, and any employer contribution calculations. This can be a time-consuming and error-prone process. With Finch, this entire process can be handled automatically. As Finch continues to expand into payment operations, we should see efficiency gains and novel solutions created.
Aside from the opportunities we just laid out, we are also incredibly excited to deepen our partnership with Finch’s co-founders: Jeremy and Ansel. The duo complement each other very well, and we have been impressed with their pace of execution, clarity of vision, and passion for building employment infrastructure. We think they are the right team to make the future of employment connected and programmable, and we’re excited to see the products to be built as a result of greater access to this valuable data.
We’ve backed Finch since inception, and we are thrilled to deepen this partnership by co-leading the $40M Series B to help accelerate Finch’s journey toward creating an open employment data ecosystem!
1 St. Louis Federal Reserve and Dun & Bradstreet First Research