As anyone who’s ever onboarded at a new job knows, payroll systems are the Wild West of financial services. It seems everyone has their own processes and finding a way to set up direct deposit can be tedious and intimidating to the point of stasis. The problem is: getting the right amount of salary to the right account is an essential part of wealth management. If your salary sits in a low-interest or no-interest account, it instantly begins losing value.
That’s where Atomic comes in. The payroll API startup has created the infrastructure that allows users to select their employer, verify their identity, as well as instantly set up direct deposits to one or even multiple accounts. It’s an API that’s finally brought the ancient payroll systems into the 21st century. At Unifimoney, we’re excited to partner with Atomic to make sure you can maximize your salary’s potential simply and seamlessly.
We gave Atomic’s Head of Markets Lindsay Davis a call to learn more about how innovative payroll APIs give consumers new ways to interact with their money. Davis is an insider who’s spent half a decade bringing fintech categories to market, advising Fortune 500 financial institutions, and working with early-stage entrepreneurs, so we also wanted to know where she saw personal finance going these next few years.
The spark for Atomic actually came for our cofounders a couple years back. They'd previously cofounded a company called Unbill, which they ultimately sold to Q2. At Unbill, they had built integrations into banks where they recognized how tricky the infrastructure was. With Atomic, they realized they could build the integrations into payroll systems because the source of the direct deposit and the data are in their payroll system. However, today that payroll data is not qualified as financial data and every single payroll system has its own way of storing consumer data. So there's no standardization, no structure and, basically, no regulation, because every state has its own labor laws.
At Atomic, we're really excited about bringing 165 different integrations together, which roughly cover 65% of the workforce, and creating one central place to access consumer-permissioned financial data through our APIs.
The first use case is solving the pain point of setting up and changing direct deposits. People may think: "Oh, is that really a problem?" It really is. To our earlier conversation, there’s no consistency across providers and every employer has their own process for accessing and updating data. Many consumers do not know their credentials to their payroll systems. Some actually haven't even set up an account.
From there, our mission is to help power a new generation of bank accounts. The vision is to help consumers access and create wealth by reducing complexity for consumers to leverage payroll APIs for financial data or to setup and change direct deposits. That reduction of friction will allow for things like fractionalizing how much money they put into savings, checking and investment accounts at the point of payroll. By eliminating some of the complexity, you can also eliminate some of the laziness that leads people to just let funds all move into one place and then sit there unoptimized and losing value.
There are companies partnered with Atomic that focus on the affluent side of things, like Unifimoney. We love the way that Unifimoney has been built to help Millennials who have a little bit more cash avoid the mistake of just letting their money sit in low-interest accounts to make sure they take advantage of the Get Rich Slow philosophy. With Atomic's Payroll API, it means you can automate at the point of payroll which makes that philosophy seamlessly work.
Then, on the lower end of the bracket, you can use this data to better underwrite someone to give them access to credit. There are roughly 33 million consumers who are considered to have a thin credit file. There's also a massive immigrant population who doesn’t qualify for a lot of banking services. We have a partnership coming out with a neobank that focuses on the Latinx community, which is the largest ethnic minority in this country. Many of them don't have access to bank accounts because they don't have social security numbers. So, this payroll API can be used to serve both ends of the spectrum. Ultimately, it's just about bringing more people into financial services and using infrastructure as an on-ramp.
There's some stuff that we can't quite disclose yet, but we will be coming out with soon. But one that I have been particularly excited to see gravitational pull around is payments out of direct deposit. The stale ACH process today means that it can take up to two days after payroll is run for the money to actually hit the account. But if you went to the point of payroll and used Atomic to access your payroll system you could put a percentage or fixed sum of the paycheck into this account to pay off sunk costs such as rent. I don't want to see that money and I certainly don't actually want to have to scramble to get that payment done on time.
I'm excited about the second wave of this: when payments out of the paycheck for a fixed cost become a tool to underwrite things like apartments or purchases. A lender or landlord can instantly see: "Oh, she's got a good payment history." People have tried to build businesses that build credit by reporting rent to credit bureaus, but what if it was just an added service tied into having an automatic payment tied to your payroll? I think that's got real legs for consumers.
I really believe that they will feel empowered to do more with their money. There's so much friction in understanding new terms: NFTs, crypto, and so many other tricky concepts. I hope fintechs and neobanks continue to bring more customers in who might have previously been scared off by the jargon.
On top of that, consumers have been conditioned to believe that a credit score is the end-all-be-all metric of their worthiness financially. And that is just not the case. A social security number should not be the benchmark for qualifying for financial services. We're really just pumped about bringing these truly unbanked and underbanked populations into better financial services and happy to see them excited about their money.
There are many new economies coming into vogue. You've got the creator economy, for example. For them, they're not going to get access to a bank account right off the bat, but they are technically a small business. With Atomic, we can embed them into a system that allows them to pay their freelancers and then allow them to use that data to better access loans when they need it for bigger projects.
And if you think about the immigrant population, the fact that many don't have social security numbers means they can't access a basic bank account. The ability to put money in an account versus getting paid in cash could be the first step to just getting them functionally over the line. We hope that our payroll API can help make that step possible.
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