On this episode of the The SMB Tech Innovators Podcast, Jeremy Zhang, Co-Founder and CEO of Finch, discusses the challenges of fragmented employment systems and how Finch is creating solutions through unified APIs. With insights on industry innovation, compliance, and benefits, Jeremy highlights how Finch is shaping the future of employment data infrastructure.
Key Takeaways:
- Unified APIs connect employment data, process payments and streamline HR functions for employers and applications.
- Simplify retirement benefits by connecting census data, pay statements and payroll deductions.
- Finch connects 50,000 employers and 5 million employees, powering equity management, health insurance and retirement systems.
- Sensitive employee data demands secure handling to prevent breaches like Equifax’s $700M settlement.
- Finch builds a centralized API exchange layer that eliminates inefficiencies in employment data, improving compliance and accuracy.
- Fragmentation from 6,000 US payroll providers complicates standardization and connectivity.
- ICHRA benefits let employees buy health insurance, with unused funds covering other health expenses, powered by Finch.
- A strong founder-market fit enables startup success by leveraging unique expertise to tackle industry-specific challenges effectively.
Listen to the Podcast.
Modernizing employment data infrastructure to unlock innovation with Jeremy Zhang
Employment data is the foundation of essential business functions such as payroll, benefits management, and compliance. However, the employment data ecosystem remains fragmented, inefficient, and vulnerable to security risks. Finch, co-founded by Jeremy Zhang and Ansel Parikh, aims to solve these challenges by providing a unified infrastructure that connects applications, employers, and service providers..
Bridging Fragmentation in Employment Data
The employment data ecosystem has long been siloed, with thousands of payroll providers in the U.S., each operating on its standards. Unlike the banking sector, which has adopted open banking regulations to encourage standardization, the employment industry has lacked a similar unifying force.
This lack of standardization has led to inefficiencies and security risks. HR administrators manually enter data for 4–9 hours per week, contributing to $7–8 billion in operational costs annually. Payroll errors result in $7 billion in penalties yearly, while sensitive employee information is often exchanged through unsecured methods, increasing the risk of data breaches.
Finch addresses this issue as a neutral third party, creating a standardized infrastructure layer that integrates across the entire employment ecosystem. Without a solution like Finch, competing payroll providers such as ADP, Gusto, and Paychex are unlikely to align on a common standard. By offering a unified system, Finch enables businesses to operate more efficiently and securely while fostering innovation in the sector.
Regulatory Changes Are Accelerating the Shift
The employment sector is also experiencing a shift due to new regulations that require real-time data connectivity. For example, the SECURE Act 2.0 mandates that employers automatically enroll employees in retirement plans starting in 2025. Compliance with this regulation requires live API connectivity, making outdated file-transfer methods obsolete.
Additionally, recent government employment data collection discrepancies have highlighted the need for more accurate and timely reporting. Relying on paper surveys and small employer samples has resulted in significant data inaccuracies. Finch is already collaborating with the U.S. Chamber of Commerce to establish reporting standards, ensuring that employment data can be used more effectively to inform economic policy.
The Founding of Finch
Finch was not initially conceived as an employment data platform. Before founding the company, Jeremy and Ansel worked on an embedded lending infrastructure, helping businesses issue credit. However, when the COVID-19 pandemic struck, many of their clients shifted focus to Paycheck Protection Program (PPP) loans, which required real-time employment data.
This experience exposed them to the inefficiencies within employment data systems and their similarities to challenges encountered in other industries. Jeremy, who had worked in the automotive sector, had previously developed middleware infrastructure to standardize data exchange between connected vehicles. Ansel, who had invested in Plaid, had deep experience in financial data aggregation.
Recognizing employment data as an untapped area for innovation, they decided to apply their expertise in API-driven infrastructure to modernize the space. PPP loans were just one example of how employment data could be leveraged—opportunities existed in payroll automation, benefits optimization, and beyond.
Finch’s Unified Approach
Finch provides three core API products that address different aspects of employment data management:
- Organization Data: This API pulls basic employee directory and census information, supporting HR tech companies, compliance tools, and SOC 2 platforms that need to verify benefit eligibility and provision applications for new hires.
- Pay Data: This API retrieves detailed pay statements, enabling fintech companies such as workers’ compensation providers, business lenders, and equity management platforms like Carta to build better financial products.
- Deductions Data: This API allows benefits platforms to write deductions and contributions directly into payroll systems, powering solutions for retirement, health insurance, and emerging benefits like Individual Coverage Health Reimbursement Arrangements (ICHRA).
ICHRA is an area where Finch has seen significant traction. This model allows employers to allocate funds for employees to purchase individual health insurance, with any remaining budget applied toward additional health-related expenses. Nearly all ICHRA providers today rely on Finch’s infrastructure to scale their operations.
Supporting Partners and Developers
Finch is more than just an API provider—it is a strategic partner for companies integrating employment data into their products. Unlike traditional SaaS models, where a contract signifies the completion of a sale, API-driven businesses require ongoing collaboration to ensure successful implementation and adoption.
Finch’s implementation engineering team works closely with clients to tailor solutions to their needs. For example, the requirements of a retirement benefits provider differ from those of a health insurance platform, so Finch ensures that industry-specific nuances are addressed.
After implementation, Finch’s developer success team provides ongoing support. This includes technical assistance, best practice recommendations, and even guidance on pricing strategies for clients’ products. Finch’s success is directly tied to the success of its partners, making customer enablement a core focus.
Unlocking Innovation Across the Ecosystem
One of the most impactful aspects of Finch’s infrastructure is the innovation it enables. By solving the connectivity challenges within employment data, Finch allows companies to build previously impractical or highly inefficient solutions.
From modernizing retirement and health benefits to launching entirely new categories of financial products, Finch’s API is helping businesses reimagine what’s possible. As its network of employers and employees continues to grow, Finch is also unlocking powerful employment insights.
Unlike individual payroll providers, which only see a fraction of the market, Finch has the potential to aggregate and analyze employment trends across the entire ecosystem. This capability already influences economic reporting and policymaking, with potential applications extending beyond payroll and benefits.
Advice for Founders
As a first-time founder, Jeremy has emphasized the importance of founder-market fit. Before Finch, he and Parikh had built several products in different industries but lacked a compelling reason why they were the best team to tackle those specific challenges.
With Finch, their expertise in infrastructure and API connectivity provided a clear advantage. Jeremy advises aspiring founders to ask themselves, “Why are you the right person to solve this problem?” A strong answer to this question is essential—not only to convince investors and employees but also to maintain conviction through the challenges of building a company.
Closing Thoughts
Employment data may not always make headlines, but it plays a critical role in the operations of businesses, the financial well-being of employees, and even the broader economy. Finch is at the forefront of modernizing this space, offering the infrastructure to drive efficiency, security, and innovation.
If you’d like to learn more about Finch or explore how our APIs can help your business, visit tryfinch.com or contact me directly at founders@tryfinch.com.
Go to The SMB Tech Innovators Podcast, powered by Gusto Embedded, to listen to more episodes.
