From payroll to perks: how embedded finance is transforming HR software

Human resources (HR) software – now sometimes called Workforce Management Software – has come a long way from its origins as a tool for processing paychecks and managing timesheets.

What started as back-office utilities for payroll and compliance has evolved into dynamic platforms that help companies engage, retain, and support their workforce.

Now, a new layer of innovation is reshaping HR platforms: embedded finance.

Embedded finance in HR software: the evolution in workforce tech

Embedded finance integrates banking features directly into HR platforms, enabling employees and employers to access financial tools — like payment cards, SME lending, and perks — within the same app. This unified experience boosts retention, cuts friction, and eliminates the need to switch between systems.

Embedded finance refers to the seamless integration of financial services into non-financial platforms. This way HR platforms can enable employees and employers to access financial tools — like payment cards, SME lending, and perks — within the same app.

This allows HR platforms to deliver personalized financial transparency to their partners and employees in one ecosystem. This unified experience boosts retention, cuts friction, and eliminates the need to switch between systems.

A short history of HR software

Before the 1970s, HR was paper-based and relied on basic mainframe computers for tasks like printing employee lists. Early HR tech was focused on efficiency — managing payroll, calculating taxes, and storing data.

In the late ’70s things began to change with the rise of enterprise resource planning (ERP) systems. These brought automation to various departments, including HR.

A key milestone came in 1979 when SAP developed the R/2 software. It was the first software built specifically for HR management. It combined HR functions with financial and operational data, enabling integrated access in a mainframe environment.

From mainframes to client-server systems

In 1988, PeopleSoft released the first ERP system designed for HR — and it ran on a client-server model instead of mainframes. This shift made HR software more user-friendly and powerful, changing the industry in a major way.

By the 1990s, the market grew with new players like Oracle and JD Edwards, increasing competition and accelerating innovation in HR management systems.

From on-premise to cloud: HR software in the internet age

The internet boom of the ’90s reshaped HR management software again. The internet era shifted HR software from on-site installations to cloud platforms — unlocking scalability and global reach.

It meant that HR software businesses could not only save time and money by not needing to use specialized locations for installations, but it also opened doors for software to become available on a global scale, supporting international businesses on an unprecedented level.

This second shift allowed global access, reduced setup costs, and opened the door for HR software companies to reach clients worldwide, transforming the industry to today’s standards.

A handful of payroll and HR software companies have become true giants. According to Crunchbase data, a trio of US companies — Gusto, Deel and Rippling — are worth more than USD 9 billion each. Europe’s biggest HR tech companies include Germany’s Personio at close to USD 8.5 billion.

HR software market in Europe: growth trends and forecast to 2033

The HR software market in Europe is huge – billions in revenues, millions of customers. Europe is one of the most significant and rapidly expanding tech sectors.

In 2024, the market reached a valuation of USD 4.486 billion. Projections by Market Data Forecast indicate that the market is expected to grow to USD 8.965 billion by 2033, corresponding to a compound annual growth rate (CAGR) of 7.6% for the period 2025–2033.

This growth is primarily driven by the increasing adoption of advanced HR technologies among corporate organizations across Europe. The influx of key market participants further contributes to heightened demand for innovative HR solutions.

By 2023, 65% of mid-to-large EU enterprises had adopted HR tech — highlighting a major shift toward digital HR management. This trend is anticipated to persist as organizations increasingly recognize the operational efficiencies and strategic advantages afforded by digitized HR processes.

Moreover, it is estimated that approximately 3.2 million small and medium-sized businesses (SMEs) across Europe utilize cloud-based HR software to manage and automate complex HR functions.

In fact, Germany is currently the leading national market within Europe, accounting for 22.7% of the HR software market in 2024. It is projected to remain the fastest-growing segment through 2030, reaching an estimated market value of USD 1.156 billion by that year.

According to current research, France represents a noteworthy case study in the European market, as it hosts a rapidly evolving and increasingly significant market for human resource management solutions.

In 2024, the French HR management market generated revenues of USD 722.9 million and is projected to reach USD 1,570.9 million by 2030, reflecting a compound annual growth rate (CAGR) of 13.8% over the 2025–2030 period – software accounted for the largest share of revenue in 2024.

Key growth drivers in the European HR tech market

1. Evolving role of HR

HR managers today are responsible for a broad and expanding set of functions, including recruitment, onboarding, payroll, employee development, performance management, conflict resolution, and offboarding. They must also navigate regulatory requirements across different European jurisdictions, as well as varied salary structures and tax legislation.

2. Technology as a strategic enabler

HR teams are increasingly adopting specialized software solutions and integrating advanced technologies such as Artificial Intelligence (AI). AI-driven tools and automation reduce manual tasks and support regulatory compliance. This helps HR departments maintain agility and control across geographies.

3. Strategic importance

For highly regulated industries, HR software is mission-critical infrastructure — not optional. It enables operational efficiency, labor compliance, and scalable HR practices. These insights support strategic, data-driven decisions and help businesses remain competitive.

Still not convinced? Discover a real-world use case!

How the SpenditCard embeds financial features into HR platforms

The SpenditCard – developed by Solaris and Spendit – serves as a powerful example of how financial services can be natively embedded into HR platforms.

This Visa debit card acts as an accessible and scalable starting point for embedding broader financial features into HR platforms, paving the way for offerings such as SME lending and insurance. With five configurable modules — from wellness perks to internet stipends — it delivers tax-free, flexible employee benefits.

The usage of this employee debit card significantly enhances operational efficiency by streamlining the administration of employee benefits, simplifying payroll processes, and reducing the overall administrative burden for employers.

At the same time, the solution ensures full regulatory compliance with German tax laws and data protection standards, including GDPR, providing a secure and legally sound framework for distributing tax-free benefits.

And there is more: customizable card designs offer companies a unique opportunity to strengthen their employer branding while delivering a modern and engaging employee experience.

Unlock scalable financial solutions for workforce tech with Solaris

Partnering with Solaris means more than ticking regulatory boxes — it’s about transforming HR platforms into powerful financial ecosystems. With a full CRR banking license and EU-wide passporting, Solaris enables HR platforms to launch financial products — fast, compliant, and scalable.

Here’s how we help you deliver more value, faster:

• Boost employee benefits with prepaid cards

  Offer prepaid cards as performance bonuses or VAT-free social benefits, e.g. meal allowances or learning and development budget — fast, flexible, and fully compliant.

• Simplify travel & expense management

  Launch tailored card programs to manage employee travel and expenses with full visibility and control. Employees manage their expenses in one place, reducing financial stress and increasing engagement with their employer's HR platform.

• Enable digital SME banking

  Give all businesses on your platform access to digital-first SME banking solutions — no physical branch visits, no red tape. By enabling features like payment cards, digital wallets, and employer-sponsored perks, HR platforms can extend their value to employees, improving retention for their business clients.

• Streamline HR and banking

  Unlock synergies like automated tax reconciliation, revenue tracking, and faster access to lending – all in one ecosystem. HR platforms unlock new financial income sources beyond traditional SaaS subscriptions.

• Power everyday business operations

  Use Solaris accounts to manage expenses, pay employees and suppliers, and handle all day-to-day financial operations. SMEs, particularly those underserved by traditional banks, can make better decisions based on real-time data, planning their finances in dynamic ways.

By embedding these services, HR platforms become gateways to financial empowerment – not just administrative tools.

With Solaris, you will have the tech and banking infrastructure to move from MVP to multi-product powerhouse — before your competitors even catch up.

Start small. Scale fast. Dominate your industry.