The future of payroll processing is expected to require professionals to adopt new technologies and skills, a senior payroll executive said June 4.
The growth of new technologies, such as robotic process automation (RPA), artificial intelligence (AI), and blockchain, are expected to redefine and innovate payroll processes by reducing the need for routine tasks, said Martin Armstrong, vice president of payroll shared services at Charter Communications Inc.
“We need to change our mindset from a payroll practitioner’s standpoint,” Armstrong said. New technologies are expected to become common, so payroll teams should embrace automation “because technology is going to propel us” to the future, he said at the annual American Payroll Association Congress, which was held online because of the coronavirus crisis.
Potential for RPAs, AI
Businesses are investing in RPAs and AI technology, with spending expected to increase to $272 million in 2020 from $73 million in 2016. By the end of 2020, chatbots--software applications that enable online conversations--are expected to manage 85% of digital interactions, said Armstrong, a member of Bloomberg Industry Group’s Payroll Advisory Board.
The potential for automation in payroll processing can be beneficial, especially to overstretched payroll departments. Up to 20% of practitioners’ time is spent on repetitive computer tasks, Armstrong said. A payroll department, through RPAs and AI, can better use resources in analysis and compliance, he said.
Some routine payroll duties that would benefit from RPAs and AI technologies include direct deposit; Forms W-4, Employee’s Withholding Certificate; garnishment and termination notices; and employment verification, Armstrong said.
Additionally, more complex processes can be implemented using RPAs. For example, states such as California require immediate final wage-payment upon involuntary termination, which typically require a lengthy process involving multiple employees. RPAs can automate the process by promptly making final wage-payments and avoiding potential employer penalties, Armstrong said.
Another complex event is the death of an employee, which requires a different process and special forms, depending on the circumstances, Armstrong said. RPAs can recognize state and federal requirements to ensure the distribution of funds and notifications to keep the employer in compliance, he said.
The global blockchain market, which often is linked to cryptocurrency, is an emerging technology that could be worth $20 billion by 2024, Armstrong said. Many financial institutions in North America and Europe have explored blockchain technology, he said.
Through blockchain, data can be stored quickly and securely because the process is decentralized, Armstrong said. Payroll records, such as Forms W-2, Wage and Tax Statement, benefit from having accompanying information attached to the data chain and stored in multiple locations.
Additionally, blockchain can help lower the costs of international payments by eliminating the problem of fluctuating exchange rates through almost-instant processing, Armstrong said.