Gig workers around the world have long struggled to gain access to many mainstream financial products and services because of their inconsistent cash flow and lack of substantial credit history. Now, they are emerging as one of the hardest-hit groups from the coronavirus pandemic, as demand for their services plummets under lockdown, cutting into their work hours and pay, and their contractor status locks them out of workplace benefits.
With workers especially in need of innovative solutions to help them through the crisis, the already significant revenue opportunity — estimated by Mastercard to be worth $455 billion by 2023 — for financial institutions (FIs) to cater to gig workers is bigger than ever. FIs also have the chance to forge customer bonds that will outlast the pandemic and to polish brand halos. The combination of the large and underserved demographic and its struggles under the pandemic has led to a flurry of innovation from across the financial services industry, resulting in an emerging and dynamic gig economy financial services ecosystem.
In the Gig Economy Financial Services Ecosystem report, Insider Intelligence explores the size and scope of the gig worker market; gives an overview of companies that started making efforts to serve the gig worker market pre-pandemic; presents some of the earliest-moving companies rolling out pandemic-specific financial services for gig workers; and lastly, outlines how FIs who move into the space during this crisis period can make sure their products have a longer-term value for customers once the pandemic passes.
The companies mentioned in this report include: ADP, Airbnb, Care.com, Chubb, Citigroup, Collective Benefits, Countingup, Coverhero, Credit Kudos, Crunch, Deliveroo, Dinghy, Doordash, Even, Evolve Bank & Trust, foodpanda, Fronted, GoBank, Grab, Internal Revenue Service, Joust, LinkedIn, Lyft, Mastercard, Moneyfarm, Moonrise, Paid, PayPal, Penfold, Penta, PNC, PolicyStreet, Portify, Postmates, Qover, Square, Steady, SteadyPay, Stride Bank, Stripe, Trezeo, Tully, Uber, Visa, Walmart, Wirecard, Wollit, Zego, and 11:FS.
Here are some of the key takeaways from the report:
- Gig workers have long been underserved by financial services companies due to their thin credit history and variable income. But new technologies like alternative credit scoring and open banking are enabling more thorough risk assessments to make serving this demographic worthwhile for FIs.
- And the time is ripe for the financial services industry to capture this monetization opportunity: Half of the US population is expected to gig by 2028, and 50% of UK workers are expected to do gig work by the end of 2020, per Kalido, representing a big and growing revenue opportunity.
- Fintechs, insurtechs and insurers, banks and neobanks, payments companies, and gig economy companies themselves were already securing a slice of this market pre-pandemic. And since the pandemic began, there's been a new wave of innovation to help gig workers through the crisis with targeted products and services.
- Innovative FIs can deliver the most value through new products and services by helping gig workers with pain points like variable income, through income-smoothing products; low wages, through top-up services; lack of workplace benefits and protections, through portable benefits; and late payments, through faster payments solutions.
In full, the report:
- Gives an overview of today's gig worker market, including its size, growth, global distribution, legal developments, and taxonomy.
- Explains why gig workers have been underserved by mainstream financial services to date, and the ROI opportunity for FIs that step into the market.
- Outlines the biggest financial challenges gig workers face day-to-day, and the products and services fast-moving players had begun rolling out before the pandemic to help address them.
- Highlights some of the earliest movers to roll out products and services for gig workers specific to the pandemic, to help them manage problems that have arisen due to or been dramatically exacerbated by the crisis.
- Suggests how FIs can adapt their pandemic-specific offerings once the pandemic has passed to ensure their offerings can turn into sustainable revenue streams and deliver long-term value for customers.