December 7, 2021
The independent economy is not a fad, and no longer encompasses just a niche set of workers.
With 68 million freelancers, contractors, gig workers, on-call workers, and more, the independent economy is only going to grow in scale. Which means that there's incredible opportunity and potential to serve independent workers as well.
And there's a gap in the market that needs filling: Banking.
Because independent workers have different financial needs — from budgeting quarterly tax payments to invoicing to tracking app income — they have different banking needs to.
“The future of banking is being shaped by independent workers who are typically overworked and underbanked,” says Hantz Févry, Co-Founder and CEO of Stoovo. “Banks need to address this growing base of gig workers. Independent workers need overdraft protection, and they need built-in financial management tools to help them create safety nets and build their credit, not draconian fees causing credit scores to plummet when their accounts are in arrears.”
To learn more about how their unique needs can be filled, we recently conducted a report on “Banking the Independent Economy” to assess how independent workers are doing their banking. Here's what we found:
Half don’t have a separate account for their business income.
When it comes to running your own business, wisdom and practicality point to having separate bank accounts for business and personal income and expenses. Independent workers are not only working individuals, they're also their own business of one — so are they using separate bank accounts for their independent work income?
We found that 51% of independent workers use their personal account for their business income and expenses. Using one account could be personal preference. It could also be because they haven't found value in having two accounts, because there aren't attractive accounts for independent workers out there.
46% want to open a new account for their business income and expenses in the next year.
Of those who do not use separate accounts, we found that 46% are looking to open a new account in the next year. This means that there are potentially 16 million independent workers shopping around for a new bank account that will fit their gig work or freelance needs. But are banks already catering to this new demographic? Or will independent workers continue to find their banking needs unmet?
Only half are very satisfied with their bank.
Finding their specific banking needs unmet could be why only 51% of independent workers report being very satisfied with their current bank, and why 34% are only somewhat satisfied while 15% aren’t satisfied at all. Dissatisfied customers will be eager to leave if they find an appealing banking option elsewhere.
High fees, a lack of features, and poor customer service are causing that dissatisfaction.
This dissatisfaction stems from high fees like monthly maintenance fees and overdraft fees. It also stems from a lack of features that cater to their specific needs as independent workers — in other words, not being understood by the market. They also attribute poor customer service to their dissatisfaction with their current bank as well.
68% say they are likely to switch banks in the next year.
Because of this dissatisfaction, 68% of independent workers say they are likely to change banks in the next year — which equates to 46.2 million independent workers. Will banks be ready to serve this new audience with low or no fees, features that cater to independent workers, and excellent customer service?
An ideal banking account would be mobile, identify tax-deductible expenses, and automatically set aside money for taxes.
What are the features that independent workers are looking for? They want a bank account that's in a mobile app (which makes sense, considering many independent workers earn their income through apps). They also want an account that will identify tax-deductible expenses for them so that they can be sure they're claiming all their deductions when they file their taxes. They also want an account that can automatically side aside money for quarterly tax payments, making budgeting easier for them.
Serving the Independent Economy
There are potentially millions of independent workers looking for a banking app that's made for them, that will offer the features and benefits they specifically need, and that will help solve their pain points to free up time and effort they can spend growing their income. The question is, Will they find it?