October 25, 2021
The independent economy is an untapped market for banks.
There are 68 million freelancers, contractors, gig workers, and on-call workers that make up the independent economy today, and they all have different banking needs from traditional W-2 employees because they get paid differently than W-2 employees do. Independent workers must manage their own deductions, calculate their own quarterly estimated taxes, track their own expenses, and more
Do current banking options fit those needs? There seems to be an opportunity for banks to cater to a new demographic, if they look at the financial needs of independent workers.
Want to learn more about how independent workers think about their bank accounts, and their ongoing financial needs? Here's what we found in our recent report on “Banking the Independent Economy.”
1. 51% use their personal account for their business income.
When it comes to bank accounts, about half choose to incorporate their business income and expenses into their personal account.
2. 46% will open a business account in the next year.
Of those who don't have a separate account for business expenses and income, nearly half are in the market to open one in the next year.
3. They’re not very satisfied with their banking experience.
Only 51% are very satisfied with their current bank, while 34% are only somewhat satisfied, and 15% aren’t satisfied at all.
4. Dissatisfaction comes from fees, a lack of features, and bad customer service.
Those unhappy with their banks cite high fees and poor customer service. Yet they also say that banks aren't giving them the features to meet the needs of their independent worker life.
5. They use digital banks for the lower fees.
Of those independent workers who use digital banks for their banking needs, the majority of them do so because of the lower fees.
6. 68% say they are likely to change banks in the next year.
Over two-thirds of independent workers want to find a bank that will fit their needs and solve their pain points.
7. They want a bank account with an easy-to-use mobile app.
Since much of their work is already done through apps, independent workers are looking for a bank account they can use exclusively in a mobile app.
8. They want a bank account that can identify tax-deductible expenses.
Because independent workers need to track their business-related expenses themselves, they're looking for a bank account that can help them with that task.
9. They want a bank account that can automatically set aside tax withholdings.
Independent workers want a bank account where they can automate setting aside a portion of their income for their quarterly estimated tax payments.
10. They want a bank account that has the ability to categorize expenses.
They also want a bank account that can track and categorize their expenses automatically, which can lessen their workload come tax time.
11. They want a bank account that can set aside a percentage of earnings for different types of saving.
They also want a bank account that can not only set aside a portion of income for tax purposes, but that can set aside a portion of income for other savings needs as well.
12. They want a bank account that can help them budget.
With all this tracking of income, expenses, deductions, and more, independent workers want a bank account with budget tools to help them keep it all on track.
13. They want a bank account that has the ability to send and receive invoices directly.
Independent workers don’t want to do invoicing through a third-party service or app, and want invoicing integrated into their bank account.
14. They want their bank to assist with savings and insurance.
Because they are not employed by a company who takes care of insurance, benefits, and retirement, independent workers want their banks to help.
The Next Generation of Bank Accounts
“The future of banking for independent workers isn’t just about keeping their money safe — it will be about creating a more personalized product for how they do business,” says Michael Rangel, Founder and CEO of Novo. “In the coming years, I anticipate we’ll see many more banking products give independent workers the tools to accomplish all of their banking needs in minutes, right from their phone, which will give them more time to focus on doing the actual work that makes them money.”
Independent workers have banking needs, which will only increase as the independent economy increases. And banks should be listening.