December 15, 2021
The independent economy is on the rise. More workers than ever are choosing to become freelancers, contractors, gig workers, or other roles that allow them better control over their future, their income, and their time. But with independent work comes new needs for financial management — and shouldn’t banks be keeping up with the needs of this massive, growing market?
From new features to faster payments to mobile-first, here are what eight industry leaders see as the future of banking for independent workers
Hantz Févry, Co-Founder and CEO of Stoovo
The future of banking is being shaped by independent workers who are typically overworked and underbanked. The post-pandemic 1099 economy is now at 57 million workers; most are contractors earning relatively high hourly wages. However, most of these workers who depend on platform-based earnings suffer from income volatility. If you don’t earn enough in the first place, how can you build emergency savings or even have working capital to pay your bills?
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.
Traditional Neobanks are not enough for these workers; banks need to address both sides of the balance sheet to serve this emerging workforce adequately. Why should a bank just keep your money? Why can’t banks help you earn more, save more, and manage expenses? The future of work is already here — banks just need to catch up.
Eytan Bensoussan, CEO and Co-Founder of NorthOne
More Americans than ever are turning to technology-focused challenger banks because they understand how to simplify users' lives. The future of banking for independent workers isn't traditional bank branches with free coffee and pens, it's mobile-first banking powered by teams and technology focused on making the handoff between work and banking as seamless as possible.
Technology and user-focused product development enables challenger banks like NorthOne to provide an empowering experience to independent workers. The simplicity, ease of use, and intelligence of emerging banking options reduce the cognitive load these workers need to manage in their day-to-day. Imagine never having to think about banking again. Imagine never having to plan a trip to a branch or clear out hours to wait on hold with your bank’s support team. That’s the starting point for most emerging banking options. It’s on top of these assumptions that the future of banking is being built.
For example, through integrations with accounting tools like QuickBooks and FreshBooks, eCommerce platforms like Shopify or Etsy, or integrated invoicing tools, challenger banks make taxes and tracking incomes and expenses far easier for independent workers. All these streams of data are finally connected. And they can finally be made digestible and intelligible for the typical independent worker who is already overwhelmed with everything else on their plate.
Michael Rangel, Founder and CEO of Novo
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. The days of jamming a square peg through a round hole are slowly dissipating as banking products become more customizable for the new age of work.
For independent workers, the most valuable commodity they have is their time. 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.
On a related note, I also imagine we’ll see many more banking products offer independent workers the ability to conduct many more financial tasks right from their phone — like invoicing and light-weight accounting functions — which will save them both time and money.
Finally, the future of banking for independent workers will be fee-free. Novo is adamant about not charging fees, and I’m hopeful that a fee-free commitment will be the norm rather than the exception in our industry in the coming years.
Gilad Uziely, Co-Founder and VP BD at Lance
Everyone will be an independent worker in the future. We already see the growth of independent workers surpassing prior estimates. The reason is we’re all exploring how to navigate different types of work contexts and pathways to match our current life chapter needs and longer-term visions.
Future financial products and offerings will need to be flexible, goal-enabling, and contextualizing. Flexibility will accommodate the increasingly dramatic shifts independent workers take between work contexts and their related finances. It’s never been easier to shift from one job to multiple income streams, thanks to marketing software, ecommerce platforms, and marketplaces.
Independent workers inherently are — or quickly become — goal-driven. Independent workers don’t want to land on another blog post about banks' standard checking and savings rates. They want savvy financial platforms to guide them to realizing their goals, faster.
Finally, with all the data consumers are sharing with banks and fintech companies, it’s no wonder they want more. The future of banking for independent workers will contextualize banking and right-sized business offerings specific to each customer. The banks and fintech companies that provide the most specific, contextualized, and trustworthy opt-in offerings will win lifelong members.
Donald Hawkins, Founder of First Boulevard
With COVID's impact on the distribution and digitization of America's workforce, one thing is clear: the era of the independent worker is here to stay. With so many new entrepreneurs voluntarily and involuntarily making the leap into the unfamiliar world of running a business, the need for services to support their weaknesses is critical. Offerings that support day-to-day transactions, payroll, accounting, and taxes are fast becoming table stakes for today’s savvy business owners. The days of downloading multiple desktop/mobile apps are numbered and APIs can only do so much. Banks and fintechs that lean into innovation to meet independent workers where they are, while building features to meet them where they’ll be, will win big in the end.
Kristen Sobel, Director of Business Development at indi
Independent workers need faster access to their earnings. Not only that, but they need a banking product that can help them build a solid financial future. According to a PYMTS.com study, 85% of gig workers said they would work more often if they were paid faster. Additionally, 58% of full-time gig workers said they would have a hard time coming up with $400 to cover an emergency bill, according to the same study.
There’s an urgent need for unique banking solutions that facilitate instant payments, allowing workers to get paid the money they’ve earned at the end of the day rather than waiting for the end of a two-week pay period. Being able to buy groceries on the way home from a job is a powerful way to support and empower independent workers. Additionally, much of the independent workforce is underbanked and can’t access traditional banking products because of credit history, job volatility, and temporary living arrangements.
Independent workers carry burdens that W-2 workers typically don’t have to worry about. Not only do independent workers often work shifts to earn income, they need to track and categorize expenses, pay quarterly estimated taxes, manage work shifts among several employers, and balance many other time-intensive administrative tasks. These tasks take time away from the hours they have available to complete shifts and earn income.
It’s imperative that banking products empower and enable freelancers to conduct these tasks all on one platform: get paid instantly, track income, categorize expenses, export data, and work toward a healthier financial future.
Ayal Levin, General Manager at Lili
“We believe the future is banking, taxes, and expense management all in one, designed to save independent workers time and money, so they can focus on what they do best.”
Banks can certainly stick to their standard checking and savings offerings, continue charging fees, and keep their simple features. But they’ll be sleeping on a growing market of 68 million eager for new banking options and features that will help them earn more, reach their financial goals, and better manage their business needs. According to our report on “Banking the Independent Economy,” 68% of independent workers are planning to change banks in the next year. Will you offer the features and support they’re looking for, and help build the future of the independent economy?