The gig economy is growing rapidly, with more than 67 million Americans forecasted to complete some form of gig work this year. Despite the growth, many gig workers need help accessing mainstream financial services. As a result, they often rely on informal or vanilla bank accounts and payment apps for their finances.
Increased access to credit
The gig industry has a major impact on the economy, with a global study by reputable agencies showing it to be a $204 billion gross volume sector. However, the flexible economy can also pose a significant barrier to financial stability and access to credit for gig workers, who are only sometimes protected by traditional benefits such as health insurance, retirement plans, and tax documents. Increasingly, gig workers are being rejected for financial products because their employment records must reflect their ability to pay for them fully. To make sure their customers are kept caught up, financial institutions need to be able to gain full visibility of all income data from gig workers. That means automating this process and gaining the ability to view gig income records from all platforms comprehensively.
Increased access to capital
Gig workers are increasingly borrowing money to buy equipment that will enable them to operate their businesses. For example, rideshare drivers often borrow to purchase a vehicle for their business. If they lose their employment with Uber or are no longer paid enough to repay their loan, they can face a huge debt burden. That is why many institutions offer loans for gig workers to accommodate their needs.
Similarly, food delivery workers may also take out loans to purchase new equipment, which will then be used to deliver meals to their customers. These investments in their assets can be difficult to repay, as they are not typically viewed as traditional creditors.
Increased access to insurance
Gig work offers many benefits, including flexibility and earning power. But it also leaves these workers without the comprehensive employee benefits they might expect from traditional formal employment.
Increasing access to insurance through short-term or major medical plans can boost the financial well-being of gig workers and increase their ability to maintain and grow their businesses. However, gig workers still have a large affordability perception gap, with more than 24% stating they don’t have health insurance. This could be a problem, particularly for minority gig workers who are more likely to be uninsured than white or black workers.
Increased access to savings
The gig economy is fueling an increasingly large number of workers looking for flexibility and freedom. But for many people, these short-term or flexible work arrangements also create a need for long-term savings that may lead to financial hardship. One way to help bridge this gap is by increasing access to savings for gig workers. For example, health insurance or an HSA that offers tax-advantaged growth and protection from unexpected medical expenses can help reduce their financial stress and keep more money in their wallets. This type of support is needed because gig workers often report being unable to cover their most basic needs, such as housing and utilities. They also experience high financial hardships and rely heavily on outside assistance, especially during volatile dips in their incomes.