Derived from the Word “engagement”, the term “gig” was originally coined in the 1920s by jazz musicians who used the term when referring to hers concerts and has since been used regularly in the music community to refer to any type of performance.
Today the term is used more broadly to refer to many types of jobs and even to describe an entire subset of jobs Job market.
The gig economy is a market based on short-term contracts or freelance work rather than permanent jobs. There are many different types of gig workers including: ridesharing, food delivery drivers, pet sitters, babysitters, movers, Apartment tenants, graphic designers, tutors and more.
The number of gig workers in the US grew 31% between 2016 and 2021 according to McKinsey’s American Opportunity Survey and 31% according to Upworks 2021 Freelance Forward Economist ReportWorkers make up more than a third of the US job market, with 59 million freelancers nationwide.
This resulted in the global gig economy generating $204 billion in gross payment volume in 2018, according to a study by Mastercard and Kaiser Associatesch also predicts that number will reach $455.2 billion in 2023.
This growing part of the economy offers banks an opportunity to capitalize on meeting the unique financial needs and challenges faced by gig workers, which primarily stem from themr Unpredictable income and hours worked.
“Workers in the gig economy, by definition, need flexibility and options,” says Mike Overwhelmed, CEO of the New Jersey Bankers Association. “As banks use tools like remote banking, remote deposit capture, online lending solutions and more, gig workers can access most of the services they need at any time of the day with the push of a button.”
Because of your aforementioned defect of steady income, a major challenge gig workers often face face is struggling to secure funding, although some banks are tailoring their services to help.
“Columbia Bank has made significant strides in our ability to meet the lending needs of small businesses, and gig workers in particular, over the past several years years,” Matthew Clements, senior vice president, director of retail and products at Columbia Bank, told New Jersey Business Magazine. “We have implemented automated processes and significantly improved decision times for small dollar business lines and Credit, and we also offer a full range of small business credit cards, giving the customer the ability to use their personal credit history to open a business credit card.”
Columbia also offers everyday business accounts with no minimum balance, according to Clementsance and sufficient transaction limits to meet the needs of most gig workers.
“On the consumer side, we have a variety of accounts that allow customers to set up direct deposits, deposit checks through our mobile app, and provide full access to them all our bank locations. Some of our consumer accounts also offer discounts on ATM fees. This allows our customers to use any ATM across the country, giving them much-needed access to cash,” he says.
Additionally, Overwhelmed says he sees banks offering more fiFinancial planning services that gig workers – who lack employer-supported options – can take advantage of, adds, “Banks now sell IRA products and some sell SEP IRA and self-employed 401(k) profit-sharing products that provide additional tax-deferred savingsS.”
While providing the gig worker with the right financial tools is critical, said Patrick True, President of lendovative Technologies, Inc. says banks need to expand beyond traditional financial services and add value to gig workers in new ways to: a more consultative approach.
“In the past, banks have traditionally been reluctant to engage in corporate advisory activities because of lender liability issues, but the tide is changing fast,” says True. “How banks work tAs they become more full-service, they are starting to think about how they can provide an entire ecosystem of products, services and personalized advice that can make them a more central presence in customers’ lives.”
Similarly, Clements adds that Columbia Bank’s position as a community bank gives it the ability to offer its customers truly personalized services, a major benefit for gig workers.
“Gig work can vary a lot, from working a few hours a week for extra money to full-time and very lucrative Career. Our banking and investment teams take the time to understand each individual’s needs and tailor solutions to suit their circumstances,” says Clements.
“Gig workers require the full range of financial services, from custodian to lending and iInvestments, but many also have additional requirements beyond what is required for traditional salaried clients,” says True. “Think of apps to help them plan for quarterly tax payments and longer-term goals like retirement options and HSA-like escrow accounts for unexpected medical expenses.”
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