Most lenders who are on the outlook to serve the gig economy have a very promising opportunity ahead of them
The fintech venture capitalist had an exceptionally productive period in 2018.
The lending sector played an important role and acted as a major repository for venture capitalist dollars. The lenders in the fintech industry have filled a huge void over the past ten years.
As most prime banks have withdrawn the loans they have been offering to individuals and small businesses due to the “Great Recession.”
Currently, various next-gen methods to procure a loan as an individual (according to verifiable income and employment status and FICO scores) or mid-level business owner (based on assets, collateral and cash flow) have popped up.
One innovative way to get a loan is through a payday lender. These lenders offer full-time and traditional workers earned wages prior to the time of their cashing out.
However, these loans are at a very high-interest rate.
But there still remains a huge void in the case of serving the niche needs of the rampantly multiplying sector of borrowers in the U.S. economy.
Majority of these borrowers are either gig workers or freelancers, this sector has various opportunities for the lenders in the fintech as well as banking sectors.
Personalisation is the way to go in today’s time and age no matter which industry or product you talk about.
The lenders in the banking and fintech sectors could also crack open this golden egg.
The digital advertising, marketing messages and other such information sent out could utilise this insightful trick. More and more consumers can be attracted to these financial services since it makes their identity unique.
According to a report on digital banking, approximately 84 per cent of professionals working in the financial services sector consider tailored services of utmost importance.
The individualised services portray an intimate outlook of each individual customer, however, most strategies remain unimplemented.
A survey conducted in Accenture reinforced the findings of this report and stated that over two-thirds of the banking customers believe that their bank doesn’t know their identity or requirements.
Most lenders who are on the outlook to serve the gig economy have a very promising opportunity ahead of them.
The gig workers and freelancers have very infrequent and irregular pay scales and structures and this pattern renders the predictability that the traditional/regular-wage workers have the comfort of.
The lenders could use this irregularity to their advantage — they can promise stability and cover-up the loops that their careers leave out.
The goodwill offered by the financial lenders will help smooth out the rough edges of freelancers.
Another important factor that most lenders usually miss out on is offering low interest cash advances to their clients and also offering customised payback options which could accommodate their current salary.
One other appealing idea that could turn out to be really effective is collaborating with already famous gig economy marketplaces and finding methods to make additional income to stay on top of their expenses and pay back the outstanding balances.
In conclusion, the Promising, forward-looking and creative fintech industry startups have raised capital successfully and executed amazingly.
However, most of these fintech startups have not yet addressed a rampantly growing target market facing the same challenges they once faced — freelancers or the gig economy.
As the gig economy gains steam in the coming years, the entire financial services ecosystem must adapt in order to address both the opportunities and the unique challenges.
Initiatives aimed at improving personalisation, de-risking and fostering fintech-bank collaboration provide a valuable guidepost and blueprint for moving forward.
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