Gig workers pose a huge revenue and brand image opportunity for banks

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In our recent Gig Economy Financial Services Ecosystem report, we showed that the gig worker market is a massive revenue opportunity for banks: Digital gig work generated $204 billion in customer volume in 2018 globally, and is projected to grow to $455 billion by 2023, per Mastercard.

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Moreover, this opportunity is growing, with 50% of the US population expected to do gig work by 2028, per PYMNTS, as is 50% of the UK population by the end of 2020, according to Kalido. No longer a niche area of the global labor market, gig workers soon stand to make up at least half of banks’ addressable audience.

Banks have historically avoided catering to gig workers because they seemed like a risky bet, but this is changing. Traditional credit assessment methods based on mainstream data types like borrowing history have long prevented banks from being able to safely offer products like overdrafts and credit cards to gig workers, who typically have little or no credit history and variable incomes.

However, alternative credit assessment models based on data like social media activity and online shopping behavior, as well as technologies like AI and open banking which enable better data analysis and sharing, are making it less risky and more worthwhile for banks to extend their services to this credit-thin consumer group. 

In particular, banks stand to benefit in two key ways from catering to gig workers if they seize their opportunity: 

• Revenue generation: The sheer size and rapid growth of the gig worker market means that capturing this consumer base can generate significant new revenue for FIs over time. For instance, 53% of self-employed consumers (just one slice of the gig economy market) have multiple banking relationships, per Javelin, suggesting gaps in bank offerings for this segment that could be converted into loyalty and sustainable revenue streams. These products may include fee-free bank accounts, fee-free debit and credit cards, and money management features to help build savings, among others.

• Bolstered brand image: As we detailed in our Banking Digital Trust Report (Enterprise only), the pandemic means it’s crunch time for banks to maintain their reputations in the public eye if they want to avoid hemorrhaging customers: For instance, if a bank continues to demand mortgage payments despite people losing their jobs, it’ll likely lose customers both during and after the pandemic. Maintaining their public image depends not only on financial acts like suspending fees, but also on more humanitarian efforts, like treating employees well and helping the disadvantaged. As such, stepping up efforts to help an at-risk group could help a bank not only bolster its brand image, but also form strong customer loyalty that can outlast the pandemic. 

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