'Gig' work is stifling old-school bank payment models
Gig workers—the independent contractor crowd—are on a healthy growth curve and are the intrepid workforce of the future.
They challenge the status quo by forging a new model of work contracts made up of several clients of their choosing. By turning the age-old 9-to-5 management model on its head, many gig workers are able to create their ideal future by being their own boss.
This emerging style of work clashes with legacy payment terms as most would expect. The challenge many gig workers face is cash liquidity. Some may negotiate advance payment terms with smaller clients, but when contracting with a bigger enterprise, gig workers may be subject to 90- or 120-day payment terms. Paying bills or covering expenses within those terms is a challenge, to say the least.
Fintechs are entering the market to close the time gap in gig economy payments between businesses and consumers. This is not just for the sole purpose of faster payments, but to address the shifting role of banking as an industry.
Faster payment means banks move from provider to partner. Banks, for some time, have felt a shift in the wind. Self-service platforms like banking apps that allow everything from money transfers to check deposits autonomously speak of a growing need for digital interface and less one-on-one transacting with a bank teller. This means one thing—good old-fashioned customer service—in the form of a smile and wink—just won’t cut it anymore.
Banks must change from being a dispenser of funds to a proactive partner by advising customers on their financial journey. Taking on a more advisory role means that data visibility and the ease of moving money grow more important each year.
Making payments in the modern age means excluding a lot of the old manual work like slipping a check in the mail or filling out bank forms to move money overseas. Payments aren’t being viewed as a service anymore but as data opportunities.
Banks, along with many companies, aren’t just interested in helping consumers or businesses move their money around, but in observing the patterns and data attached to payments.
Payments carry rich data in the form of remittances and reconciliation paperwork. Services that cut down on the back end work by automating reconciliations along with the payment are serving a need for faster, more accurate transactions.
Hunting down payment reconciliation information can feel like a needle in a haystack hunt for accounts payable staff, and services that cut down on this type of work help drive revenue back through the doors of businesses instead of leaking costs with inefficient manual tasks or financial drudgery. This also means that contractors or gig workers have a chance of getting paid sooner.
Faster payments means more autonomous work. Economically, faster payments make sense. Check float isn't what it used to be. But in the long run, it isn’t just about sending payments faster but making way for new imaginings of the banking industry and the traditional workplace.
Creating services that serve greater personalization and autonomy will equip the modern worker with more options to do the kind of work they want, which benefits everyone.