A slice of a new pie: how banks can leverage tax to get a slice of the gig economy

TL;DR

The gig economy represents a $455 billion opportunity.

Tax insights enable bespoke financial solutions for gig workers.

New products could range from retirement to lending.

Embedded solutions offer fast turnaround without the overhead.

Banks can compete with fintechs by implementing embedded tax.

The rapid advancement of technologies like artificial intelligence (AI), blockchain, and big data have given a fresh, exciting vibe to the world of finance. There’s tough competition amongst finance companies to capture a larger market share. This competition has resulted in a greater variety of tailor-made products and more efficient services to meet the needs of a diversifying consumer base.

As we look ahead in this exciting era of personal finance, one expanding market is becoming too large to ignore – the gig economy. With a dynamic workforce breaking away from old-school employment norms, gig workers have unique financial challenges that have caught many financial institutions feeling unprepared to capitalize on the market shift. These financial institutions are always looking for the next big product or feature, but are still struggling to address the growing $455 billion market at their doorstep.

Integrating tax into large financial institutions’ product suites is imperative, as it provides invaluable insights for addressing the specific needs and challenges of the expanding gig economy. Financial institutions can secure a significant share of this rapidly-growing workforce by building enduring products that confidently address the unique needs of gig workers. The 455 billion dollar question is: How?

The gig economy is more than just a trend. It’s a seismic shift in employment models that offers flexibility and freedom to millions of workers worldwide. But the financial needs of this group are vastly different from W-2 employees. Many companies are not equipped to serve both, leaving the profitability of the gig economy market largely untapped.

While fintech companies have aggressively targeted the gig economy, it’s essential to recognize that large financial services organizations, particularly legacy banks, have the depth of resources to compete. From savings and investment options to insurance products, gig workers need flexible financial planning tools and lenient credit requirements.

Building products around income patterns: With tax, banks can pinpoint when gig workers earn more due to seasonal demands or when they face leaner quarters, and offer tailored expense tracking or flexible overdraft options during slower months.

Building products for retirement: Financial institutions can read into gig workers’ retirement savings behavior and analyze self-employment contributions and deductions to develop innovative retirement savings and investment products.

Building holistic lending products: With embedded tax, institutions can create loan products with flexible repayment terms tailored to a gig worker’s income flow.

As we step into this exciting era of personal finance, the gig economy is a rapidly expanding market too large for large financial institutions to ignore. Integrating tax into their product suites provides invaluable insights for addressing the specific challenges of gig workers.