Indian gig economy to drive the next wave of fintech and banking innovation

It is absolutely true that, the Gig Economy would drive the next wave of Fintech and Banking innovation. Gig economy, despite its growing importance and acceptance, continues to be vulnerable to financial insecurities. Apart, from irregularities in income, they lack corporate benefits such as provident fund, insurance etc.

Moreover, traditional banks and financial institutions offer little or no flexibility for products, most credit and even investment products are out of reach for them. For instance, in the case of SIPs, non-payment of installments leads to heavy penalties, for a freelancer, who has variable income, the need to have flexibility for payment is necessary.

Similarly, for credit, since the institutes follow a standard underwriting process, loan application of a new-age professions like a freelance writer is often rejected. New-age fintech firms, are quick to recognize the opportunity presented by the rising number of people joining the flexible work economy. They are creating distinct financial services that caters to the need for flexibility and quick turn-around-time required by the sector. Financial planning, on demand credit and flexible investment options are a few popular financial services amongst the sector."

"Priyanka Rastogi (25) graduated from a prestigious management school in 2017. She, like many others from her batch chose to skip the campus placements that guaranteed a corporate job. She instead is working on two diversely different work assignments. The first project, which she considers her bread and butter, is as a product design consultant with a FinTech firm and fits well with her management background. Her second project, as a sailing instructor in not high paying but keeps her mentally alive, according to her.

Last five years have seen a meteoric rise in the number of people opting for flexible /short contract work over a steady permanent employment. A research report issued by McKinsey, estimates that up to 162 million people in the U.S. and EU-15 currently engage in independent work. A report by BetterPlace (a technology platform company in India) titled “Blue-Collar Workers in 2019” states that the Gig economy of India is set to create 2.1 million jobs by Q4 2019.

Independent work is rapidly evolving as digital platforms create large-scale, efficient marketplaces that facilitate direct and even real-time connections between the customers who need a service performed and the workers willing to provide that service. Today, just 15 percent of the independent workers we surveyed have used a digital platform to find work, but the so-called on-demand economy is growing rapidly.

While this digital transformation unfolds, several other forces could fuel growth in the independent workforce: the stated aspirations of traditional workers who wish to become independent, the large unemployed and inactive populations who want to work, and the increased demand for independent services from both consumers and organizations.