The modern space is rapidly evolving with more and more companies opting for flexible working opportunities for their employees. Gig economy is booming as a result observed Bahaa Abdul Hussein. A large section of people is choosing to work as freelancers or part-time contractors instead of taking up traditional full-time employment.
Gig economy financing refers to financial services and products designed specifically for individuals who work in the gig economy. These non-traditional workers who do not hold full-time, salaried positions have specific needs. The emergence of products and services suited to their needs are also changing financial services as a whole.
New Products And Services
As more workers enter the gig economy, financial institutions are likely to develop new products and services tailored specifically to their needs. These include specialized loans, credit cards and savings accounts. Having irregular income, gig economy workers often do not qualify for these services in their traditional form.
Competition With Traditional Financial Institutions
Modern day workers of the gig economy are heavily reliant on digital services including platforms where they find employment. So Fintech companies are a natural partner for their economic solutions. With the rise of such companies, traditional financial institutions will face increased competition leading to greater innovation and lowering of costs for consumers.
Credit Scoring Changes
Since workers in the gig economy are starting to get access to specialized credit cards, traditional financing will need to change the way credit scores are calculated. This will increase financial inclusion of these potential customers with irregular income. By taking into account alternate data sources like successful project completion, the creditworthiness of gig economy workers may be accurately determined.
Specialized Economy Insurance
Insurance products tailored to the needs of gig workers, such as liability insurance for drivers or equipment insurance for freelancers are also being developed. The payment methods of such insurance may also be updated based on the nature of their income stream. For example, by assuring payment of premiums to a dedicated credit card allowing for the fluctuations in the income.
Greater Financial Inclusion
Since a large population of the world that does not have access to financial services is also dependent on the gig economy, financing them could help to promote greater financial inclusion. This access to financial services for workers who may have had difficulty accessing them in the past could help to reduce inequality and promote economic growth.
To Sum Up
Gig economy finance is specialized to provide financial services for those who do not have access to traditional financial services because of the nature of their income. Providing benefits like banking, insurance, retirement benefits for these people without a stable income will lead to greater financial inclusion and overall economic development.
Thank you for your interest in Bahaa Abdul Hussein blogs. For more information, please stay tuned to www.bahaaabdulhussein.com.
