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The Future of Work And Financial Planning: Can Neobanks Help Adapt to the Gig Economy?

The traditional model of the 9-to-5 job with a steady paycheck and employer-sponsored benefits is fading fast. Last year, up to 30% of the global workforce participated in some form of freelance or independent work. Fueled by digital platforms and on-demand services, this new landscape, known as the gig economy, offers flexibility and independence, but it also creates a complex financial tightrope for its participants. 

This is where neobanks and alternative financial apps step in. These digital-first resources, designed for the mobile age, could be the game-changer for gig workers' financial stability. Can neobanks equip this growing workforce of independent earners with the tools and resources they need to thrive in the evolving gig economy? 

 

Challenges for Gig Workers

Self-employed contractors – many of them working remotely – face a set of financial hurdles, which makes budgeting and saving for retirement a constant juggling act. Essential benefits like health insurance and paid time off are absent, leaving them exposed to financial risks and solely responsible for securing their future. To top it off, navigating and paying self-employment taxes independently can be a confusing and time-consuming process, fraught with the potential for costly mistakes.

 

The Rise of Neobanks: A Mobile-First Ally 

Enter neobanks – digital, user-friendly financial institutions built for the mobile age, with a global user base of more than 250M people. Their on-the-go approach perfectly complements the remote nature of much gig work. But more importantly, neobanks offer a suite of features specifically designed to address the financial challenges gig workers face.

Income Tracking
This innovative tool helps average earnings across months, providing a more consistent picture of your average income – handy for budgeting and financial planning.

Tax Optimization Tools
Neobanks can automate the complex calculations and filing of self-employment taxes, saving independent contractors valuable time and reducing the risk of errors.

Freelancer-Friendly Accounts
Some neobanks offer accounts tailored for gig workers, with features like lower fees for frequent transactions (up to 75% lower fees compared to traditional banks) and easier expense tracking tools. 

Expanded Payment Options
Apps like Brighty allow freelancers greater flexibility in receiving payments, including cryptocurrencies, opening doors to new job opportunities in the burgeoning Web3 space.

By addressing these challenges, neobanks empower gig workers and gain access to a large and growing pool of potential customers. They build a loyal user base that relies heavily on their services, fostering a mutually beneficial relationship.

Bridging the Gaps: Neobanks as a Stepping Stone

While neobanks can't replicate traditional employee benefits, they can equip gig workers with valuable resources to get to the same level of security. 

Collaborations between neobanks and insurance companies can offer affordable, portable health plans, addressing a major concern for gig workers. Tailoring savings and investment tools to the income patterns of gig workers will encourage consistent saving for emergencies and retirement. For example, Acorns, a micro-savings app, recently launched a feature specifically designed for freelancers, allowing them to invest "spare change" from their earnings. Additionally, neobanks can foster online communities where gig workers connect, share resources, and advocate for further support.

However, it's important to remember that neobanks are not a silver bullet solution for the financial challenges of the gig economy. They can be a valuable stepping stone, but freelancers should also consider these strategies:

Upskilling and Diversification
The gig economy requires constant adaptation. Gig workers should continuously develop new skills and diversify their income streams to mitigate the risk of income fluctuation. Platforms like Coursera and Udemy offer a vast array of online courses to help gig workers stay competitive.

Building a Safety Net
While neobanks can help with short-term emergencies, gig workers should also consider building a financial safety net, e.g., saving a few months' worth of living expenses. These savings can be set aside in interest-earning accounts like the Brighty Vaults, where users can earn a higher interest percentage compared to traditional financial institutions.

Advocacy for Worker Rights
Gig workers have a voice. They can advocate for policies that improve their working conditions and financial security. This could include lobbying for portable benefits, standardized tax structures, or minimum wage protections for platform workers.

 

Collaboration is Key

To truly create a secure financial future for gig workers, a collaborative approach is crucial. For policymakers, it might be exploring options like portable benefits and simplified tax filing specifically for gig workers. The European Union is currently exploring ways to create a “single social security status” for platform workers. 

Freelancers actively use neobanks' resources and advocate for policies that address their needs. Organizations like the Freelancers Union offer resources and support to share experiences, advocate for legislative changes, and push for industry-wide standards. By working together, they can create a more stable and equitable environment for the gig economy as a growing segment of the workforce.

 

 

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Nikolay Denisenko

Nikolay Denisenko

Co-Founder & CTO

Brighty App

Member since

23 Oct 2023

Location

Baar, Zug

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