According to industry projections, the global gig economy is expected to increase from USD 204 billion in 2018 to USD 455 billion in 2023 at a CAGR of 17.4%. The gig economy is likely to continue expanding given the perceived advantages for both employers and employees. However, gig workers barely contribute to the delivery of banking services. Banking was not one of the top 20 industries hiring gig workers, according to a 2020 report on the gig economy.
Why are banks still resistant to gig workers?
Traditional banks are developing products geared for gig workers in an effort to get over their initial hesitancy, but they still have not truly warmed to the idea of hiring them. There are three basic causes for this:
Banks contain a wealth of personal client information that fraudsters highly value. Banks are increasingly careful about hiring temporary foreign talent due to the rising cost of fraud.
Service complexity: Bank services demand higher-level expertise. Therefore, banks are less likely to hire gig workers because of a lack of confidence in the calibre and regularity of services.
As regulations change, businesses must now categorise independent contractors as workers under California’s Assembly Bill 5 (AB5). It’s possible that other US states will pass legislation along these lines.
How will the use of gig workers assist banks?
The common difficulties that banks encounter while employing temporary employees can be divided into two categories:
Seasonal needs for particular skills
Holiday season, for instance, or credit season
Banks need non-core business competencies.
Professionals in the legal, audit, and bankruptcy fields, for instance
It is frequently advantageous for the banks to hire qualified gig workers and align them to a new remote work model in order to keep costs down. This is because the skills required during project or gig delivery are seasonal and short-term in nature.
scaling up the gig economy
The gig model has developed over the past few years to support highly specialised abilities. In-house gig platforms have been developed by businesses like PwC and Philips to repurpose freelance workers for opportunities within their companies. To directly engage gig workers, Axis Bank in India has launched the “GIG-A-Opportunities” portal. These novel hiring strategies ought to serve as an example for other institutions.
How can banks employ contract workers?
Today, banks all around the world use independent experts in the fields of audit, accounting, valuation, and legal advice for particular tasks. Banks already have a foundational framework for enlisting outside expertise thanks to this experience. Here are three quick measures that banks may take to effectively participate in the gig economy.
Platform: The first stage will be to find talent, preferably using a customised internal platform or a platform provided by a third party that is set up in accordance with the bank’s specifications. In order to acquire access to certified specialists, banks can also work with groups like the Chartered Financial Analyst Institute or the American Institute of Certified Public Accountants (AICPA). The supply side of skills is established in this way.
Positions: The next phase in this process is to find and advertise jobs that are in high demand, are not essential to the bank’s operation, are flexible, and do not put the bank at an unnecessary risk (Example: training, sales, certain legal functions, auditing, and accounting). This handles the skills demand side.
Performance: Rating gig workers on the platform based on their skill level, timeliness, and quality of deliverables is the third and most important phase in the process. This will give the bank information it needs to find top-notch people and work with them continuously.
It is beneficial to hire gig workers with the appropriate expertise, but it is crucial to make sure they have been verified in accordance with bank policy. Before gig workers are accepted onto the platform, banks need hire an FCRA (Fair Credit Reporting Act) compliance firm to verify their credentials. Banks should restrict the access of the gig workers to only those systems that are necessary for them to do their tasks. By taking these measures, the security threats posed by gig workers will be reduced.
Banks must also implement governance risk and compliance (GRC) systems and procedures that enable them to stay current with the changing legal framework governing gig labour. This will guarantee that the bank can use gig services in accordance with the law.
Banks are among the biggest users of temporary staffing through third-party agencies, which is a USD 195 Bn market in the US. Gig workers might meet 15-20% of the demand for temporary staffing with the deployment of the appropriate platform and interaction with stakeholders on the supply and demand sides. This will be extremely advantageous for banks as well as gig workers.