The global gig economy is projected to grow from USD 204 billion in 2018 to USD 455 billion in 2023 at a Compound Annual Growth Rate (CAGR) of 17.4%, as per an industry estimate. Given the perceived benefits for businesses and workers, the gig economy is likely to keep growing. However, the participation of gig workers in delivering banking services is insignificant. In a 2020 study on the gig economy, banking was not among the top 20 industries hiring gig workers.
Why haven’t banks warmed up to gig workers?
While traditional banks are overcoming their earlier reluctance by building products focused on gig workers, they have not really warmed up to hiring them. This can be attributed to three main reasons:
Security risks: Banks hold rich customer confidential data of significant value to fraudsters. With the increasing cost of fraud, banks are very cautious about bringing temporary external talent.
Complexity of services: Services rendered by banks require higher-order skills. Hence, a lack of confidence in the quality and consistency of services discourages banks from hiring gig workers.
Evolving regulation: California’s Assembly Bill 5 (AB5) compels companies to classify independent contractors as employees. There is a possibility of other states in the US bringing in similar legislation.
How will banks benefit from deploying Gig workers?
When it comes to hiring temporary talent, the typical challenges faced by banks can be assessed in two dimensions:
For example: Holiday season, credit season
For example: Legal professionals, audit professionals, and bankruptcy specialists
Given the seasonal and short-term nature of skills required during project or gig delivery, it is often beneficial for the banks to hire qualified gig workers and align them to a new remote work model to keep costs low.
Upscaling of the gig work model
Over the last few years, the gig model has matured to support high-end specialized skills. Companies like PwC and Philips have built in-house gig platforms to reutilize gig workers for opportunities within their organizations. Axis Bank in India has launched the “GIG-A-Opportunities” platform to engage gig workers directly. These new models of hiring should provide a cue for other banks.
What can banks do to hire gig workers?
Today, banks worldwide hire outside professionals in areas of audit, accounting, valuation, and legal counsel for specific assignments. This experience already provides banks with a basic framework to engage outside talent. Listed below are three simple steps to help banks engage in a gig work model efficiently.
Platform: The first step will be to acquire talent, preferably through a bespoke internal platform or a third-party platform that is configured to the bank’s requirements. In addition, banks can collaborate with organizations such as the Chartered Financial Analyst Institute or the American Institute of Certified Public Accountants (AICPA) to gain access to qualified professionals. This establishes the supply side of skills.
Positions: The second step in this process is to identify and publish jobs that have a large volume, are non-core to the bank’s function, are easy to adapt to, and do not expose the bank to undue risks (Example: training, sales, certain legal functions, auditing, and accounting). This addresses the demand side of skills.
Performance: The third and critical step in the process is to rate gig workers on the platform in terms of the quality of deliverables, timeliness, and skill level. This will provide inputs for the bank to identify high-quality talent and engage them on a continuous basis.
While hiring gig workers with the right skills is good, it is important to ensure that they are vetted as per the banks’ policy. Banks should enlist the services of an FCRA (Fair Credit Reporting Act) compliant agency to verify gig workers’ credentials before they are onboarded onto the platform. Banks should also limit the access of the gig workers only to the essential systems needed to perform their tasks. These steps will ensure that the security risks posed by gig workers are mitigated.
At the same time, banks also need to deploy governance risk and compliance (GRC) systems and processes that keep them abreast of the evolving law governing gig work. This will ensure that the bank is able to avail gig services in compliance with the regulation.
Temporary staffing through third-party agencies is a USD 195 Bn industry in the US, and banks are among the largest consumers of such services. With the deployment of the right platform and engagement with stakeholders on the supply and demand side, gig workers could fulfill 15-20% of temporary staffing needs. This will prove immensely beneficial not only for the gig workers but also for banks.