With the unemployment rate at a 50-year low and earnings starting to pick up the pace, the American economy is booming. This fact alone is great news for FIs, as more people making money yields increased deposits and accelerated requests for financial products.
Yet beneath the surface, we must recognize that while the amount of money Americans make is changing, so is how they make it. The epicenter of this phenomenon is a three letter word that is gaining in popularity with the American public and a potential win for savvy FIs, so long as they have all their ducks in a row and are able to execute a smart cash management and service strategy.
"76 million Americans work in gig-related occupations."
What is the gig economy?
The gig economy, as it's come to be known, is rapidly evolving. Those in the gig economy are either employed full time as contractors – often via multiple part time jobs – or supplementing their income by taking on jobs in their spare time. The rise of the gig economy can be tied to innovations in technology and industry disrupters like Lyft, Uber and other app-based employers, with some experts expecting 2019 to be the "Year of the Side Hustle." Indeed, according to a recent poll conducted by Packaged Facts, approximately 76 million people in the U.S. 18 years of age or older are currently engaged in gig-related occupations.
What are these jobs? As you might suspect, they tend to run the gamut, including bartending, baby-sitting, house cleaning, repair work and chauffeuring, whether as taxi drivers or ride service apps like Lyft and Uber. While traditionally, these "gigs" were seen as low-paying stopgaps to full-time employment, this appears to be charging: As reported by The Wall Street Journal, since 2011, the number of independent earners making $100,000 or more per year is up 70 percent.
Service to the fore for gigsters
Perhaps the most critical opportunity for FIs seeking to cater to those making a living in the gig economy is an expansion of financial services: With contractors getting income from multiple sources, potentially in dribs and drabs, a bank's ability to proffer holistic, personalized service is more important than ever. And, of course, automation serves as an excellent mechanism for FIs to offer all that this segment demands.
In a way, the bank's ability to offer high-touch, personalized service driven by automation and branch transformation mirrors the very nature of the gig economy. We've written extensively about how technology can act as a means to free up on-hand resources to focus on the personal touch, and the gig economy is simply this concept writ large. These gigsters don't make money like their predecessors, so likewise, FIs need to begin thinking out of the box.
Cash is key for side hustles
What is the biggest impact of the gig economy for banks and credit unions? While there are numerous repercussions of this evolving trend, the FI focus must be on cash management.
No one can deny that cash use is down, mainly because Americans have more options to pay for goods and services. But notable exceptions include services that fall under the gig economy banner. For example, in 2017, more than two-thirds of Americans said they preferred paying babysitters in cash, according to a study conducted by CardTronics. Their partiality to paper has only increased since then, with nearly 80 percent opting to pay their kids' babysitters in cash in 2018.
The same can be said for people who leave tips for superior service, traditionally for side-hustle jobs like servers at restaurants, baristas at coffee shops and Uber drivers. Sixty-four percent of respondents in the study said they typically paid tips in cash in 2017, which rose to 73 percent a year later, according to CardTronics.
Additionally, many of the businesses that hire gig workers – such as fast-casual dining facilities, small businesses and mass merchandisers – are using cash more frequently, due to its simplicity and the fact that everyone accepts it.
Bottom-line: There's never been a better time to modernize and systematize your cash management systems and strategies. Whether it's by recognizing withdrawal trends at certain branches or updating your ATM arsenal, BranchServ has the tools, expertise and equipment that can better prepare you for the gig revolution. Contact us so we can help you make your branch more customer-centric and ready to embrace the needs of the gig generation.