The Role of the Gig Economy in Fintech: Flexible workforces
The foundation upon which the gig economy is built is one where there is no longer intermediaries. As such, many industries are increasingly being cut out of traditional and new marketplaces.
But don't ask me, check with your local taxi owner, hotelier, or car rental agency if Uber, Airbnb, or Turo have affected their way of doing business. This is a good thing, but how we react to this shift will define our businesses in the years to come.
When discussing what fintech means for the traditional finance industry, Barry Ritholtz, a Bloomberg columnist, aptly answered: "what is much more interesting to me is how the traditional money-management industry will respond to and adopt the latest technologies for helping it operate more efficiently and with greater client satisfaction."
This is an astute observation, and one that I believe in strongly. The gig economy is premised on flexible employment, so how can this model become part of fintech?
This flexibility is something that most industries, including the financial sector, have yet to fully embrace. There are a number of gig economy companies out there who have access to thousands of on-demand workers who can perform a number of tasks that were traditionally the wheelhouse of full-time employees. So why would a large financial institution have tens of thousands of employees across the country to verify assets when they can leverage a stable of trained, vetted, and professional gig workers? This is the crux of the gig economy, where people with spare time have self-identified as willing to complete on-the-ground tasks in their geographical location.
In this sense, gig economy companies are not just a vendor service, they can be part of the process and can save a company money.
Let's dive into a specific sector of the emerging fintech industry, online lending, as a case study looking at how the gig economy can enable and complement the lending process.
Gig Economy Case Study: A flexible workforce and online lending
Online lending, including peer-to-peer lending, is an old concept reinvented for a digital age. Entrepreneurs, business people, and citizens have always borrowed and lent money to each other, but only in recent history has that become much more sophisticated and accessible through online marketplaces and fintech services.
Foundation Capital predicts that over $1 trillion in loans is expected to have originated through these new lending marketplaces by 2025.
Indeed, fintech has enabled a safe lending environment between people and businesses through innovative screening and credit checking. Investors and businesses of all stripes can now lend and borrow through internet platforms without traditional bank applications, or even the need to physically exchange documents.
In most of these cases however, asset or document verification are still requirements of this type of transaction.
Take for instance common financial loan transactions, such as vehicle financing or refinancing, property financing, business loans, etc. All of these transactions require some form of physical verification that an asset exists, and is 'as described'. Whether that is a car, property, business, or other assets, someone needs to ensure they fulfill lending requirements.
Gig economy companies have access to thousands of workers across the U.S. who are ready and trained to travel to a specific destination to complete asset verification tasks.
The Gig Worker Landscape: What that means for fintech
Technology allows on-demand workers to capture the correct on-site data and perform tasks in a consistent manner across the U.S. The benefits of this gig model are numerous, and a gig economy worker can now: Replace multiple vendors Augment or supplement employees in the field Augment, supplement, or replace employees dispatched from a bank to verify assets or perform a task Provide faster task completion at a lower cost Capture and store all data in the same place and format Gig economy companies are SSAE 16 SOC Type II data certified. This means they can securely store data and adhere to privacy issues. Many other field service companies providing commercial property inspections, residential occupancy inspections, merchant site inspections, or site improvement inspections, unfortunately are not.
Because of the flexibility inherent in gig work, there is a significant increase in flow of information to clients. For instance, companies can provide an electronic "live" report, which allows clients to review photos and information prior to receiving a traditional report.
There is also the ability to support video, enabling a walk-through of a property, a demonstration of a piece of equipment in operation, and much more. This walk-through can also be done live with the client if needed.
Another example of where the gig economy can complement fintech or traditional financial companies is document retrieval. For example, in the past, a customer would need to bring documents to a bank and work face-to-face with a branch employee for notarization and paperwork completion. This is no longer the case. Gig employees can now immediately travel to the customer's home or place of business, where they can take photos of the asset, deliver documents, notarize originals, and then deliver them to a shipper and submit all relevant information via an electronic report. This allows the bank to view all information, verify all the documents are properly signed, and can then fund a customer before the FedEx or UPS package of original documents arrive.
All of this flexibility allows for faster turnaround times, the elimination of multiple vendors, and a reduction in lag time waiting on a customer to try to get to the bank during business hours.
In the end, what we have is a smarter and faster process, which is important, particularly when a loan rate guarantee is in place.
Changing entire industries takes time, but the gig economy and fintech are rapidly altering the landscape of the traditional finance industry. These industries are not mutually exclusive, as traditional financial services can embrace the better use of technology through fintech, and greater efficiency through the gig economy.
I believe that fintech will remain as disruptive as it has through the adoption of gig economy principles, in particular a flexible workforce. The gig economy is here to stay, so let's figure out how we can best capture it to help improve our businesses.
Robin Smith is the Co-Founder and CEO of WeGoLook, an Oklahoma City-based company that specializes in on-demand field inspection and verification services. With its web and mobile platform, the company empowers a 20,000+ mobile workforce, known as Lookers, to collect and verify information and fulfill custom tasks for businesses and consumers alike. www.wegolook.com