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How fintech misses out on 1.5 billion customers

Disastrously, 70 per cent of freelancers are not contributing to their pension, writes Hannah Duncan. It's a huge fintech opportunity.

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Pexels/Ketut Subiyanto

“Imagine a bank that … literally … did your tax for you”, whispers Dan Callis, a freelance SEO expert.

We both dream for a moment. When an invoice gets paid, 20 per cent trots off to a pot called “VAT”. 20 per cent skips into a jar labelled “Corporation tax”. And God knows how much into an account labelled “Income Tax”. 

Sighing, I steal a begrudging glance at my messily arranged Tide Account. Why isn’t this stuff available to freelancers? 

“Banking apps are trying”, Callis grimaces. “But I find Monzo’s finance forecasting …it can't…because my finances are so unpredictable”. 

A $500bn gap

Unpredictable pay is at the centre of freelance life. 

Around 40 per cent of us suffer swings of 30 per cent and above. 

But Henry Oakes, co-founder and CEO of Gigpay believes the volatility is even higher. ‘In the quietest months, it's not uncommon for freelancers to earn nothing at all - in other words a 100 per cent 'negative swing' from their mean monthly earnings”, he explains. 

As Oakes reminds me, models, actors, stylists, movie producers and many others are often paid their entire annual salary in just one or two invoices. Glancing through my own accounts, my best month (July) brought in nearly eight times as much as my worst (August). 

Yet, for myself and the other 4.3 million freelancers in the UK, there’s no support. It’s a shame because annually, we add £278bn to the economy and we’d really appreciate some help. 

Maria Praena, the founder of Studio Artemy, is one of the many freelancers who’d probably benefit from better fintech. She’s singlehandedly created a thriving international business. But – infuriatingly – Praena spends hours untangling invoices, forex, cross-border payments and more. 

“Friday is my business managing day”, she reveals. “Honestly, I absolutely dread and hate the moment”. Every minute takes time away from value-adding work. What’s more, the stress of dealing with admin makes it harder for her to design new products. “I cannot get into the creative flow”, she sighs.   

By contrast, large businesses don’t suffer from these issues. They benefit from a never-ending sweet shop of services. Almost the entire financial system was built around them. Smaller businesses get support too. 

For decades, they’ve mostly had access to bank accounts, financing, factoring, and government schemes like the 2020-2021 furloughs. 

But for freelancers…? Uhh…Nope. All we can do is try to fit ourselves into products designed for others. “Freelancers are forced into being square pegs in round holes”, emphasises Craig J Lewis, founder of the US platform Gig Wage. 

Former CEO of Crealogix, David Joyce has recently plunged back into freelancing himself. As a fintech expert, he feels freelancers are still waiting for their revolution. 

“A lot of the disruption or innovation has been at the small-to-medium enterprises. But freelancers are one step further away from that”, he elaborates. 

How much longer will we need to wait? Between 2021 and 2022, UK freelancers dropped by 5 per cent. Could more businesses have survived with support? Missed opportunities are racing by. 

A universe of uncreated services

A handful of online banks and platforms advertise to freelancers. But when you dig into the details, they’re normally scaled-down versions of the kind of thing that Tesco or Walmart would use. Almost nothing has been designed around the real life and needs of a freelancer. 

Bukki Adedapo, UK country manager for Fiverr, talks to hopeful fintech partners every week and he’s found the same thing. 

“A lot of people are like, ‘Hey! You have these freelancers, and we want to provide this solution to them’, but it’s actually a solution that’s been made for SMBs, it’s not made for individual freelancers”, he reveals. 

Even Starling Bank - one of the most popular platforms for solo entrepreneurs – falls into this category. “We have a bit of an agnostic view”, comments William Boocock, Head of Partnerships. 

“I wouldn’t say that there’s anything specific that we aim to do for freelancers that we don’t do for businesses or vice versa”. 

Platforms like Starling and Xero offer plug-ins, to help freelancers customize platforms. But these integrations are mostly designed for corporations. Freelancers are not mini-Walmarts. We have unique business models. We need our own things. 

Take bartering for example. A big corporation might lease office space for money. But me? I swapped three articles for membership at a business club. It’s how I prefer to pay for subscriptions and industry events too. 

Freelance graphic designer Ana Sofia Mendes traded artwork for wedding entertainment. “I contacted several pianists but their schedule or the prices were not complying with my budget”, she explains. “I ended up swapping my design skills”. 

For the world’s 1.57 billion freelancers, bartering is another means of payment. 

Yet, it seems no tech company has capitalised on this. There’s a universe of uncreated services. Globally, a $500bn market is left in the dark. 

Time for a voice 

John Coldicott, director at Xero understands the issue. Alongside Starling’s Boocock, he believes freelancers don’t have a voice in the macroeconomy. 

“The balance isn’t very fair if you consider how big businesses are represented in government versus smaller businesses including freelancers”, Coldicott explains. “There isn’t a big enough representation”. 

For the record, UK freelancers turnover nearly five times more than Tesco, seven times more than Sainsbury's and over 25 times more than Marks & Spencer. We should have a voice.  A f**king loud one. 

Both Xero and Starling are working in different ways to boost freelancers’ interests. But they are limited in the type of service they can provide. 

“As regulated entities, you have some restrictions in terms of how creative and wacky you can be”, comments Boocock, “We don’t want to get too far ahead of what the regulators want”. 

Perhaps the issue is systemic. Freelancers are forced into accountancy structures that were designed for (and lobbied by) powerful corporations. We need our own champions. 

What now? 

I never thought I’d feel so relieved to hear these words: “We’ve built technology natively for freelancers”. Gig Wage’s Lewis has long advocated for freelancers to get a decent deal. In 2014, he founded the platform to help companies pay their freelancers effortlessly. 

“Payroll is the foundation of economic stimulus and success”, he affirms. 

Here in the UK, Oakes is also trailblazing with a freelance-first platform, Gigpay. He’s aiming to help freelancers reduce income volatility with steady payments. 

“It’s an income-smoothing app”, he explains. “It allows freelancers to do the flexible work they love with stable monthly pay”.

While these services are incredibly welcome additions, there is bountiful room for more. Consider maternity or paternity leave. Or integrations for legal assistance, insurance, savings, or pensions. 

While some of these already exist, they are simply not reaching enough freelancers. As of 2020, a disastrous 70 per cent of freelancers are not contributing into a pension at all. We need support. 

Lewis also left a powerful message to other fintechs, which I can’t leave untyped: “All fintech talks about is economic empowerment. All fintech talks about is the unbanked and serving the unserved. What I would say is don’t just talk about it. Do it”. 

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