Financial institutions to increase uptake of gig economy workers

Freelance workers will perform up to 20% of the work in a typical financial institution in five years, new research finds

Dubai, United Arab Emirates. March 17, 2015///  Atmosphere at The A4 space in Al Quoz, Dubai. The next generation of entrepreneurs and freelancers who take advantage of free wi-fi and go about their business in some of the Dubai's cafes, shunning the typical and stable 9 to 5 job routine. Rebecca Rees for The National / Reporter: Emmanuel Samoglou  / Section: National *** Local Caption ***  Freelance Cafe Culture 003.JPG
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About 52 per cent of financial institutions expect to employ more gig-based employees over the next three to five years as the economic impact of the Covid-19 pandemic continues to disrupt traditional working models, according to global consultancy PwC.

Gig-economy talent currently accounts for 5 per cent of the financial services workforce, while contractors account for 9 per cent, the research found.

Gig economy workers are non full-time employees who are sourced for specific projects and skills, and are not exclusive to any employer. They may be working on multiple projects for different firms, with no defined period of time. Contractors are also non full-time employees, however, they generally work exclusively for an employer for a defined period of time.

In the next five years, gig workers will perform 15 per cent to 20 per cent of the work in a typical institution, driven by cost pressures and the need to access digitally skilled talent, PwC said in a report on productivity.

Despite increasingly available on-demand talent, most financial institutions primarily depend on full-time and part-time employees, according to the report, which surveyed more than 500 financial services businesses globally.

“Leaders in the industry are looking seriously at their workforces to evaluate which roles need to be performed by permanent employees and which can be performed by gig-economy workers, contractors or even crowd-sourced on a case-by-case basis,” John Garvey, global financial services leader at PwC US, said.

“Covid-19 and remote working have opened the door to accessing talent outside of a firm’s physical location, including outside of the country. What we are seeing now is a talent marketplace for gig workers in financial services, competing to take advantage of their specialist skill set and boost productivity within their businesses.”

The coronavirus pandemic has driven the rapid rise of the gig economy by disrupting traditional working models and resulting in many employees pursuing gig work for additional income during these uncertain times.

Around 56 per cent of gig economy workers in the US report having two or more jobs or projects, according to Statista. Meanwhile, MBO Partners, a US-based consultancy that provides business services to independent contractors, estimates that freelance workers will make up more than half of the US workforce by 2023.

Upskilling the workforce is key to improving productivity within the financial services industry, the PwC research found. This can be done by embracing the platform economy and gig workers, among other measures, the report added.

“Gig economy workers add value by immediately bringing the digital skills needed by financial services firms to improve functions such as customer experience and improving institutional resilience, while the full-time workforce is being upskilled,” Nicole Wakefield, global financial services advisory leader at PwC Singapore, said.

Besides the gig-economy, the PwC research also identified crowd-sourcing solutions as a key contributor to improving productivity. Crowd-sourcing – the outsourcing of work to a large, sometimes undefined crowd of people – has more than doubled since 2018, according to half of the participants surveyed by PwC. Of this, 80 per cent who leveraged crowd-sourcing said it added “high value” to their organisations.

Leaders in the industry are looking seriously at their workforces to evaluate which roles need to be performed by permanent employees and which can be performed by gig-economy workers

“Many of the most valuable companies in the world share one thing in common: they have embraced the platform economy as a business model,” Mr Garvey added.

“They operate with relatively few full-time employees and an increasing percentage of gig-economy talent and skills that they can access on-demand, making the organisations far more innovative, nimble and cost-efficient.”

However, respondents to the survey cited some challenges in taking on gig economy workers, including confidentiality concerns (44 per cent), a lack of knowledge (43 per cent), regulatory risk (42 per cent) and overall risk avoidance (37 per cent).