What independent workers (don’t) want from their bank, in 4 charts
- Independent workers in the U.S. are seeking new banking options, because their needs are not being adequately served.
- Millions are looking to switch banks in the next year, creating a major opportunity for banks to capitalize on.
The independent economy – which includes freelancers, independent consultants, content creators, on-call workers, and merchants – is growing fast. It currently consists of 68 million people in the U.S. alone, and it’s estimated that by 2025, it will include over half of all U.S. workers.
Despite the rapid growth, this market remains largely underserved when it comes to their banking needs. Recently, a number of challenger banks and fintechs have sprung up to offer personalized services tailored to the needs of independent workers. Examples include Lili, Oxygen, Lance, Novo and indi. However, so far, major banks and traditional financial institutions haven’t stepped in to sufficiently fill this growing gap in the industry.
Every customer has specific needs, but a business of one is a different ball game. Independent workers have unique requirements, as they have to manage their income, taxes, savings, and other financial obligations on their own, in addition to running their business. So when it comes to bank account offerings, what exactly are they looking for?
Abound, a firm that builds financial APIs for the independent economy, turned to independent workers themselves to learn more about their specific banking needs. Abound surveyed over 400 independent workers from across the U.S., representing a variety of roles, income levels, age groups, and years worked. Findings highlight how independent workers feel about their current banking situation, the problems they face, the features they care about the most, and what their ideal bank account would look like.
Only about half of independent workers are very satisfied with their bank
So, how do current satisfaction levels look for independent workers when it comes to their banking needs? Not great. Only about half of them (51.1%) say they are very satisfied with their current bank. Around a third of respondents (34.2%) are somewhat satisfied, and nearly 15% are not satisfied at all.
The report also finds that most people who are ‘very satisfied’ have accounts with regional or local banks, and most who are ‘least satisfied’ are customers of national banks like Wells Fargo, JPMorgan Chase, and Citi. This suggests that the country’s biggest banks may really be missing the mark when it comes to fulfilling the specific needs of independent workers. But what exactly is causing this dissatisfaction?
Dissatisfaction stems from high fees, a lack of features, and bad customer service
Among respondents who aren’t satisfied with their bank, one in five (20.4%) complain that the banking fees are too high. In particular, they are most frustrated by monthly maintenance and service charges, overdraft fees, cross-network ATM fees, wire transfer fees, and international transaction charges.
Other independent workers complain about a lack of features that sufficiently meet their particular needs (19.9%), poor customer service (18%), inadequate security measures (15.1%), and long bank transfer processing times (13.1%).
Together, these reasons help explain why so many independent workers are dissatisfied with their current bank, and are seeking out new banking options with personalized features and lower fees.
Most independent workers want to switch banks in the next year
More than two-thirds of independent workers are looking to switch banks in the next 12 months. In particular, 30% say they are somewhat likely to change banks, and almost 40% say they are very likely to do so.
Translated to a macro level, this suggests that out of the 68 million independent workers in the U.S., 26 million would be actively looking for a new bank account in the next year. Most of these people make over $100,000 in yearly income, according to the report. This could be a major opportunity for banks to zero in on.
But what kinds of products and services are these prospective customers looking for in their new bank?
Managing and categorizing expenses is the most valued feature
Independent workers are not just looking for a place to store their money, but a bank that can help them manage their role as a freelancer, content creator or consultant, and all the nuances that come with it. They want a feature-rich bank account that acts as their financial manager and helps them navigate the obligations that come with being self-employed.
The most important features that independent workers look for include the ability to manage and categorize expenses (26.1%), automatically set aside tax payments (18.1%), automatic budgeting and savings (17.1%), and a user-friendly mobile app (16.2%).
With so many independent workers dissatisfied with their current bank, and millions planning to switch banks in the next year, there's a major gap in the market waiting to be filled by banks that are willing to offer specialized services tailored for the needs of the independent economy.
“Independent workers may be considered a niche market today, but with over 68 million of them in the U.S. alone, this growing market will make up half of all U.S. workers in the future,” said Trent Bigelow, co-founder and CEO of Abound.
“Traditional banks need to capitalize on their established position and extensive resources to attract the independent economy. Failing to serve it now creates the perfect opportunity for challenger banks and fintechs to step in and capture this market with purpose-built and automated solutions for independent workers.”