How the Future of Work Will Impact Fintech

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Over the past decade or so, the workforce in the United States has been going through some major changes. One of the most significant of these changes has been the rise in popularity of freelancing. In 2005, only 10% of the workforce was made up of non-traditional employees like freelancers and independent contractors. In 2016, however, 16% of the workforce is made up of these alternative workers. By 2020, it is predicted that up to 40% of the workforce may be freelancers.

Reasons for the change

Part of the reason why freelancing is becoming more popular is because freelancing is now a lot easier to do.

Online platforms such as Upwork and Freelancer, connect high volumes of freelancers with clients. In fact, Upwork has over 12 million registered users, and 3 million jobs posted every year. 

The ever-expanding use of the internet in many different countries has also made it easier for people to connect with each other to do business all over the world.

Freelancing is also highly appealing to many people because it allows them to be their own boss. Also, in many cases, all a person needs to run his or her freelancing business is a computer.

This adds a lot of flexibility, and opens up the possibility of location-free lifestyles. These benefits are extremely appealing to many people.

In fact, one study reports that 92% of contractors are "very or somewhat satisfied" with their freelance jobs.

Fintech and the Freelance Economy

The freelance economy is generating both tremendous opportunities and a dramatically increased need for fintech solutions. This is because more financial transactions are happening online and between nations than at any other point in history.

The freelance economy is causing companies to rapidly expand their sales, transactions, and teams into new regions of the world.

However, often there can be problems when it comes to making payments between people in different nations. For example, in Latin America, only about 20% of people have access to international credit cards.

Also, regulations, taxes, and security must all be considered when people are making payments between nations. What this means is that the world needs financial technology companies to help to create solutions to keep up with the increasing demand for online, mobile, and international transactions.

Outlook

The increased demand for fintech products is creating a major upsurge in the amount of jobs that will be available in this sector.

In fact, it is estimated that in the U.K. alone, 100,000 jobs will be created and 8 billion dollars’ worth of investing will take place in fintech by the year 2020.

Many companies have already established their place in the fintech world and have become the trusted household name. For example, PayPal and Stripe are all widely trusted.

However, they do not cater to the globalized freelancing world. For instance, these services charge a "cross-border" fee which is a percentage of a payment transaction that can range from 2-4%.

And this is causing newer companies such as Payoneer, and BlueSnap to enter the fold.

Payoneer is a payment company that received $180 million in Series E funding in 2016. Payoneer and BlueSnap represent the potential of the fintech industry for the future of work.

A future with a whole lot of freelancing!

 

Final Thoughts

The continued growth of the freelance economy and international financial transactions are fueling the expansion of the fintech sector.

The world has seemingly arrived at the point where it needs simple and frictionless online transactional solutions. This need will generate tremendous opportunities for employment and for investment in fintech.

In the next decade, e-commerce and online transactions could become significantly smoother and more seamless than they have ever been.