The Fear Factor Associated with the Gig Economy in the Financial Services and Insurance Industry

Is the financial services and insurance industry equipped to handle the challenge of the rise of the gig economy?

February 24, 2017

The financial services and insurance industry has had a rocky ride over the past years. Organizations have been faced with numerous challenges, including the continuous string of new and revised regulations; the increased use of technology for both in- and outward facing processes; a large number of M&As; and the need to win back the trust of the public. Fortunately, for the most part, the organizations that survived the Great Recession are still standing today. But are they equipped to handle the challenge currently facing them—the rise of the gig economy?

The rise of the gig economy

According to the HR.com article “Contingent workforce: Six factors that drive them,” experts predict that on average by 2020, 40 percent of an organization’s workforce will consist of contingent workers. Interestingly, Millennials and Baby Boomers are demonstrating a strong gravitational pull towards contingent work—not because they don’t have any other option, but because they want to work on a project-by-project basis. This fact, combined with employers’ post-recession preference for agile, scalable workforces that allow them to respond quickly to in- and external pressures is the driving force behind the continuing rise of the gig economy.

The fear factor

For many employers, however, there’s a considerable fear factor associated with the gig economy and free agency talent. That fear is based on three important concerns:

  1. How can financial services and insurance companies restructure work into gigs? The logical consequence of more and more workers choosing free agency is a restructuring of work into projects to which talent can contribute a pre-determined amount of work. But many employers are debating whether this is a viable option, and if so, to what extent. Does all the work need to be restructured, from IT security to mortgage financing to bank tellers? Will the linear career path as we know it disappear? Is this even a possibility across the board?
  2. How can employers attract and retain top talent? The truth is that organizations are already losing workers to free agency at two critical career stages: high-potential mid-career professionals and mature workers with decades of industry- and company specific knowledge. It’s only logical for employers to ask what exactly they need to do to attract and retain top talent if having a salary, benefits, and a career path within an organization aren’t enough anymore. What’s so attractive about the gig economy—which doesn’t guarantee steady work—that makes people leave stable positions? What aspects of the gig economy can employers realistically incorporate into their own organizations to make them more attractive to top talent?
  3. How can financial services and insurance companies compete with other industries like high tech? In the gig economy, workers can (if their skills allow) easily move across a range of industries—industries that might have more interesting and better paying opportunities for free agents. Financial services and insurance employers are rightfully concerned that they’re in competition with sectors with an extensive legacy of using gig workers—for example, the IT and high tech world. The question then becomes not only how to be a more attractive prospect than other employers in their own industry, but also than employers in other industries.

In all honesty, there are no set answers to these questions, but I believe that’s precisely why they’re worth exploring. So stay tuned as we look more in-depth at the gig economy in the upcoming months. In the meantime, I’m curious to hear your thoughts on the matter.

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