The UK’s gig economy workers are continually facing challenges in accessing financial services.
A new report reveals that a significant number of these workers are denied these services due to an evident data disconnect between financial institutions and the applicants.
According to recent findings by Rollee, a rising FinTech startup focused on facilitating secure and consented access to income data, a staggering 25% of financial institutions have difficulty accessing complete income and employment details when evaluating applications from UK gig workers.
Consequently, 70% of these workers find it challenging to secure approval for financial products. When compared to a similar study conducted by Rollee in 2022, the situation has seen a meagre 6% improvement.
Furthermore, the research highlights that 38% of UK gig workers doubt whether their banks have an all-encompassing understanding of their multiple income sources during the application process. These revelations come as part of the “The Gig Economy Equality Gap” report, which delves into the prevalent issue of financial exclusion faced by gig workers. It brings to light the struggles of banks in conducting effective credit checks, resulting in an evident data divide.
A survey encompassing 1001 gig workers showed that 66% have been declined a loan since joining the gig economy, even with a commendable credit score. To put this into perspective, on average, a gig worker must approach at least three financial institutions for credit cards or loans before getting an approval. Disturbingly, 34% reported missing out on housing opportunities, as banks, building societies, or renting agencies turned them down, despite their evident ability to afford it.
Highlighting the gravity of the situation, 80% of gig workers feel that they lack equal access to financial services in comparison to traditional full-time employees. This imbalance has forced 39% of them to contemplate quitting their freelance work to seek full-time employment, thereby improving their financial service accessibility chances.
After submission of applications, a concerning 68% felt neglected by financial institutions, stating that their income and employment data were not meticulously reviewed. Amplifying their woes, 42% reported that they weren’t even given a reason upon denial of a financial service.
Rollee CEO and Co-founder Ali Hamriti said, “This research reveals that financial institutions are struggling to grant gig workers access to financial products because of a data disconnect in credit checks. This is having critical repercussions on the lives of many self-employed workers, causing them to face high levels of financial exclusion and being denied financial products despite having the necessary levels of affordability.”
He further added, “To avoid excluding a growing market of gig workers, bridging the gap caused by this data disconnect is vital. Financial institutions must find solutions to access a broader range of data, including verifiable data points about a worker’s income, employment status and activity. Having this kind of holistic view will ensure that credit assessments are not just based on financial transactions, but also account for gig workers’ ability to repay. This is the final frontier of open finance.”
Currently, in the UK, Rollee collaborates with auto lenders, mortgage brokers, and accountants to simplify their access to vital income and employment data, ensuring fair and prompt decision-making.
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