How this startup is leading the niche banking revolution
The summer of the big resignation has now dragged on for two more seasons – and there are no signs of slowing down. More than 24 million Americans left their jobs between April and September. More interestingly, the highest resignation rates were among employees with five to 15 years of seniority. Their quit rate was more than 54% higher in 2021 than in 2020. This change does not affect the growth of concert workers, as in the past. This trend is for skilled mid-career professionals leaving for more flexible and diverse income opportunities.
As more of us turn to running our own businesses and related businesses, we immediately face the challenges of managing a multitude of back office roles. When you’re the boss, there’s no HR team to walk you through setting up and selecting benefits. No AP Finance to hand over a business credit card hold a session on making up the retirement savings package. Slip into a number of freelance social media threads or check out the best-selling business books on Amazon. You will quickly see a growing interest in using fintech apps, banking services, and other software offerings to track expenses, account for tax deductions, and generate profitable freelance income.
Last week, I spoke with Oona Rokyta, CEO and Co-Founder of Lance, about how this shift in workforce and a rapidly evolving fintech industry is changing what we need and what we expect. of our banking solutions, more specifically. With customer data and industry insight, Oona explains the purpose of her business, why neo-banking solutions can be more flexible and tailored to the needs of the self-employed, and why providing personalized game plans and financial support will become a part. integral to banking development.
Gary Drenik: What is Lance’s mission?
Oona Rokyta: Our mission at Lance is to help people who work independently manage and grow their finances, automatically.
If you are or speak with a self-employed person, you know that the modus operandi today is to put together a handful of solutions – like a business bank account, invoicing software, and an accounting tool – to try and manage your cash flow simply. . To this you usually have to add solutions which can then offer various advantages and investment options. And then, as if that weren’t enough to add to your workday, you need to figure out your financial game plan and follow it regularly, even when you change clients, jobs, and homes. Did you know that the average person changes jobs 17 times and moves 11.7 times in their lifetime? It’s just an insane amount of changes to go through as you seek to make the most of every dollar.
With Lance, a simple business bank account allows you to consolidate all your income streams and payments – W-2 and 1099! – and have confidence that every dollar will be used for the best. We want everyone who is brave enough to fend for themselves and be confident that they are choosing the best financial options for their growth.
Drenik: Why does Lance focus on freelancers? Why are freelancers good candidates for a niche bank?
Rokyta: First of all, well over a third of the workforce is now independent. It is a huge and growing service market. Second, we fully understand the financial needs and anxieties of freelancers. Recently, a Prosper Insights & Analytics survey found that nearly a third of people in all age groups are unsure whether they are saving enough for their future needs. We are in the midst of a pandemic as we all save more than ever in recent history! This nagging uncertainty, however, creeps far beyond the savings of independents – and quickly prevents them from making progress in organizing and optimizing their finances. It’s just too intimidating on a day-to-day basis, on an individual basis. This is where we came in to create a comprehensive platform to introduce and implement best practices, personalized financial offers under the guise of a simple business bank account.
Drenik: The end of the year approaches. How does Lance help its users organize how much they earned in 2021?
Rokyta: As our clients use their Lance account to capture payments and their debit card to cover business expenses, we are able to categorize and add all of these amounts into a personalized Annex C form in real time. While we help with withholding and making estimated quarterly tax payments, this completed form can help our clients easily file their year-end taxes or apply for loans any time of the year.
Drenik: What are the reasons why someone would move their bank accounts from big banks to smaller neobanks?
Rokyta: Neobanks like Lance are increasingly competitive with more established banks in terms of fee structures as well as mobile experiences. In addition, there is more flexibility and creativity starting to be applied today to meet targeted market needs beyond marketing campaigns, like that of freelance workers. For example, just over a third of 18-34 year olds want to increase their savings over the next 3 months, according to a recent Prosper Insights & Analytics survey. We have seen that this objective also resonates strongly with our customers. With most traditional banks and even many neobanks, you need to open a savings account, figure out how much you can afford to save, and then set up an automatic transfer for a monthly withdrawal. Within our platform, we can turn these three steps into one. We recommend the amount you need to save based on your expected income, and then once you approve that setting, we just put the right amount into a savings account as you get paid.
Drenik: What does the future of banking look like?
Rokyta: Beyond the niche back office needs of this growing wave of freelancers, 64% of the Gen Z population are looking for a personalized banking experience. As neobanks and other fintech solutions continue to drive down banking and payment fees, the real value proposition and retention opportunities lie in the personalized advice provided to niche demographics. There are very different financial goals, risk profiles, and offerings that are relevant to adolescents and their parents or qualified freelancers, for example.
Drenik: What does Lance hope to accomplish in the near future for freelancers?
Rokyta: Today, a Lance account automatically recommends and sorts portions of customer payments based on personalized cash and savings needs. In the near future, this same account will grow to ensure that every freelancer can easily opt for the best benefits and investment options that are best suited to the income available.
Drennik: Thank you for sharing all these ideas from across the industry and your development of Lance, Oona. I’m sure we all look forward to banking and other financial tools to evolve to the point that all of us, part of the Great Resignation or not, can easily take a more personalized path to financial growth. Definitely, would make an easy New Years resolution at the start of each year!