How do American fintech startups replace banking freelancers

Remote work is a trend of the modern labor market, which is hard to ignore. Over the past 20 years, the system of relationships between customers and private contractors has undergone significant changes due to the development of information technology. Has banking services become comfortable for freelancers working from different parts of the world? We, at the editorial board of the online publication on payment services, fintech-startups and blockchain Web-payment.ru , decided to look into the features of banking services for freelancers and translated an article by the famous investor Pavel Cherkashin. Next, directly translate.

A few weeks ago, my column about the shadow banking economy and the new American dream for Yahoo Finance came out. It was supplemented with practical information as the second part of the discussion on this sector of the banking industry. I'm talking about what problems exist in the global financial system, and how it actually deceives freelancers. The economy of free banking is much more developed than you can imagine. The economy of freelancing is being formed everywhere, in a wide variety of industries. The United States Revenue Service calls them " independent contractors " or "1099-nicks" (from tax form 1099). The government still formally equates them to stenographers on a voluntary basis and to auctioneers; in fact, freelancers make up a much more substantial part of the global economy. Every third working American today is involved in freelancing.

The main problems freelancing

One of the first things you learn when managing a company is to delay payments to suppliers for as long as possible. In fact, this turns into months of waiting. For some freelancers, this expectation concerns vital things. Of course, when your wallet is swollen from credit cards, it all seems insignificant. But if you look globally, it turns out that there are hundreds of millions of workers who do not use credit cards, and they needed the money yesterday.
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If you really want to understand how modern financial services treat you, look at the fees for international payments. Many believe that the American fintech projects PayPal, Stripe and Square are cashing in on the fees charged. However, these companies themselves expect that you will consider them innovative, offering a convenient service for sending money abroad. In fact, they rip us off.

Take, for example, a freelancer in the Philippines who charges $ 5 an hour and has just completed a $ 100 project. He is likely to have to work a few extra hours, only to cover the amount of the commission that the payment operator will take. Imagine that the bank charges you $ 1,000 for cashing a check for $ 10,000. In addition, you can withdraw only $ 20,000 at a time and no credit or support services. And you regularly hear “Sorry, but we do not serve your country. Let's start as soon as possible. Thank you for contacting. ” This is where the line of free economics is today. When I say “free economy”, I mean workers who are not dependent on office space, employers, or even governments.

The current banking system has been built for centuries, and today there are literally some changes every week. If financial systems are not able to maintain the speed and working methods that workers need, they must leave the stage. People will go to other service companies, to other jurisdictions, to another reality. There are roughly a billion people involved in the new economy. They have their own interests around the world, advanced IT systems and outsourcing. The market turns to face them, but the financial payment systems fail them.

Unlike other industries, in the American financial industry, everything is built in such a way that the intention to create your own bank is not the best idea for a startup. Here is a dialogue in the current reality looks quite adequate:

“And what if we launch an artificial intelligence satellite into orbit that will track the expression of the face of every cat on the planet and ensure the delivery of catnip using drones for 10 minutes?”
- In my opinion, a great idea!
“What if we open the bank instead?”
- Mmm ... I like the idea of ​​cats more.

It sounds silly, but it’s easy to recognize the typical dialogue in Silicon Valley. Silicon Valley Bank, like the most startup-friendly bank, refuses to take new customers from Fintech. It refers to the fact that the risks are too high.

In another article on this topic, the author wrote that Crunchbase lists 43 American payment start-ups (17 of them were launched after 2010) with a venture capital investment in excess of $ 10 million. Europe and Asia are well ahead of America. Thousands of new startups work here. Let us give an example of only a few of the last European unicorns and those who will soon become a unicorn: Adyen (Netherlands, $ 2.3 billion); TransferWise (UK, over $ 1 billion); Nutmeg; Currency Cloud (UK); iZettle (Sweden); Funding Circle (UK); Klarna (Sweden, over $ 2 billion); Zopa (UK).

And we still do not take into account the bitcoin segment, where literally thousands of new competing companies are ready to crush the global banking industry. For many sectors, such as micropayments, cross-border import / export operations and illegal trade, bitcoin has become the standard.

This whole banking system for freelancers, similar to the Wild West, with its net payments in the amount of 60% of the initial amount, 5% of withdrawal fees and loans at the rate of 1% per day - is based on an honest word. It will disappear as soon as a few startups bold enough to call themselves free economy banks and decorated as legal entities in Singapore or Malta will offer premium banking services to freelancers and their clients around the world.

Such banks will have hundreds of millions of extremely loyal customers, good profitability indicators and free hands in terms of banking regulation, reporting reserves, and so on. Huge financial structures, where money has to be paid only to transfer them, will disappear. Your credit limit will depend on the karma on Github and the number of followers on Instagram. Mastercard will be delivered in 3 days by mail. Mortgage and medical insurance will be provided by hedge funds, which you do not know.

As soon as cross-border, freelance-oriented banking services become available to a wide audience, the situation will begin to unwind in a spiral. More and more conservative-minded professionals, comfortably settled in the comfort of large corporations, will be drawn into the reality of the new free world. Qualified professionals will gain more control over their own lives. It will be possible to abandon the traditional full employment. The horizons of financial markets will expand, leaving traditional banks with a constantly declining audience.

Many will have to look for new ways to introduce innovations and provide banking services, but on the whole it would be high time to do that.

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