Future-gazing: The future of work and its impact on payments
Prior to 2020, our ideas of work were one dimensional and rigid - an office location, with fixed working hours. Now, following what can only be described as a complete revamp of working as we know it, more organisations have introduced remote and hybrid working arrangements.
With COVID-19 pushing the boundaries of what can be done outside of the office, employees have realised just how malleable working can be. The full-time in-office employee is becoming a smaller majority as more staff take on flexible and freelance jobs.
So what’s next for the working world? There is a number of ways the workforce is likely to adapt over the next few years following the pandemic, and the projected effect on the payments industry cannot be understated.
How the workforce has changed
While remote working existed prior to COVID-19, it was a practice that was only adopted by a few. Today, many employers are offering remote and flexible work to stay competitive in the market, with studies showing that 70% of the workforce will be working remotely at least five days a month by 2025. Remote working is not the only change.
The time spent in lockdown gave a lot of people a new approach to work. Around the world, many people started their own businesses, left their old roles and most interestingly, more became freelancers. A recent survey by freelancer platform UpWork found that in the U.S, 20% of current employees 10 million people are considering doing freelance work. Not only are employees becoming more open to freelance work, but employers are too, with the study also showing that nearly half (47%) of hiring managers are more likely to engage independent talent in the future.
The impact on the payments industry
Freelance marketplaces such as Upwork, Fiverr and Toptal host freelancers, connecting them with businesses around the world. As more organisations employ freelancers, there will be increasing cross-border payment requirements to pay an increasingly global workforce. Cross-border payment services will be needed more than ever to collect money from international clients and pay overseas freelancers.
The financial payments space thrives on globalisation and as the world embraces flexible working and freelancing, this creates greater opportunities for platforms in the cross-border space to provide their services. This is especially important given the projected rise in the value of cross-border payments over the next six years - with research from the BCG predicting that the value of cross-border payments will increase from almost $150 trillion (2017) to over $250 trillion by 2027.
As the freelancer marketplaces expand their reach, they must put the best processes in place to transfer funds - and this is where cross-border payments services come in. Freelancing platforms must work with multinational payment service providers to help advise on overseas regulations and also to provide fast payment speeds, payment tracking, strong security, and transparent pricing. This will ensure the platforms pay and get paid efficiently.
The catalyst of workforce change
Understanding what the changes will be is one thing but knowing how this transformation has happened is also important. One of the key catalysts for the change in the future of work has been technological advancements. Digital communications platforms from Microsoft Teams and Zoom to Slack and WebEx have meant that staff are able to work collaboratively without being in the same room. Of course, many of these apps existed before, but with the emergence of COVID-19, the public put them to the test and became reliant on keeping contact with colleagues. This created a new normal.
The unpredictability of events such as COVID-19 means that the future of working cannot be completely foreseen. However, based on the events of the past 18 months we can predict that the increase in remote and freelance work will be permanent. It is because of this, that all those within finance should be aware of present trends so that they can best prepare for whatever the future holds.
About the author: Joshua Bao, is the co-founder of SUNRATE, a Chinese fintech created to empower cross-border business. Prior to founding SUNRATE, Bao was the Senior Vice President of Citi in Hong Kong.