It’s time for banks to recognize the self-employed as a real and vital segment. Gartner’s most recent report on the workplace in a post-pandemic world states that “38 percent of organizations are replacing full-time employees with contingent workers as a cost-saving measure.”

This trend fits with the news that the IRS is taking steps to capture its share from the likes of Venmo and other payment providers. It fits in with the growth in the services sector of the economy, with broadening platform-enabled employment, and with product sales platforms (think Etsy). It will soon be likely that most individuals have some kind of financial interest in a self-operating enterprise (or, if you prefer, micro-business). 

You can see it happening now in the data from the SBA. You’ve likely heard that the largest employer in the country is the small business, but were you aware that most of those small businesses are single-employee companies? The validity of predictions that work-from-home, technology-enabled freelancers will grow beyond 30% of the working population is becoming increasingly evident.

As a banking professional, you may feel that you adequately accommodate these folks within your business banking group. But it’s important to consider that the small business group is looking to serve bigger fish, and that this solo practitioner probably isn’t buying your treasury products yet. Indeed, the typical self-employed contractor needs a few specialized financial services (most of which banks already offer), and could very well become a larger business over time. However, they are not being served correctly by any area of your bank.

But is this new segment good for banking?

When we first began studying the self-employed, we focused on the gig workers. The spotlight of the nation shone on this quickly growing sub-segment, enabled by the latest platform technologies, and on the changes this growth meant for the economy, the workforce and society. We felt concern for the struggling young entrepreneurs striving to earn a living, and challenged the banking industry to support their needs. Some of the feedback we received from banks referenced the lower-end wage earnings of this group, and altruistic sentiments aside, it would be difficult to build a strong business case with just the gigsters.

Fortunately for banks, a close analysis of IRS data indicates that the gig economy is just the frontline of a huge segment that has been steadily growing during our transition to a more service-based economy. The data shows that around 50% of self-employed workers are earning more than $50,000 a year, and that the largest portion of this group is earning more than $100K. Our process to analyze the earnings of this segment cross-references SBA data, which indicates that some of the larger trades for these earners are in the professional and technical service areas.

What does this mean?

I think this means a couple of things for banks, and offers a huge opportunity. At the intersection of retail banking and small business banking, there is a canyon where many customers are falling through the cracks. I would suggest that a few years ago, they landed somewhere within the bank, and maybe not in the right place. Maybe they landed in the wrong product somewhere in the bank because, after all, there really wasn’t another choice. These days, however, the challenger banks are filling the void with new product lines and services that cater to some simple yet commonly unmet needs. A little bit of focus on this segment would help differentiate your existing products and build a competitive advantage for banks with foresight.

Clarrow helps banks find and service their self-employed customer base, as well as earn new customers by differentiating deposit accounts and credit cards. We’ve built a suite of features that simplifies being self-employed – helping you attract young, strong customers to your bank and create an entirely new set of segment products. If you wish to talk more about it, you can reach me direct at or schedule a demo on our website