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Financial Health for the Future of Work

January 2019

PayPal Inc.Center for Social Sector Leadership, University of California, Berkeley Centre for Public Policy, Indian Institute of Management in Bangalore

Executive Summary 4

Introduction 12

The Future of Work: Hype vs. Reality 15 Automation,MachineLearning,ArtificialIntelligence 15 Platform Economy 18 Socio-Demographic Changes 22 Entrepreneurship 27

The Impact of the Future of Work on Retail Financial Services 29 Payments:InflowsandOutflows 29 Savings: Short- and Long- Term 32 Credit 39 Financial Management 41

OpportunitiestoBuildFinancialHealthfortheFuture 43

Ecosystem 43 Universal Financial Health 43 Reestablish Trust 46

Institutions 49 People over Products 49 Get the Full Story 51

Products 54

Flexibility 54

Intelligence 55

Conclusion 58

Appendices 60

References 76

Contents

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Thefutureofworkdebatehassparkedaconversationabouttheneedtofundamentallyrethink“socialcontracts”inmarketsaroundtheworld.Ithasalsostimulateddebateaboutimportantreformsinareassuchaslaborretraining,healthcarebenefits,andpensionmar-kets. It stands to reason that just as these markets need to be shifted in light of changes inthelabormarket,sotoodoestheretailfinancialservicesmarketplace.

Retailfinancialservicesweredesignedlargelyforaworldwhereindividualshadahandfuloffixedsalariedjobsoverthecourseoftheirlives.Thereisanincreasingconsensusthatthiswillnolongerbethecasegoingforward.Thetraditionalnine-to-fivejobislikelytobelesscommongoingforward,aswellastheideaofasinglejobforlife.Thischangeshouldstimulateasector-widediscussionaboutessentialreformsandinnovationsthatneedtooccurinfinancialservices.Thisresearchpaperisthefirsttoexploretheimplicationsofthefutureofworkonfinancialservices.

Reformstofinancialservicesoughttoprioritizethegoalofbuildingfinancialhealthandresilience for individuals, families, businesses, and communities. There are 1.7 billion peo-pleintheworldwithoutaccesstoformalfinancialservices,buttherearebillionsmoreforwhomthetraditionalfinancialsystemsimplydoesnotwork.1Buildinguptheseindividuals’ability to pay and be paid, manage expenses, save for emergencies, access credit, and plan fortheirfutureiswherefinancialservicesreformsoughttofocus.Moreover,incorporatingchangesinthewayinwhichpeopleearnmoneyintothiscalculuswillonlymakeforbetterfinancialintermediationandbetteroutcomesforpeoplegoingforward.

Three original sources of information were utilized in the preparation of this report:

1. asurveyof8,000workingagepeoplefrom8differentmarkets;

2. over100interviewswithexpertsonfutureofworkand/orfinancialservices;and

3. proprietary PayPal data.

Executive Summary

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Only38%ofworkersinjobsthatareatahigh risk of automation report that they have savings to cover 6 or more months

of expenses if they lost their primary source of income.

ThesurveywasfieldedinBrazil,Canada,China,France,Germany,India,theUnitedKing-dom,andtheUnitedStates.Abroadspectrumofexpertsfromover25differentcountrieswere involved inthe interviews, includinggovernmentofficials,corporate leaders, laboreconomists, international lawyers, startup founders, technology investors, non-profitCEOs,andacademichistoriansamongmanyothers.

Therewereimportantgeographicdivergencesinthefindingsofourresearchandinfuturereportswewillfocusonuniqueinsightsfromspecificmarkets.However,belowaresomeofthekeyfindingsthatcutacrossmarketsandreflectglobaltrends:

Automation,machinelearning,andartificialintelligencearelikelytocausejobchurnandincreasetheneedforretrainingandupskillingthroughoutpeople’sworkinglives.Therewillbeanincreasedneedforshort-termsavingsandcreditsolutionsthatallowpeopletobridgeincomegapswhilemakingthesetransitions.

• Workersinjobsthatareatahighriskofautomation(classificationaccordingtodatafromtheOECD2)areunderpreparedfortheirfinancialneedsinthefuture.

• Over75%ofworkersinjobsthatareat a high risk of automation believe that overthenext5yearstheirincomeswillbemorepredictableortherewillbenochange in predictability compared to today.

• Only38%ofworkersinjobsthatareat a high risk of automation report that they have savings to cover 6 or more months of expenses if they lost their primary source of income.

• Workers in jobs that are at a high risk ofautomationare13%morelikelythan

1. Automation

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Only28%ofindependentcontractorre-spondents to our survey said they make a consistent income each month, compared

to72%ofallsurveyrespondents.

Onlineplatformsaregrowinginimportance,increasingthenumberandtypeofworkingrelationshipsthatpeoplewillhaveoverthecourseoftheirlives.Independentcontractorshave always been a part of the global economy, and this segment continues to facefinancial challenges because of unsteady income. Platforms are enabling independentcontractorstoimprovetheirfinancialsituation.Nevertheless,thereareuniquefinancialchallenges that are faced by workers on platforms. Financial services need to adjust toenablepayments,creditscoring,underwriting,andconsumptionsmoothingbaseduponmultiple streams of variable income.

• Only 28% of independent contractorrespondents to our survey said they make a consistent income each month, compared to 72% of all surveyrespondents.

• Only65%of independentcontractorsreported that they can cover their monthly expenses with their currentincome, lower than any demographicgroupwestudied.

• The total payment volume of platform companies that use PayPal grew onaverage 47% year-over-year between2014 and 2018.3

• Nearly 75% of respondents workingin the online platform economy said they could cover more than 3 months of expenses if they lost their main source of income, higher than almost any other groupwestudied.

• 51%ofworkers intheonlineplatformeconomy in our survey dataset have

thoseatlowriskofautomationtohavepaid a bill late and incurred additional fees over the last 12 months.

• 50% of respondents borrow fromfriends/family or a financial institution

whentheydon’thaveenoughincomefortheir expenses. With career breaks and income gaps potentially becoming more prevalent, there is going to be a need to reimagine credit and savings.

paid a bill late and incurred fees over the past 12 months, compared to only 38%of people who do not participate in theonline platform economy.

2. Online Platforms

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34%ofmillennial(ages21-38)respondents said that they have multiple jobs,comparedto25%ofGenX(ages38-

50) people.

Socio-demographic shifts in the labor market, such as age, gender and location are driving demandforworkflexibilityandwillrequireinnovationsinfinancialmanagementtotrulymeetpeople’sfinancialneeds.

• 63%ofworkersintheonlineplatformeconomy in our survey dataset said they prefertoreceiveincomefromworkmorefrequently.

• Real-time payments to platform economy workers through PayPal’srecently-acquired Hyperwallet platformhaveincreasedbymorethan200%year-over-year.

• 34% of millennial (ages 21-38)respondents said that they have multiple jobs, compared to 25% of their Gen X(ages 38-50) counterparts.

• Millennials are 16% more likely toprefer to receive their income through digital payment apps than their Gen Xcounterparts.

• Around75%ofmillennialrespondentssaid that they believed over the next 5 years more than 50% of their jobswould be impacted by new or changingtechnology.

• 52% of women respondents reportedthat they would be very stressed ifthey lost their main source of income, significantly higher than their malecounterparts.

• Only 64% of female respondentsreported feeling confident about theirability to reach their financial goals,comparedto71%ofmalerespondents.

• Only 14% of rural respondents saidthattheyfeltveryconfidenttheywouldbe able to retire at their desired age, comparedto24%ofurbandwellersand21%ofallrespondents.

3. Socio-demographic shifts

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55%ofsmallbusinessownersreportedpaying a bill late over the last 12 months, a higher percentage than any other demo-

graphicgroupwestudied.

• Only46%ofsmallbusinessownersre-ported making consistent income each month, compared to 72% of all surveyrespondents.

• 55%ofsmallbusinessownersreportedpaying a bill late over the last 12 months, a higher percentage than any other de-mographicgroupwestudied.

• 77%ofsmallbusinessownerssaidtheywouldliketoreceivetheir incomemorefrequently, compared to only 49% ofoverall respondents.

Entrepreneurship may become a viable path for income generation for more people in the future. For many entrepreneurs there remain great challenges in financial servicesincludingpaymentsaswellasaccesstocredittohelpenterprisesstartupandsmoothoutincomefluctuations.

Despitethefundamentalchallengesthatthefutureofworkwillraiseforfinancialservices,thisisalsoanimportantopportunitytoreimaginefinancialtoolsandsolutions.Thispaperhighlightsopportunitiestoinnovateandreformfinancialsservicesinlightofchangesthatwill be brought by the future of work in a manner that will lead to increased financialhealth for individuals and families across the world. Our research revealed that thereare both specific financial services challenges as well as structural problems that mustbe resolved. Thus, we advocate for a top-to-bottom approach of wholesale reform offinancialservices.Thesereformsmustcomeatthehighestlevelsofthefinancialservicesecosystem, pervade individual institutions, and down to particular products. It is onlythroughthisholistictransformationthatfinancialservicescaneffectivelyhelppeopleandcommunitiesmanagetheirfinanciallivesinthefuture.

4. Entrepreneurship

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1. Ecosystem• Universal Financial Health: The future of work presents an important opportu-nityforfinancialsectordeepening,inpar-ticular for emerging markets. Hundreds ofmillionswillbebroughtintotheformalfinancial system over the next few yearsas individuals secure work and transactthroughtechnology-basedplatforms.Newchallengesrelatedtoinequalityinfinancialservices should become the paramount concern. The public and private sector must align around the goal of ensuring that every worker is able to lead a financiallyhealthy life in the future.

• Reestablish Trust: Financial services currentlysufferfromamajortrustdeficit.As work and financial services continueto digitize, it will only be more importantand critical to build trust into the heart of the ecosystem. Digitization presentsan opportunity for unprecedented trans-parency; and the ecosystem must lean into provide that transparency. Technology also increases exposure and vulnerabilities related to data privacy, security, and digni-ty. The ecosystem must respond to these vulnerabilitiesheadonandworkwiththepublic sector to protect users. Moreover, providers must be aware of biases thatcould be embedded and prebuilt into fi-nancial technologies. Ethical frameworksand codes of conduct must be designed to mitigate risks. Again, the public and private sectormustworkincollaborationinordertoreestablishtrustinthefinancialservicesecosystem.

2. Institutions • People over Products:Thefutureofworkwillcreateafarmoreheterogenoussetofcustomers for financial services providersgoing forward. Institutions must seek tounderstandtheeverydayreal-worldneedsandproblemsthatpeoplearedealingwith.Solutions must be developed for finan-cial needs on a personal level rather than simply trying to push people into existing product sets or siloed categories. Focusing on people can also lead to the develop-mentofnewproductsthatmeetburgeon-ingneedsinbetterways.

• Get the Full Story: Financial services providers need to develop a holistic un-derstandingofcustomers’financiallivesinordertodevelopmoreeffectivesolutions.Workers in the future are going to have a

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Peoplewillneedmoretailoredtoolssuchas micro-payments, micro-savings, micro-

credit, micro-investments, and micro-insurance

3. Products• Flexibility:Thenatureofworkgoingfor-ward is going to be more flexible, so toowillfinancialservicesneedtoflextomatchthelevelsandtimingsof inflowsandout-flowsofincomeofthemodernworker.Theneedsofworkersgoingforwardwillbemoreproximate in time. People will need moretailored tools such as micro-payments, micro-savings, micro-credit, micro-invest-ments, and micro-insurance, which canhelp to overcome the many short-term uncertainties that are likely to become increasingly common in the future. En-abling individuals to access payments in real-time, save small amounts from their paycheck, leverage future earnings for credit, and secure insurance to appropri-atelymanageriskswillgreatlyenabletheirfuture prosperity. Moreover, breaking lon-ger-term savings and credit products into bite-sizedpiecesmakesitmorelikelythatindividuals will engage with longer-termproducts in the future.

• Intelligence: The complexity of a financial life is going to increase due tothe multitude of jobs and increased life expectancy. Future financial productsneed to understand variability in income streams, changes in expense flows, and

significant moments in people’s life cycle.Simplified and integrated dashboards canhelp provide transparency and choice. Data should be leveraged to nudge people to positive long-term financial decisionsand suggest the right product for the particular need at the right time. Enhanced intelligence can help to provision the kind of flexibility and structure that will bedesired in the future, alongside the kind of stability that is needed.

complex set of financial inflows and out-flows. Open data within the financial ser-vicesecosystemisanimportantfirststeptowards better understanding customers.Integrating with data from employers,governments, and billers would expandthe knowledge base of financial servicesinstitutions. Moreover, enabling people to understand the financial value of all their

talents and assets is currently an untapped opportunity.Thebestwaytoenableinno-vation, empower the customer, and en-hance economic opportunity is through interoperabilityandportabilitybetweenfi-nancial providers so that a comprehensive picture of the customer can be built, and customerscan choose and customizethebest product solutions for their needs.

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Reformingfinancialservicesisnotgoingtofullyresolvetheproblemsassociatedwiththe future of work. There are structuralchallenges that will require fundamentalreforms made to other sectors like gov-ernment benefits, health care, and laborrelations. Financial providers can help to provide insights about the financial livesof their customers, which might help toinform some of the changes needed in

theseadjacentsectors.Moreover,financialservices providers ought to be promoting some of these reforms as they could help to create more stability in the lives of their customers. If these societal reforms falter, however,itonlymagnifiestheimportanceofreimaginingfinancialservicestoempow-er individuals to be able to manage some of thechangesanduncertaintiesthatwillbepresentedbythefutureofwork.

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The future of work debate has sparked asetofimportantconversationsabouthowto change fundamental institutions like healthcare,pensions,and labororganiza-tion.Retailfinancialservicesmustsimilarlyadapttochangesinthewayinwhichpeo-plewillbeearninganincomeinthefuture.The debate around the future of work islargely taking place in industrial markets, inparticulartheUSandEurope.However,the debate also has incredibly important implications for emerging markets.

Thereareseveralforcesatworkthatseemto be driving the discussion around the future of work. The first, and foremost,drivingforceistechnology–whetherit isautomation that causes job churn and dis-placement, or digital platforms that enable worktobebrokenupintosmall individu-al tasks and distributed to a nearly limit-lesssupplyofworkers.Socio-demographicchanges related to age, gender, family, and urbanization also seem to be driving thetrendofincreaseddemandforflexibilityinwork. Moreover, the uncertainty createdbythefutureofworkseemtobepropellinga new wave of entrepreneurs attemptingtotakemorecontroloftheirfinancial fu-ture. All of these changes seem to be lead-ingtoalabormarketinwhichworkwillbeincreasingly uncertain and variable in the future.

Thetrends inthefutureofworkare like-lytocauseverydifferentoutcomes in in-dustrialandemergingmarkets.But,inthelongerterm,thefutureofworkmaydriveconvergence between emerging and de-

veloped economies in terms of the struc-ture of their labor markets. Flexibility, un-certainty, and variability have long been a featureofworkarrangementsinemergingmarkets. Technology, socio-demographic, and economic shifts may yield short-term increases in stability in emerging markets by bringing more workers into the for-mal economy and providing more income earning opportunities. Meanwhile, indus-trial markets in the short-term are brac-ing for volatility and job churn as a result of these similar changes. This convergence may already be starting to take place. Dar-yl Collins, CEO of Bankable Frontier As-sociates(BFA)andauthorofPortfoliosofthe Poor argued that the multitude of in-come sources high volatility of income she iscurrentlyseeingintheUS,mirrorswhat

Introduction

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she has seen in non-agricultural popula-tions in Kenya and many other emergingeconomies where informal labor is preva-lent.4 As technology continues to evolve inemergingmarkets,however,thecostsofaddingaworkermaystarttooutpacethecost of adding a machine. Therefore, in the

medium to long term, there is a possibility that labor markets in both industrial and emerging markets will be more volatile.This instability places strain on individual and social constructs that have been creat-ed to manage and mitigate against adverse consequencesfromshocks.

Therehavetraditionallybeenthreepillarsofthesafetynetthathelppeopleweatherthetype of labor and income shocks that are being predicted in discussions around the future ofwork:

• Government Safety Net: Government-provided backstop social benefits such asunemploymentpaymentsandwelfare

• Employer Safety Net: Benefitsthatem-ployers provide to their employees as part of the employment contract either due to a government requirement or to increaselikelihood of retention

• Individual Safety Net: Personal or com-munity savings, credit, and insurance plans that help to manage unexpected risks

Thefutureofworkdebatehastraditional-lyfocusedontheneedtorethinkthefirsttwopillarsofthesafetynet.Thispaper,in-stead, focuses on this third pillar of safety net,wherefinancialservicescanhavethemostimpact.AsCarmenRojas,CEOoftheWorker’s Lab said, “The social safety netneedstobewaybroaderthanwhatitwasin the 20th century. It needs to be articu-latedindifferentways.”Thisreportisnotanefforttodivertattentionawayfromim-portantdebatesonhowtoreformthegov-ernment safety net and the employer safe-tynet.Instead,itisanefforttoexpandthescope of the debate, and to provide some newthinkingonhowfinancialservicesre-

formcouldbenefitandhelp,evenifonlyinasmallway,peopletomanagesomeofthechallenges that are likely to come in the la-bor market in the future.

Inordertogeneratenewinsightsonthein-tersectionbetweenthefutureofworkandfinancial services, we fielded a 25-ques-tionsurveyin8markets,with1000work-ing age respondents per market. We also leveraged proprietary data from PayPal to better understand the impact of the digital economyonthefutureofwork.Finally,weconducted over 100 half-hour phone inter-viewswithexpertsfromover25countriesaroundtheworld.

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1. Howdoyouthinkthewaypeopleearnmoney will be different 20 years fromnow? Do you believe we need to re-think how people actually get paid fortheirjobsdifferentlyinthefuture?

2. Howcanwebetterbridgethegapbe-tween people’s earnings and their ex-penses if and when earnings are somuchmorevariableinthefuture?

3. How do we need to rethink savings,access to credit, and retirement based upon the changes that the future of workmaybring?

4. Areyoupositiveornegativeonfinan-cial technology’s ability to meet theneedsofthosethatwillbeimpactedbythefutureofwork?

The insights generated from the responses we received formed the foundation of this report.

AsofSeptember30,2018,wehaveover20million merchant accounts used for earning an income,aswellasover254millionac-tive accounts used by individuals to move and manage money using PayPal products and services. We have seen the interaction and intersection of income-earning and retailfinancialservicesforsometime.Wewantedtoundertakethisresearchstudyinorder to foster a robust discussion in the financialservicesecosystemabouthowtoengage in some fundamental reforms in order to meet the future needs of our cus-tomers. We also hope that sharing insights fromthefinancialsectorcouldhelptoin-form changes that might be needed in the labor market and adjacent areas like gov-ernment benefits, education, and healthcare.

Theonlythingthatiscertaingoingforwardis change. That is why financial servicesmust adapt to the changes that are going to occur in the future of work. The glob-al economy is currently in the 10th year of recoveryfromthe2008financialcrisis.Thepossibilityofanothereconomicdownturncoulddrasticallyimpactsomeofthefind-ingspresentedinthisreport.Nevertheless,webelievethatnowisthetimetofunda-mentallyreimaginetheretailfinancialser-vicesecosystem.AsJohnF.Kennedyoncesaid,“Thetimetorepairtheroof iswhenthe sun is shining.”5

“The time to repair the roof is when the sun is shining.”

JohnF.Kennedy

We asked experts the following four questions:

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“The era in which the majority of the workforce provides labor and talent in exchange for a predictable salary is passing.”

Arun Sundararajan, ProfessorandtheRobertL.andDaleAtkinsRosenFacultyFellowatNewYork

University’sSternSchoolofBusiness.

There are countless recent studies at-temptingtopredictwhatisgoingtohap-peninlabormarketsaroundtheworld.Un-surprisingly, there are also many debates around predicted scenarios – some hope technological progress might finally allowfor the 15-hour workweek and abundantleisure as forecasted by the economist John Maynard Keynes, while some fear itwouldspelltheendofwork,anargumentoften dismissed as the “Luddite fallacy.”6 It isdifficulttosiftthroughthesestudiesandseparate hyperbole from reality. Despite themultitudeofviewsandscenariospre-sented in literature and in our discussions with experts, our research findings havecoalesced around several clear themes.

While there is not enough evidence to pre-dictivelyquantifytheextentofchangeor

Thereismuchdebateaboutwhetherro-bots will replace humans, and whetherautomation, and other developments in machinelearningandartificialintelligence(ML/AI)willdisplacejobs.Thereisfarlessdebate about technology causing and ac-celeratingjobchurn.Estimatesvarywidely--researchersattheUniversityofOxfordestimatethat57%of jobs inOECDcoun-

triesareatriskofautomation,whereastheOCEDitselfcalculatedthatjust14%ofjobsare at high risk.7 Many of the experts that were interviewed as part of this projectsubscribe to the notion that humans in-ventvaluewherenoneexistedbeforeandthereforetherewouldbeacontinuedneedfor humans to perform tasks in exchange formonetaryrewardsgoingforward.Most

compute the impact of different contrib-uting factors, one of the overarching take-aways from our study is that the notionof a traditional full-time job is going to be less common going forward, let alone theidea of a single job for life. We can no lon-ger take “a steady job with benefits” forgranted. Workers will have far more vari-ability in their income-earning lives and will have to adapt more frequently. Manyoftheexpertswhowere interviewedsug-gested replacing the descriptor of “jobs” with the nomenclature of “a portfolio ofopportunities”. The expectation of under-taking multiple income-generating activi-ties going forward is the result of severalchanges that are transforming the labor market.Wehavefocusedonthefollowingfour areas of change:

The Future of Work: Hype vs. Reality

I. Automation, Machine Learning, and Artificial Intelligence

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researchersattheUniversityofOxfordestimatethat57%ofjobsinOECDcountries are at risk of automation

whereastheOCEDitselfcalculatedthatjust14%ofjobsareathighrisk.

pore, puts it, “The disruption in the chang-ing job market may cause some people to restart at the bottom of the pyramid in theirnewjob.”Thechallengeisexacerbat-ed because the jobs most likely to be auto-matedarelow-skill,andtypicallylow-wagejobs,heldbythosewhoareleastpreparedfor alternative careers.

The job churn caused by automation will increase the need for retraining andupskilling later in life. Dr. Daniel Tsiddon, Professor of Economics at Tel Aviv University and Founding General Partner at Viola FinTech Fund remarked that, “withtechnologyacceleratingchangesanddisruptions, opportunities will open andclose faster. Job churn will increase, andworkwillnolongerbeacontinualprocess.”The traditional model of education before career will become obsolete, and lifelonglearning will become more of a norm.As we enter into an era of “permanenteconomic dislocation,10” we can expect to

believedthatautomationwillbeapositivedevelopment for most of humanity, al-though there will of course be those whowill be negatively affected, and solutionsmustbeputinplacetoaidethosewhoareimpacted by the transition. The World Eco-nomicForum’slatestFutureofJobsReportestimates that 75 million current job roles may be displaced by technology, but 133 millionnewjobrolesmayalsobecreated.8

Automation is being driven by the pre-cipitous drop in the cost of computing power,theriseofdatacollection,andthecontinued development and precision of algorithms. These technological develop-ments enable computers and robots to do tasks that could previously only be done by human beings. There are certain tasks that experts predict are more likely to be replacedoverthenexttwodecades.Auto-mation of these tasks can cause a severe devaluation of skills that have often taken long periods of time for people to master. Truck drivers have to take classes and se-cureaspecialized license, lawyershavetospend years in post graduate schooling, and radiologists have to do multi-year res-idencies in order to become professionals. Automation could potentially take over large swaths of these tasks over the nexttwodecades.Automatingprofessionssuchas driving a vehicle could have broad im-pacts, as there are over 3 million people that drive for Uber alone globally.9 This devolution of certain skills is a challenge not only because of the time spent gaining thenowuselessskillsbutalsothetimeitwilltaketogainnewskillsthatcouldgen-erate value in the economy. As Cher Pong Ng, Chief Executive of SkillsFuture Singa-

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switch jobs frequently and will thereforeneedtodevelopnewskillsandcapabilitiesthroughout our lives. One study evenestimatesthat65%oftoday’sgrade-schoolchildrenmayendupdoingworkthatisyetto be invented.11 Inordertokeepupwiththe changes and stay competitive, the structure of our lives will become muchless linear, as we will be learning whileworking,andlearninginbetweenepisodesofworking.

Rapid advances in automation and ad-vancementsinartificialintelligencearesetto continue. The economic relationship betweenlaborandmachineshaschangedfrom“whateverlaborcost,itcostlessthanthe machines going idle” in the postwareconomy12 to “we estimate large and ro-bustnegativeeffectsofrobotsonemploy-mentandwagesacrosscommutingzones”in 2017.13 Industry is beginning to invest heavily in artificial intelligence because ofthe perceived opportunity for enhanced efficiencyandlowercost.IMFresearches-timatesthat180millionjobsheldbywom-en globally are at risk of being displaced by automation over the next 20 years.14 Six of the fifteen “hot emerging jobs” on Linke-dInfor2019relatetoartificialintelligence.15 Carl Frey and Michael Osborne from Ox-ford University studied 702 occupational groupingsandconcludedthat“47%ofU.S.workers have a high probability of seeingtheir jobs automated over the next 20 years.”16 A recent McKinsey study foundthat30%of“workactivities”couldbeauto-mated by 2030, and 75 to 375 million may needtoswitchoccupationalcategoriesandlearnnewskills.17 The productivity and in-comegainsfromautomationandartificialintelligence, “just-in-time” business pro-

cesses, and desire for efficiency will likelyto continue to push automation further, andsubsequentlydisplacejobs.

Workers that are at risk of automation cur-rentlyappeartobeunawareofwhatmightoccur for them in the near future.Accord-ingtooursurveydata,over75%ofworkerswhoareinjobsthatareatahighriskofau-tomation believe that over the next 5 years their incomes will be more predictable orthere will be no change in predictabilitycompared to today.

There is far less debate about technology causing and accelerating

job churn.

It isunclearwhethertherateandpaceofthe deployment and scaling of machine learning/artificial solutions (ML/AI) solu-tions across geographies, but it is possible that automation may impact labor mar-kets in emerging economies more slowlybecause of the cost differential, and effi-ciency gains from replacing existing labor may not be as large as those in industrial economies. Martin Fleming, chief econo-mist at IBM, however, expressed concernthat employment in emerging markets could be disproportionately impacted by machine learning/artificial intelligence inthe medium term because many tasks that have been outsourced from industri-al to emerging economies are simple and therefore are more suitable for the deploy-mentofML/AIsolutions.

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Nearlyallofthe10millionjobscreatedbetween2005and2015intheUSwere

nottraditionalnine-to-fivejobs.

II. Platform EconomyA multitude of terms are used in literature torefertothephenomenonofdigitizationenabling new short-term task-based in-come earning opportunities. Gig, platform, contingent, independent, freelancer, and crowdworker are sometimes used inter-changeably to refer to this phenomenon. Oneclarifyingnotewewouldliketoofferattheoutsetisthatalternativework(withouta traditional employer-employee relation-ship)hasexistedforsometime.Over90%of net employment growth from 2005 to2015intheUSwasinthealternativeworkcategory. In other words, nearly all of the10millionjobscreatedbetween2005and2015 in the US were not traditional nine-to-fivejobs.18

Independent workers have always beenpart of industrial economies, but the Inter-net, and the pervasiveness of mobile tech-nology, have transformed the scope and scaleoffreelanceorgigwork–werefertothis phenomenon as the platform econo-my. Already, nearly 1 in 4 Americans earn money from the “digital platform econo-my”,accordingtoaPewResearchStudy.19 Our survey research finds that these on-line platform economy workers are doingquitewellfinancially.Nearly75%ofrespon-dentstooursurveyworking intheonlineplatform economy said they could cover more than 3 months of expenses if they lost their main source of income, higher thanalmostanyothersubsetwestudied.Moreover,86%ofoursurveyrespondentswho participate in the online platformeconomy said that they feel like they have controloverhowmuchincometheymake

each month, compared to 75% of overallrespondents.Butasmorefreelancers joinin to power the growing platform econo-my, it is possible that the labor and talent they supply will become less specializedand more commoditized, which wouldputdownwardpressureontherenttheseworkersareabletocapture.Indiscussionswithexpertsthereisaseriousconcernthatplatform workers will soon live financiallives that are more similar to traditional independent contractors. Our survey re-searchfindsthatthese independentcon-tractors have serious financial challenges;only 65% of the independent contractorsin our survey reported that they can cover theirmonthlyexpenseswiththeircurrentincome, a lower percentage than any de-mographicwestudied.

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The online platform economy lacks some of the traditional barriers to entry associ-atedwithemploymentandenablespeopleto earn an income even if they may be in adifferentlocation,lackcertainnetworks,andhavedivergentqualificationsorlicens-es than what might have previously beenrequired. Platforms enable frictionlessworkrelationshipstobecreatedinstantly,but these relationships can also be broken justasquicklyandeasily.

Many workers on the platform economyin industrial and emerging markets are currently supplementing a traditional full-timejobwith“gigs”duringoff-hours,whileothers use it as a primary source of econ-omy. According to a study by the Interna-tionalLaborOrganization,32%of“crowd-workers” said complementing pay fromother jobs was the main reason for doingthework,whileaboutone-thirdofrespon-dentsalsostatedthatcrowdworkwastheirprimary source of income.20 For those that did consider crowdwork to be a primarysource of income, they stated that it only comprised about 59% of total income,again supporting the idea of a portfolio ap-proachtoworkandincomegeneration.21

The platform economy also enables indi-viduals to earn an income from assets that weretraditionallyverydifficult,ornoonethoughttomonetize. Justtoname a few,onecannowsellapart-timeusageofone’shouse, car, energy, cell phone minutes, In-ternet service—and even one’s personaldata—in order to earn an income. These additional income-earning opportunities can help to fill gaps between income andexpenses as labor-market opportunities become less reliable. Ray Boshara, Direc-

tor of the Center for Household Financial StabilityattheFederalReserveBankofSt.Louis believes that, “identifying and mone-tizingabroaderrangeofassetsthatcouldgenerate some kind of income,” would beimportant in helping to address future la-bor market challenges.

As automation puts pressure on certain traditional full-time job categories, these platform jobs could become increasing-ly important and common. China’s StateInformation Center estimates that the “sharingeconomy”inChinawillgrowby30percentannuallyoverthenextfiveyears.22 Moreover, if changes are made in health-care or pension markets to increase base-line universal coverage, then one could imagine the platforms growing further inimportanceduetotheincreasedflexibilitythat they bring.

The platform economy also has the poten-tial to transform large traditional business organizations.23 Qing Cao, Professor at the University of Illinois and former research scientistthatIBMWatsonResearchCenter,argued that in the future businesses might beorganizedaround“functionalities”rath-er than traditional “segments.” This type of organizationscouldenablefunctionaltasksto be distributed more easily to contingent workers, which will further accelerate thegrowthofthe“gigpopulation”asbusinessmodelsevolvetooperatewithaleanerfull-timeworkforce.

China’s State Information Center estimates that the “sharing econo-

my” in China will grow by 30 percent annually over the next five years.

P. 20

Informal employment as a percentage of total employment25

100%

80%

60%

40%

20%

0%Africa

85.8%

Asia and thePacific

68.2%

ArabStates

68.6%

NorthAmerica

18.1%

LatinAmerica &

the Caribbean

53.1%

Europe & Central Asia

25.1%

World

61.2%

Source:InternationalLaborOrganization

Thegigeconomyisnothingnewinemerg-ing economies, where piecing togethermultiple jobs in order to make ends meet has been the norm. Most of the emerging marketexpertswespoketovieweddigitalplatforms as a net positive for emerging

economies.Therewashopethatplatformscould bring more workers into the formaleconomy, a persistent challenge in emerg-ingmarkets.TheInternationalLaborOrga-nizationreportsthatthereareover2billionworkingintheinformaleconomyglobally.24

In developing economies, there are 230 million people, nearly two-thirds of wageearners in the private sector, that receive their salaries in cash.26Theirwealthtendstogrowattherateofinflationbecausetheyare cash-based and rarely have long-term savings or investments. There is a fear of thecomplexitiesandcostsassociatedwith

regulation and taxes that has traditionally keptmajorswathsofthepopulationintheinformal economy. Technology has the abil-itytoabstractawaythatcomplexity,lowerthe costs, increase incomes, and therefore drawnewwavesofindividualsintothefor-maleconomy.Thisisviewedasamajornetpositive for emerging economies.

P. 21

“independent is the new normal”

“The change from technology will be global. There are differences

across economies, but the technol-ogy will have global impact.” ZiaQuresh,BrookingsInstitution

has been working to plug marginalizedcommunities into the digital platform economy, including refugees and those at the base of pyramid. During the past de-cade, they have successfully helped over 10,000peopleinemergingmarketsfindin-ternet-basedwork.

Case study: Anudip Foundation, India. Anudip Foundation trains workers in India ages 18-25 who are coming from traditional informal sectors into the pro-fessional world of digital services (i.e. travel, transportation, e-commerce). Every year Anudip Foundation helps 25,000 workers to transition into the formal plat-

form economy; impacting over 100,000 family members annually.

The platform economy is also viewed asan opportunity for minority groups whohave traditionally struggled to secure an income.Forexample,womeninemergingmarkets who cannot leave the home duetosecuritycannowearnanincome. Indi-viduals with disabilities can perform cer-tain tasks through their computers that theytraditionallywouldhavebeenunabletodo.Dr.YangWeiguo,DeanoftheSchoolof Labor and Human Resources at Renmin University of China, agreed with the po-tential of the sharing economy to “reduce discrimination and provide more employ-ment opportunities.”27 Although there are biases that remain in these platforms (as discussedinfurtherdetailbelow),theydopresent an opportunity for traditionally marginalizedgroups.

The technological changes in the form of automation and the platform economy may have divergent implications for in-dustrial and emerging markets in the short term, but there is the long-term likelihood ofamajorconvergence.AsBrookingsFel-low Zia Qureshi put it, “The change fromtechnologywillbeglobal.Therearediffer-ences across economies, but the technolo-gywillhaveglobalimpact.”

Samaschool, a program of Samasource, be-lieves that “independent is the new nor-mal” and focuses on upskilling and pre-paringlow-incomepopulationstosucceedas independent workers in the platformeconomy.PhillipKudakwasheChikwirama-komo, Senior Director for Impact Solutions basedinNairobi,Kenya,notedSamaschool

P. 22

Millennials,thosebornbetween1982-1999makeup28.4%oftheglobal

population.

Millennials

28.4%

III. Socio-Demographic ChangesThe transition towards greater flexibil-ity with work in industrial markets is inpart driven by several socio-demographic changes.

Age: Millennials,thosebornbetween1982-1999makeup28.4%oftheglobalpopula-tion.28Thisgenerationofyoungerworkersinindustrialmarketsistakingaverydiffer-entapproachtowork.Theyfavorflexibilityandseemtobemorecomfortablewithjobchurn. A study done by LinkedIn in 2016, found that people who graduated fromcollegebetween2006and2010hadnearlydoublethejobsintheirfirsttenyearsoutof college than their parent’s generationwhentheygraduatedfromcollege.29 A 2016 GalluppollintheUSfoundthat21%ofmil-lennials reported changing jobs in the last year; more than three times the numberof non-millennials.30 Based on more than40,000 responses from millennials and non-millennials alike, PricewaterhouseC-oopers’ NextGen: A Global GenerationalStudy found that millennials have a newapproach to workplace productivity andflexibility; the millennial generation doesnot believe that productivity should be “measuredbythenumberofhoursworkedattheoffice”butrather“bytheoutputoftheworkperformed.”31AnAllianzsurveyof1000 millennials in 5 markets found that theywantedjobsthatlefttimefor“otherthings in life.”32 A 2016 survey of millennials by Deloitte found that 75% wanted moreopportunitiestoworkremotely.33 In emerg-ingmarkets,peoplehavelonghadflexiblework arrangements and so this shift maynot be a disruption in those markets. Ofcourse, millennials still have a strong desire for stability in their lives, but they also de-

sireflexibilityalongsidethatstability.

Younger people globally are also far moreflexible in where they choose to live, andtherefore work. In fact, there have nev-er been more people living outside their country of birth in recorded history.34 Some of this is not by choice, as there are more refugees than at any point before, many of whom are younger in age.35 But there arealsoothermorefortunatepeoplewhoaremobile because they want to avoid beingtied down to a particular place and wanttoexploreandenjoytheflexibilitytotryanewplacewhenevertheywant.Thisdesireto be flexible in living arrangements hasinpartledtoadropinhomeownershipinindustrial markets among younger popula-tions.36Technologyisenablingthisflexibili-tyintermsofworkhoursandlocation.Ac-cordingtooursurveydata,around75%ofmillennial respondents said that they be-lievedoverthenext5yearsmorethan50%oftheirjobswouldbeimpactedbyneworchanging technology.

P. 23

Increase in life expectancy at birth - 1960 vs 2016

70%60%50%40%30%20%10%0%

World

Upper middle income countries

Sub-Saharan Africa

South Asia

OECDmembers

NorthAmerica

Middle income countries

MiddleEast&NorthAfrica

Low&Middleincomecountries

Latin America & Caribbean

Least developed countries

Europe & Central Asia

EastAsia&Pacific

CentralEurope&Baltics

Arab World

37%

52%

50%

50%

57%

49%

35%

60%

15%

56%

52%

13%

64%

19%

14%

Source:WorldBank

Globally, people are living longer and there-foremayneedtowork longer,whichmaygo hand-in-hand with more job switches.Industrial economies have set up public and private retirement and pension savings plans based on the assumption that peo-plewouldworkfor40yearsorso,andthenwould require support from and dependon the system for only 10 to 20 years. With lifeexpectancyrisingglobally,therewillbe

a need to rethink these assumptions. The following two charts show the significantrise in life expectancy and share of elderly populations around the world.37 By 2050,theshareofworldpopulationaged65andabovewillhavedoubledfrom10%to20%.38This trend is not likely to reverse and may evencontinueoverthenextfewyearswithmedical and public health advances in early childhood and aging populations.

P. 24

Increase in population over 65 as a percentage of overall population between 1967 and 2017 (in percentage points)

0.0 1.0 2.0 3.0 4.0 5.0 6.0 7.0 8.0 9.0 10.0

Arab World

CentralEurope&Baltics

Caribbean small states

EastAsia&Pacific

Latin America & Caribbean

MiddleEast&NorthAfrica

NorthAmerica

South Asia

Sub-Saharan Africa

World

0.85

9.12

4.17

6.58

4.16

1.25

6.04

2.44

3.52

0.14

Source:WorldBank

Gender: The changing role of women inthelaborforceisalsoanoteworthytrendthat will likely impact the future of work.Thepercentageofwomenparticipatinginthe labor force has remained fairly consis-tentoverthelast20yearsinOECDecon-omies.39 In certain emerging markets there has been a marked rise in female participa-tioninthelaborforce,astheywereoper-ating from very low baselines.40 Women’searnings and their subsequent contribu-tion to household income have been in-creasinginOECDeconomiesoverthelast40 years.41 A 2015 report from the Center for American Progress found that 42% of

mothers were the sole or primary bread-winners in their family.42 Women’s earn-ings,however,globallycontinuetobebe-low their male-counterparts, which mightexplaininpartwhyonly64%offemalere-spondents to our survey reported feeling confidentabouttheirabilitytoreachtheirfinancial goals, compared to 71% of malerespondents.

Dual-income households have become more of a norm in the US in the decent decade,risingfromjust25%ofhouseholdsin 1960 to 60% of households in 2012.43 Among younger populations, dual-income

P. 25

Increase in percentage of population living in cities between 1987 and 2017 (in percentage points)

0.0 5.0 10.0 15.0 20.0 25.0 30.0

Arab World 9.6

1.7

2.9

26.2

18.0

11.3

7.0

9.3

13.8

12.9

CentralEurope&Baltics

Caribbean small states

EastAsia&Pacific

Latin America & Caribbean

MiddleEast&NorthAfrica

NorthAmerica

South Asia

Sub-Saharan Africa

World

Source:WorldBank

households may be becoming a trend glob-ally.A2015Ernst&Youngstudyofnearly10,000 adults from 8 markets around the worldfoundthat78%ofmillennialrespon-dents had a spouse or partner workingat least full-time, twice more likely thanBoomers.44 Rising costs for child care facil-itieswill likelymakeflexibility inhoursanincreasingly important demand. Simulta-neously, single parent households are also becoming more common in industrial mar-kets–anothertrendthatwarrantsapref-erenceforflexibleworkhours.45 Single par-ent households, 81% of which are helmed

bywomenintheU.S.46, might also explain inpartwhy52%ofwomenrespondentstoour survey reported that they would bevery stressed if they lost their main source of income.

Location: Urbanization is another majortrend that will drive the future of work.Data fromtheUnitedNationsPopulationDivision shows that 54.8% of the world’spopulation lives in cities in 2017; up from34% in 1960.47 The UN researchers esti-mate that by 2050, there will be twice asmany people living in cities than in rural areas.48

P. 26

The nexus of the various demo-graphic shifts longer life expec-

tancy, changing role of women in labor force, urbanization is where even more interesting develop-

ments might emerge.

A major reason people are moving to urban areas is the increased economic opportu-nity in both formal and informal sectors. In Africa, the informal sector has been ab-sorbing rising urban populations over the past decades.49 There remain, however,large segments of the global population liv-ing in rural areas. Understanding the labor and income challenges of individuals in ru-ralareaswillalsobecrucialinpreparingforthefutureofwork.Notably,67%ofoursur-veyrespondentswholiveinruralareashadbelow-mediansavingsonamonthlybasis.

The nexus of the various demograph-ic shifts discussed above – longer life ex-pectancy,changingroleofwomeninlaborforce, urbanization – is where even moreinteresting developments might emerge.

Albert Francis Park, Director of the Insti-tute for Emerging Market Studies at the HongKongUniversityofScienceandTech-nology raised the example of young peo-ple in rural villages in China who want tohave an experience and secure a stronger economic future, so they are moving into cities. These demographic changes are go-ing to amplify one another and continue to transformlabormarketsaroundtheworld.

P. 27

PremalShah,CEOofKiva,aninternationalmicrolending nonprofit organization, pre-dicts a future with “mass entrepreneur-ship” and “an artisanal economy” withsome choosing the path by choice and some due to necessity. A challenge withtraditional entrepreneurship has been the risk calculus when comparing the conse-quencesoffailurewitha“steadyjob.”Thischallengecanoftenacutelyaffectnewandsmaller firms. When observing business-es in the EU over a four-year period from 2008-2012, Europa found that survival rates for businesses are inversely related tothesizeoftheenterprise.However,dig-itizationishelpingtoleveltheplayingfieldbetween largeandsmallfirms. InCanada,digitalbusinessesgrew28xfasterthantra-ditional businesses in 2017.

As “steady jobs” become less common due to automation, platform economy, and demographic changes, the risk associated withentrepreneurshipbecomesmorepal-atableandacceptable.AsifFaruqueofLev-el 39 (a UK community hub for startups)noted that, “entrepreneurship thrives in periods of uncertainty.” Entrepreneurship also thrives in periods of innovation and digitization.

In addition to enabling the platform econ-omy,digitization isremovingsomeoftheentry barriers that have traditionally pre-vented individuals from becoming entre-preneurs. An individual anywhere in theworldcannowlaunchabusinessonlineandimmediately access millions of customers globally. Global ecommerce sales is expect-ed to reach $4.5 trillion by 2021, which isan unprecedented opportunity that the digital world provides to entrepreneurs.50 Small businesses that take advantage of thisglobalopportunityseea34%increasein productivity within the first year andare11%morelikelytosurvive.51 Moreover, a multitude of Internet intermediaries can helpwithwebsitedesign,marketing,pay-ments, back end processing, and customer service.Thedigitizationofmicro-entrepre-neurshipcouldunlocknewincome-earningopportunities for hundreds of millions of micro-enterprisesaroundtheworld.

This rise in entrepreneurship also interre-lateswiththeriseoftheplatformeconomyinanotherinterestingway,asmanyofthesemicro-entrepreneurs will rely on a varietyof platforms in order to achieve economies of scale necessary for securing certain ser-

IV. Entrepreneurship

P. 28

vices. For example, a jeweler may list his/her product offerings on multiple digitalcommerce platforms to increase sales and ship products in bulk, at discounted ship-pingrates.Infact,entrepreneurswhosoldontwoonlinemarketplacesinsteadofjustone averaged 190% more sales revenuethan single-marketplace retailers.52

Micro-small-medium enterprises (MSMEs) are critical to creating a sustained and healthy economy. In the U.S. small busi-nessesmakeup99%ofallbusinessesandwere responsible for 60% of the net newjobs during the height of the economic re-cession between 2008-2013.53 In the EU, SMEscontribute57%ofvalueaddedintheEU overall, and countries within the EUwith higher SME prevalence, experiencehigher economic growth.54 And in India, whileMSMEcontributiontothetotalGDPis 37%, a KPMG report found that digitaldividends for entrepreneurs could increase MSMEcontributiontoIndia’sGDPby10%by 2020.55 56

The vast majority of workers in emergingeconomies could be considered entrepre-neurs; whether they are informal workersrunning a small food stall or a micro-en-terprise manufacturing artisanal product. Many of these businesses remain in the in-

formal economy due to several factors in-cludingliteracyandawareness,regulation,andtaxation.Digitizationcouldresultinalargeenoughriseinrevenueandaloweringofcostsandheadaches,thatwecouldseeamovementtowardsformalizationofmicroenterprisesinemergingmarkets.Digitiza-tion provided $193 billion boost to worldeconomic output and created 6 million jobs globallyin2011whileemergingeconomiessaw some of the greatest gains including94%ofglobalemploymentimpact.57 These emergingmarkets,recognizethistrendofmicro-entrepreneursbeingthegatewaytostimulatingeconomicgrowthandaddress-ing poverty crisis. World Bank statisticshave shown microenterprises in develop-ingeconomiescontributemorethan60%of GDP and more than 70% of total em-ployment.58 This trend can continue to lift up the underserved as digitization feedsentrepreneurship which in turn feeds jobcreation and better economic health.

The vast majority of workers in emerging economies could be con-

sidered entrepreneurs.

P. 29

“With new jobs come new rules.”Dr.TaoKong, AssociateResearchFellowat

Institute of Social Science Survey and Institute of Digital Finance, Peking University

Retailfinancialserviceswerelargelydesignedforfixedsalaryemployeeswhomightworkahandfulofjobsbetweenages20and60andwouldthensettleinfora10-to20-yearretirement. As the labor market evolves based upon the trends described above, every facetoftheretailfinancialserviceslandscapewillalsoneedtoadaptaccordingly.Inotherwords,changesinthewaymoneyisearnedoughttobeaccompaniedbychangesinthewaymoneyispaid,managed,andintermediated,inordertoadaptivelyoptimizepeople’scapacitytobuildastablelifeandseizeopportunitiesinaworldofnewworkarrangements.Infact,therelationshipbetweenfinancialservicesandworkforcefluctuationswillbecomeevenmorecloselytied,asCherPongNg,ChiefExecutiveofSkillsFutureSingapore,noted,“Itisdifficulttohavecareerresilience,iffinanciallyyoudon’thavetheresiliencetoman-age the shock and transitions.”

Paymentsarethearchitectureuponwhichother financial services can then be built.Paymentswilllikelyhavetoundergosomefundamental shifts to respond to the changes that are going to occur in the labor market.Movingfromnine-to-fiveemploy-ment to work that’s characterized by anexpected increase in job churn and prev-alenceofgigwork,meansashiftfromsin-gle-source predictable lump sums paid at regularintervalstowardsmultiplestreamsand sources of variable, unpredictable, and likely smaller incomes, which has implica-tionsonthetiming,frequency,andstruc-ture of payments services.

Inflows - Demand for simplicity and re-liability: : The corollary of growth in jobchurn and the platform economy is the need to integrate for payments with newincome providers, which entails buildingnew contracts and financial relationships.Also, some of the income streams received by workers in the platform economy canbe less than reliable at times. For example, 70% of freelancers in New York reportedhaving had at least one job that they did not get paid for.59 Payments solutions need to be more streamlined and sophisticat-ed to match and facilitate the increase in multiplicity and complexity of work ar-

The Impact of the Future of Work on Retail Financial Services

I. Payments: Inflows and Outflows

P. 30

rangements and labor relations. In addi-tion, many individuals in emerging markets engaging in the platform economy often have to pay excessive costs to access their income due to the high cost of traditional remittances. Moreover, the payers in these transactions are often on the other side oftheworldandsotrustandreliabilityinthese payments is crucial. As technology allowsindependentworkersandmicro-en-trepreneurs to trade their products, ser-vices, and assets online and across borders, cross-border payment solutions are likely to increase in importance.

Inflows - Need for rapid transfer and re-al-time access:Beingabletogetpaidim-mediately for work that is completed willbeanimportantdevelopmentforworkersgoing forward. Rapid transfer of moneyfrom the payer to the payee is incredibly important to enable people to better han-dleshorttermexpensesandoffsetcertainshocks. According to our survey, 77% ofsmallbusinessownerssaidtheywouldliketo receive their income more frequently,compared to only 49% of overall respon-dents. Moreover, real-time payments to platform economy workers through Pay-Pal’s recently-acquired Hyperwallet plat-form have increased by more than 200%year-over-year. While serving the import-ant function of consumption smoothing, real-time access to cash can also be cou-pled with smart budgeting and savingssolutions to ensure that income is made availablewithinastructurethatpromotesdisciplinewithregardstospending.More-over,withincreasingincomevariabilityanduncertainty,givingpeopleareal-timeviewofhowmuchaparticularpaymentwillim-pact their savings and ability to manage

other expenses will become increasinglyimportantfortheirfinancialhealth.

Outflows - consumption smoothing: The variability in income raises challenges for workers as most expenses are relativelyfixedinsetincrements,therebyenhancingthe need for consumption smoothing and more active and vigilant money manage-ment. According to our survey data, 39%of independent contractors that we sur-veyed report feeling like they do not have controloverhowmuchincometheymakeeach month, compared to only 25% of allsurvey respondents. Innovative tools for financial well-being are an important partof Walmart’s efforts to train and upskillitsemployeesforthefutureofwork.Over300,000 Walmart associates use the Even app for getting paid on demand, budget instantly, and save automatically.60 “Pre-

P. 31

liminary data shows that these new toolsareveryefficientatmanagingfinancialin-flowsandoutflows,”saidGayatriAgnewofWalmart,“whichisappealingtoourassoci-ates.” Some of the developments in savings and credit described below could be cou-pledwithpaymentssolutionstodeliveracertain level of stability to workers in thefuture.

Outflows – expense management: Man-agingoutflowsofpaymentstotakecareofexpensesisanotherchallenge.55%ofsmallbusinessownersinoursurveydatasetsaidthey have paid a bill late and incurred ad-ditional fees or interests as a result in the past12months,comparedto41%ofoverallrespondents.BenjaminFernandes,CEOofTanzanianfintechstartupNALA,remarkedthatNALA’stransactionhistorytoolisoneof its strongest value propositions because most of NALA’s customers could not tellhow much money they had spent in theprevious week. Moreover, most expensescannot normally be paid for ahead of time. With incomes being more variable in the future, individualswouldbenefitfromtheabilitytopaydownfutureexpenseswhentheyhavealargeinflow.

Push for digitization: Most people around the world continue to be paid for their

work in cash, and many emerging econo-mies are primarily cash-based economies. InBrazil,forexample,only30%ofpersonalconsumption is paid digital and only 48%of salaries are paid digitally.61 There have been some exceptions to this trend (i.e. China,Kenya,andTanzania)wheremobilepayments have taken a significant mar-ket share. As work becomes increasinglydigitized and involves more remote andmultiple partners in the future, the expec-tationfordigitizingpaymentstofacilitatetransactionswilllikelygoupaccordingly.Astronginfrastructurefordigitizedpaymentflowswillsetafoundationuponwhichsolu-tionsinsavings,credit,andfinancialman-agementcanbeofferedefficientlyatscale.

Moving from nine-to-five employ-ment to work that’s characterized

by an expected increase in job churn and prevalence of gig work, means a shift from single-source predictable

lump sums paid at regular inter-vals towards multiple streams and sources of variable, unpredictable, and likely smaller incomes, which

has implications on the timing, fre-quency, and structure of payments

services.

P. 32

There is no evidence that expenses will become much lower in the future. In fact, thetrendtowardsurbanizationcoulddriveupexpensesforthosewhomightbemostaffect-edbythechangingnatureofwork.Theincreaseinworkthroughtheplatformeconomyandtheshiftbytraditionalemployerstowardsamoretask-basedmodelforworkerswillcontinue to drive variability and unpredictability in earnings. As a result, more and more peoplewillearntospend,butnotearntosave.Savingsneedtobereimaginedtobecomemoreconvenientandeffectiveinstrumentsofconsumptionsmoothingandfinancialin-termediation in the future.

“People talk a lot about income inequality but not volatility. Vol-atility is an enormous problem. This is a technical problem that financial companies can solve.”

Louis Hyman, AssociateProfessoratCornellUniversity’s

School of Industrial & Labor Relations

Need to afford lifelong retraining: Sav-ings will be particularly important if andwhen an individual loses a job due to au-tomation and has to retool or upskill for a new position. These savings will be a keyfactor determining the success the indi-vidualcanachieveinadaptingtothenewlabormarket,assavingswillbeimperativeto cover expenses during episodes of un-employment and/or retraining. Only 38%of workers who responded to our surveyin jobs with a high risk of automation re-ported having savings to cover 6 months of expenses if they lost their primary source of income.

Savings may also be important even after theindividualhassecuredanewposition.Amajorchallengeofjobchurnthat’scausedby high-speed automation is that when

individuals are eventually able to secure a newposition,theywilllikelyenterthatnewpositionatthebottomrungoftheladder;even iftheywereatthetoprung intheirold position. Greg Medcraft, Director of the OECDDirectorateforFinancialandEnter-prise Affairs, argued that individuals willneedtoconsidercreatinga“biggerbuffer”tooffsetsomeofthefluctuationsthatwilloccur and recur in income going forward.In the US, educational lending debt already standsatnearly$1.5trillion,doublingwhatitwasbeforethe2008financialcrisis.No-tably,borrowersover35havesubstantiallyincreased their proportion of educational lending debt in the US.62 Lifelong learn-ingwillrequireareimaginationofdebtfi-nancing as well as a much more carefullyplannedandefficientsetofsavingsmech-anisms to be created.

II. Savings: Short and Long Term

P. 33

Saved using a savings club or a person outside the family (% age 15+)

0%

25%

20%

15%

10%

5%8% 7%

5%3%

20%

12%

8%5%

23%

13%10%

6%

Lowincomecountries

Source:GlobalFindex,WorldBank

Lowermiddleincome countries

Middle income countries

Upper middle income countries

2011 2014 2017

Need for quality savings mechanisms: Short-term savings will continue to be akey instrument for mitigating the mis-match between variable income streamsand consistent expenses; this will be trueacross income levels. There might be a greater need for savings mechanisms among independent contractors, as only 28% of independent contractors that wesurveyed said they make a consistent in-come each month, in sharp contrast to 72% of all survey respondents.Separatingsavings goals that can be used for short-term expenses and those that must be saved, if possible, for long-term expenses willbeanimportanttoolforworkers.Digi-tal technology holds the potential for more secure and valuable savings solutions, as it helps societies move away from cash and

createnewandhigherqualitysavingsop-portunity outside of keeping cash under themattressandhavingitgrowattherateofinflation,whichwillbeparticularlyben-eficialforthoseatthebottomofthepyr-amid. In emerging markets, savings circles have existed for some time as a solution to enable community members to pay in anddrawdowntomanageexpensespikes.In fact, according to the Global Findex, the percentage of population that saved us-ing a savings club or a person outside the family went up between 2011 and 2017,everywhere except in high income coun-tries.63 While there are many variations of savings clubs and their mix of characteris-ticsandvaluepropositionsdiffer(e.g.peerpressure, flexibility, reliability), it is clearthatthereisagrowingdemandforsavingsmechanisms.

P. 34

Saved to start, operate, or expand a farm or business, young adults (% age 15-24)

Lowincomecountries

Middle income countries

Lowermiddleincomecountries

10% 15% 20%0% 5%

15%

8%

11%

14%

8%

11%

17%

10%

12%

15%

15%

13%

Upper middle income countries

High income countries

World

2014 2017Source:GlobalFindex,WorldBank

Saving for micro-enterprises: Short-term savings are also important for micro-en-terprises and small businesses, which areoften the backbone of communities and economiesaroundtheworld.Creditisnotthesolesolutionforcatalyzingabusiness.The vast majority of micro-enterprises in industrial and emerging markets continue to be funded through savings either in-dividual, family, and community. Among young adults aged 15 to 24, the percent-ageofthosewhosavedforthepurposeofstarting, operating, or expanding a farm or

businessincreasedbetween2014and2017acrossincomelevels.Savings,however,canbe a major challenge for entrepreneurs who are constantly looking to reinvestextra money into growing their business.Saving for the future is a difficult propo-sitionwhenthereareimmediatebusinessopportunities and needs to satisfy. Solving for this need will be even more import-ant, as more people leverage the platform economy and digital technology to start theirownbusinesses.

P. 35

Did not save any money in the past year (% age 15+)

0% 10% 20% 30% 40% 50% 60%

48%

55%

47%

39%

30%

44%

60%

57%

54%

29%

52%

52%Lowincomecountries

Lowermiddleincomecountries

Middle income countries

Upper middle income countries

World

High income countries

2014 2017Source:GlobalFindex,WorldBank

Short-term savings shortfalls: Despite its importance, short-term savings shortfalls areobservedaroundtheworld.IntheUS,40%ofAmericansdonothaveenoughinsavings to cover an emergency $400 ex-pense.64 According to data from the Global

Findex,overhalfofadultsaroundtheworlddid not save any money in the year lead-ing up to data collection in 2017.65 In fact, the percentage of population increased between 2014 and 2017, across almost allincome levels.

Long-term savings gap: Saving for the longterm isverydifficultandchallengingwhen short-term expenses are matchingor exceeding income. Solving short-term savings issues can therefore help unlock opportunities in long-term savings.

Absent broader changes in safety nets and mechanisms for long-term savings, tax-ad-

vantaged retirement savings will becomea reality for an increasingly small segment of the global population. The International LongevityCenteranalyzedcross-sectionaldata to calculate the retirement savings gap and found that reliance on public pro-vision plus any current mandatory pension schemes will only be sufficient to deliv-

P. 36

er adequate retirement incomes in 3 outof 30 OECD and other developed econo-mies.66 The retirement savings gap can be attributed to persistently low median in-comegrowthandrecord lowglobal inter-est rates, generally low levels of financialcapability, and the aforementioned demo-graphic shifts (rising life expectancy, stag-nant retirement age and increased medical expenses). According to the World Eco-nomic Forum, the retirement savings gap for the eight largest pension markets willgrowto$400trillionby2050.67Two-thirdsofAmericansdon’tcontributeanythingtoa401(k)orotherretirementaccountthat’smade available through their employer.68 A report by Prudential revealed that among the 50% of private-sector workers whohave access to some form of workplaceretirement plan, the share covered by a definedbenefit(DB)planfellfrom83%in1980to18%in2011.Theshiftfromdefinedbenefit(DB)planstodefinedcontribution(DC) plans, i.e. from traditional pensions to individual savings, as the primary vehi-cle for retirement savings means individ-uals are now required to shoulder moreresponsibilities.69 Only 13% of our surveyrespondentssaytheyare“veryconfident”they’ll have enough money to providefor a comfortable retirement.70 The need anddemandforqualitylong-termsavingssolutionswillincrease,duetoaheightenedsense of individual responsibility, feeling of insecurity, and the pressure to save and in-vest appropriately for retirement in a lon-ger life.

According to the Global Findex, an over-whelmingmajority(79%)oftheworldpop-ulation did not save for old age in the 12 months leading up data collection in 2017.

The percentage stands at 56% for highincome countries and 91% in low incomecountries. On the other hand, our surveyalso revealed differences on this point intermsoflocation,wherewefoundthatonly14%ofruralrespondentssaidthattheyfeltveryconfidenttheywouldbeabletoretireat their desired age, compared to 24% ofurbandwellersand21%ofallrespondents.

Savings need to be reimagined to become more convenient and ef-

fective instruments of consumption smoothing and financial intermedi-

ation in the future.

P. 37

Did not save for old age in the past 12 months (% age 15+)71

100%0% 20% 40% 60% 80%

93%

88%

79%

70%

62%

76%

91%

87%

84%

81%

56%

79%

Lowincomecountries

Lowermiddleincomecountries

Middle income countries

Upper middle income countries

High income countries

World

2014 2017Source:GlobalFindex,WorldBank

Long-term savings via asset acquisi-tion: Assets such as jewelry and real es-tate have long represented a longer-term savings opportunity for individuals and families around the world. However, withpeople desiring more flexibility in wherethey live and having more variable income streams, there is starting to be a stronger preference for renting property instead

of buying and owning. Entrepreneurs arealso avoiding large real estate investments andareinsteadusingco-workingspacestolaunch their businesses. Long-term sav-ings through assets, however, could be areality for more people if the products and servicesarecreatedinawaytoenablepeo-pletoownsmallerpiecesofanasset.

Long-term savings has been a perennial challenge in emerging markets. Govern-ment and community-based savings pro-grams exist, but these are not adequateor particularly efficient solutions to thegrowingchallengeoflongerlifeexpectancy

in developing countries. Long-term saving solutions provided by the private sector are beginning to pop up in emerging mar-kets, but there is still much that needs to be done.

P. 38

Understandingfinancialhealththroughtheprismofthefutureofworkisacomplexmat-ter,soweundertookathoughtexperiment,creatinganaverageworkerintoday’seconomy– Sam – and running a series of regressions to understand the impact of various changes onherfinanciallife.Whiletheanalysisisnotexhaustive,thefollowingresultsfromsce-nariosimulationsarestatisticallysignificant,andtheyrevealinterestingconnectionsthatwarrantfurtherattentionandstudy.DetailsonouranalysisarecontainedinAppendixIII.

Anchor Profile:Samisamarried30-year-oldfemalephysicaltherapistwithamas-ter’sdegreeandafull-timesteadyjobatahospitalinacityintheUS.Shebelongstoatwo-incomehouseholdwithabove-medianincome.

Holdingeverythingelseconstant,andbasedona90%confidenceinterval,

• IfSam’sjobwereathighriskofautoma-tion,shewouldbe15%lesslikelytobeableto cover 6 or more months of expenses withsavings,ifshelosthermainsourceofincome.

• IfSamwereanonlineplatformeconomyworker,shewouldbe16%morelikelytofeela sense of control over her income than in her current job. However, she would alsobe22%lesslikelytohavepaidallherbillson time over the last 12 months. Also, she wouldbe41%morelikelytopreferreceiv-ingincomefromworkviadigitalpaymentapplications.

• IfSamwereanindependentcontractor,shewouldbe53%lesslikelytomakecon-sistent income each month.

• IfSamwereaGenXer,shewouldbe16%less likely to prefer receiving income from workviadigitalpaymentapplications.

• IfSamweremale,hewouldbe31%lesslikely to be stressed about making the money needed each month, if he lost his main source of income.

• IfSamlivedinanemergingmarket[Bra-zil, India, China], she would be 63% morelikely to be able to cover 3 months of ex-pensesand123%morelikelytobeabletocover 6 months of expenses if she lost her main source of income.

• IfSamlivedinaruralarea,shewouldbe25%lesslikelytobeabletocover3ormoremonths of expenses with savings, if hermain source of income is lost.

• IfSamownedasmallbusiness,shewouldbe 27% less likely to make consistent in-comeeachmonth.Shewouldalsobe33%more likely to prefer receiving income morefrequently.

Case Study: Sam

P. 39

Credit assessment models have evolved tremendously in the past several decades. The current models used for credit assess-mentareafarcryfromwhatBillFairandEarlIsaacusedtoassessinvestmentswhentheycreatedFICOinthe1950s.Neverthe-less, there is a major need for innovation in credit models for both individuals and businesses. Most traditional credit models useasetofpreviousfinancialmetricsthatcan be an inaccurate representation of an individual’s credit worthiness. Several ex-perts we interviewed also suggested thatthepathforwardwillhavetobeassessingthe individual’s probability of earning, in-stead of only past earning.

Outdated modes of underwriting and as-sessing creditworthiness: A basic premise of traditional credit-worthiness has been

having a stable income stream from a rep-utableemployer.Forexample, inSweden,afixedlong-termemploymentcontractisa perquisite for securing a housing loan.72 Banks in Bosnia are not as willing to dis-burseloanstopeoplewhocouldnotprovetheyhaveacontractwithanemployerformore than one year.73Individualswithmul-tiple streams of income applying for credit struggle to aggregate those earnings into a statement that would make sense to acredit provider. Alternative forms of data are beginning to be adopted into cred-it scoring models to look beyond simply past credit usage and income. Looking into broader factors like payments history, net-works, and behavioral factors could helpto yield more accurate risk analytics and better credit decisions. Moreover, the larg-er volume of data being collected and an-alyzedcanunlocknewandbetterinsightsinto credit worthiness. For example, withaccess to a portion of the user’s phonedata, applications such as Smart Finance in China and Branch in Kenya, TanzaniaandNigeria,buildonthesuccessofmobilebankingandrelyonalgorithmstoanalyzehundreds of variables, including typing speed and frequency of battery recharge,to make micro-loan decisions.74 There are also experiments around disbursing against liquid assets and deposits, or fu-ture potential earning. Traditional forms ofcreditwerenotdesignedforthewayinwhichpeoplewillbeearninganincomego-ingforward,andthebasisofunderwritingcredit products needs to be updated and redefinedinthefuture.

Outdated modes of delivery - mismatched schedule and structure of repayment: Repayment of credit has traditionally been

III. Credit

P. 40

structured and scheduled as a series of fixed payments on a standard cadence.However, this mode of delivery will notmatchupwellwithanincreasingportionofthe labor market, as more and more people make a living by patching together variable and unpredictable earnings from multiple sources. There is a need to redesign the schedule and structure of repayment, so they are friendlier to cashflows and moreresponsive to fluctuations in earnings.“People don’t want a smaller mortgage.They want a way to finance housing in awaythatmatchesthewaytheyearntheirincome,”saidAmoloNg’weno,EastAfricaRegionalDirectorattheBankableFrontierAssociates. Innovations of longer-term credit products could potentially open upassetownershiptoabroadersegmentof workers in the future and could helpreversegrowinginequality.

Stress associated with debt: 50% of re-spondents to our survey borrow fromfriends/family or a financial institutionwhentheydon’t haveenough incomefortheir expenses. Credit needs to be provi-sioned in a careful manner in the future. When income is variable, the credit need isoftenforsmallamountsofmoneyquitefrequently. Low income individuals oftendo not have access to affordable creditthat meets this need. The energy, time, and emotional toll of borrowing at highcost seem to be a common phenomenon around the world. According to Dr. AnnieHarperattheYaleSchoolofMedicine,lackof access to affordable, short-term, smallscale credit can have adverse effects onpeople’s health. Products will need to becreated that can help to lower stress forindividuals if they are going to be needing

to smooth out their income streams more frequently.

Small business credit gap: With a rise in entrepreneurship globally, access to small business credit is going to become an in-creasingly important issue. For entrepre-neurs,cashflowisunevenandthustradi-tionalcreditmodelshavealwaysstruggledto underwrite. The International FinanceCorporation estimates that there are 65 million formal micro-small and medium enterprises in developing countries that haveunmetfinancingneeds,agapof$5.2trillion.75 In the US, the 2017 Small Busi-ness Credit Survey (SBCS) fielded by 12regional banks in the Federal Reserve Sys-tem revealed that 53% of employer smallbusinesses experience “financing short-fall”,i.e.thechallengeofreceivingfinancingless than the amount they applied for and needed.76 As more people turn to entrepre-neurshipinthefutureofwork,thesegapscouldwiden.Innovationsincrowdfunding,peer-to-peer and online lending are begin-ningtochipawayatthisgapbyopeningupnew channels for obtaining capital. More-over, innovations in underwriting and re-payment are also being introduced into the market. Alternative data, similar to whatis being leveraged in the consumer credit context,canunlock new insights into thecreditworthinessofabusiness.

“People don’t want a smaller mortgage. They want a way to finance housing in a way that

matches the way they earn their income.”AmoloNg’weno,BFA

P. 41

With the increase in sources of income, enhanced volatility of income, and complexity of aportfolioofincomeearningopportunities,theneedforeffectivefinancialmanagementtoolswillbemagnifiedinthefuture.“Whenincomeisvariable,peoplearenotasconfi-dent,evenifsomevariabilitymeansmoreincome,”saidCarlCamden,formerCEOofKellyServices and now Founder and President at IPSE-U.S., the Association of IndependentWorkers.

ownership, inpart,becausetheysee itasa pathway to control their own financiallives.” However, entrepreneurs and free-lancersoftenfacethechallengeoforganiz-ing and aggregating their earnings in a sin-gle easy-to-navigate platform. With more people joining the ranks of freelancers and business owners, retail financial servicesmay need to pay attention to the inter-twiningofindividualandbusinessfinancialaccounts. According to our survey data, 55% of small business owners reportedpaying a bill late over the last 12 months, a higherpercentagethananyothergroupwestudied. The current practice of separating personal from business accounting may benefit from rethinking to better servethe needs of consumer-entrepreneurs. Correctly calculating taxes is another chal-lengethatwillbemagnifiedbytheincreaseinthenumberofindependentworkersandentrepreneursforwhomconsumptionandbusiness taxes can be intermingled.

“When income is variable, people are not as confident, even if some variabil-

ity means more income.”Carl Camden, IPSE-US

Need for smart budgeting and planning: Agigworkerdoesnotmakeasteadywage,which makes calculating monthly incomeand planning for expenses a serious chal-lenge. This has been a constant reality for informal labor in developing economies andwillbeconfrontedbymoreandmorepeople in developed economies. Accord-ing to our survey data, only 46% of smallbusinessownersreportmakingconsistentincome each month, compared to 72% ofall survey respondents. Although most ex-penses like food, shelter, communication, transportation tend to be predictable on a monthly basis, many people often lack the tools to understand these expenses and anticipate total expenditures. The combi-nation of variable income, limited finan-cial capabilities, and lack of insights into expenses can make it challenging to man-age and match steady expenses with un-steady earning on a regular basis. Provid-ers can help individuals identify trends in incomeaswellashowthosetrendsrelatetosteadyexpenses,whichcouldhelptore-ducefinancialstress.Adashboardtoolthatcanindicatehowmanymorehoursofworkrequiredtoachieveacertaingoalwouldbeverybeneficial.

Intertwining of personal and business accounts: Gina Harmon, CEO of AccionUS, states that “people choose business

IV. Financial management

P. 42

New tools for government benefits:Oneotheraspectoffinancialmanagementthatmayrequirereformsinlightofthefutureofworkwillbegovernmentbenefits. Ifsolu-tionslikeuniversalbasicincome(UBI)aregoingtobecomeareality,financialservicesproviders will need to understand thesenewincomestreamsandhelppeopleman-age them. In the US, earned income tax credits (EITC) are disbursed as an annu-alizedreturntolow-tomoderate-incomeworking individuals and couples, but theannualizedreturndoesnotmatchupwiththepeople’sliquidityneeds.Thisisanoth-erinstanceinwhichretailfinancialservicescouldlinkinwiththegovernmenttodevisenewtoolsandadjustthestructureofEITCtomaximizehouseholds’capacitytobud-get and smooth consumption.77 The po-tential expansion of government benefitsinlightofthefutureofworkwillraisetheimportance of tools that can help people easilyunderstandhowtheirincomemightimpacttheiraccesstopublicbenefits.

Investment as buffer: Financial manage-ment tools have the potential to open up investment opportunities for a new classofworkers.Dr.AnnieKoh,professoroffi-nance at the Singapore Management Uni-versity argued that in the future, “people will need to invest for themselves.” Toolswill need to be created that simplify in-

vestments and automate them so that in-dividuals can more readily take advantage of them. Workers are no longer going to necessarily be incrementally making more moneyastheygetolder,andtheywillhavemore gaps in earning capacity due to pe-riodic breaks for the purpose of retooling and upskilling.

Financial tools can engage people in invest-ing early on could help to create a larger bufferthat’snecessaryforstagnantwagesand/orgaps inearnings lateron.Financialplanning and asset management has tradi-tionallybeenservicesofferedonlytoase-lectsetofwealthyclients.Inaddition,withthe younger generation expecting and de-manding digitally delivered, highly intuitive financial management tools, the financialservices industry needs to fundamentally rethink the diverse market segments and models for these services.

This reassessment should be centered on the goal of helping customers to achieve inclusiveandsustainablefinancialhealth.

P. 43

“More flexible work in the future is a market opportunity. Freedom is an opportunity for everyone in the financial services ecosystem.”

Alejandro Cosentino, ChiefExecutiveOfficer,Afluenta

Technology isgoingtofundamentallytransformfinancialservices inthenext20years,just as it is going to transform the world of work. That transformation, however, mustbefocusedon improvingpeople’sfinancialhealth ifwewanttomeetpeople’sneeds inthefuture.Otherwiseweriskexacerbatingtheproblemofinequalitythatiscurrentlyatthecenterofnearlyeverypolitico-socio-economicchallengearoundtheworld.Thisisatremendous opportunity to reform financial services from top-to-bottom; a piecemealapproachsimplywillnotsufficeforthefuture.Thissectionprovidesrecommendationsonhowtoreformeveryleveloffinancialservices.

Themodernfinancialservicesecosystemdatesbacktothe1400sinSpainandItalyandwasdesignedtoservetheneedsofgovernmentofficialsandmerchantgroups.Theeco-system has evolved since that time, but it still sits on a core architecture that makes ser-vicescheapforthosewhoarewealthyandexpensiveforthosewhoarepoor.Moreover,pastexcessiverisk-takingbehaviorsandfinancialcriseshaveledtoanerosionoftrustinfinancial services. The unprecedented power of digital technology has the potential tomagnifyormendthistrustgap.Buildingtrustintotheverycenterofreformsandinnova-tionswillbeabsolutelycritical.

The future viability and success of the fi-nancial services ecosystem hinges on its ability to reform and innovate in response to the new realities and needs that arisewiththefutureofwork.Buildingcustom-ersfinancialhealthinthisrapidlyevolvinglabor landscape will determine the levelofstabilityandgrowthpotential inthefi-nancial services ecosystem. Several expert intervieweesremarkedthatfinancialinsti-tutions have historically been motivated

andjudgedbytheirprofits,returnoneq-uity, market share and client servicing. And wemaywellbemovingtowardsaworldinwhichfinancialintermediationneedstobeenriching for all parties to be sustainably profitable into the next century, as moreclientswilldemandit.

It is hard to overstate the importance of reorienting the financial services ecosys-tem towards the goal of universal finan-

Building Financial Health for the Future of Work

I. Ecosystem

i. Universal Financial Health

P. 44

cial health, which means instead of onlymeasuringhowmanypeoplehaveopeneda payment account, financial institutionsmust consider the outcomes and impacts of all of the financial services that peopleneed and use to take control of their fi-nancial lives. Financial health can lead to increased economic opportunity, more re-siliencyagainstfinancialshocks,andsocialmobility.

Overcomingchallengeswithaccessisonlythe first step towards achieving universalfinancial health. There are nearly 1 billionpeople without a formal identity docu-ment,1.7billionpeoplewithoutafinancialaccount, and 2.5 billion without a mobileconnection,andover3billionwithoutac-cess to the Internet.78 “Identity manage-mentisthefoundationuponwhichfinan-cial innovations can be created,” said Hala ZahranofArabBank.Afinanciallyhealthyand inclusive world does indeed requireuniqueIDs,andtechnologyisrapidlyhelp-ingtochipawayatsomeofthebarriersthatare traditionally associated with identitymanagement infinancialservices,suchasphysical proximity, information asymme-try and commercial viability. Internet and mobileconnectionswillcontinuetobethegatewayforpeopletoopenupfinancialac-counts in the future, but it is important to note that there are still far too many in the worldwithoutconnectivity.Onceaccessisprovided through digital technology the impact can be tremendous. A panel survey conducted in 2014 found that better ac-cess to M-PESA increased household con-sumption and savings, thereby reducing poverty rates by two percentage points.79 Mobilemoneytransfershavebeenshowntoreducethetransactioncostsoffinancial

transfers, and are central to risk sharing and consumption smoothing strategies for households in the face of shocks.80 Anoth-erstudyfindsthatM-PESAusersaremorelikely to transact for regular support, cred-it, and insurance purposes, enjoying more optionsformanagingtheirfinanciallives.81

Between2011and2017,over1billionpeo-ple had newly created transaction ac-counts.82 We may fall short of the World Bank’sgoalofuniversalfinancialaccessby2020, but we have certainly made stridestowards the goal. The challenge at handis shifting to how to improve and createservices that are useful to people who

P. 45

now have these financial accounts. In In-dia, for example, despite a significant risein the number of bank accounts over the past several years, nearly half of these ac-counts lay dormant according to the World Bank.AsurveycommissionedbyPayPalin2016 found that nine out of 10 consumers inBrazil,IndiaandtheUSreporthavingabank account, but still feel underserved by thecurrentfinancialsystem.Thefutureofworkprovidesanincredibleopportunitytoprovide useful financial services to manyofthenewlybanked,andtheunderserved,aroundtheworld.

Solving for financial health and the chal-lengesthatarisewiththefutureofworkisan important business opportunity for the financial services industry at this uniquehistorical moment – as industrial econo-miesmirrordevelopingeconomies,withagrowingportionofthelabormarketmovefrom doing “steady jobs” to undertaking a “portfolio of opportunities.” Contrary to widelyheldassumptions,thepoorarewill-ingtopayforfinancialsolutionsthatservetheir needs. For example, sometimes the poor will deliberately choose a more ex-pensive moneylender because the looser repayment schedule fits their needs bet-ter. Instead of receiving interests on bank deposits, they might even pay fees to use

a good savings product.83 Improving their financialhealthwithhighqualityproductsand services ought to be the foundation on which institutions within the financialservicesecosystemdifferentiate.Thebasisandpotentialofprofitabilitywillbedefinedby features such as reliability, security, con-venience,andaffordability.Withsuchclosealignmentbetweenthefinancialhealthofcustomers and commercial success of the financial services providers, reforms andinnovations of all levels should start from and reflect a reorientation towards thegoalofuniversalfinancialhealth.

Moreover, the ambition of universal fi-nancial health will require much broadercollaboration across the financial servicesecosystem and public-private partner-ships. Indeed, a commitment to univer-sal financial health may require revisitingthe norms and rules the ecosystem oper-ates by. Moreover, there is an opportunity for both the public and private sectors to come together around the commitment of universal financial health, just as the sec-tors committed to universal financial in-clusion before. Since 2010, more than 55 countries have made commitments to fi-nancial inclusion, and more than 30 have either launched or are developing a nation-alstrategy.WorldBankresearchindicatesthat when countries institute a nationalfinancial inclusion strategy, they increasethepaceandimpactofreforms.Nowisthetime for a renewed focus on universal fi-nancialhealthacrossthefinancialservicesecosystem.

With such close alignment between the financial health of customers

and commercial success of the financial services providers, reforms and innovations of all levels should start from and reflect a reorienta-tion towards the goal of universal

financial health.

P. 46

Financial services providers reached his-toriclowsintrustfollowingthe2008finan-cial crisis. In 2007, trust in banks, according totheEdelmanTrustBarometer,was68%,but it fell well below 50% after the crisis.Althoughanoverallrecoverytoabove60%canbeseeninthelastcoupleofyears,fi-nancial services remain one of the least trusted industries.84 This recent stalled recovery in trust is fragile and could be rapidly lost, if technology is not leveraged properly to meet the needs of individuals and businesses in the future. As technol-ogy becomes and continues to be the pri-mary vehicle through which workers arepaidandhowtheymanagetheirfinanciallives,therewillbeseriousconcernsabouttransparency, privacy, security, bias, and stabilitythatwillneedtobeaddressed.Allof these issues strike at trust, the core of thefinancialtechnologyecosystem.

Privacy will become an increasingly im-portantissueinthefutureasworkersneedtoengageinamultitudeofworkcontractswithmultipleproviders.Systemsandpro-tocols must be created to ensure that sensitivefinancialdataiskeptprivate.Ac-cordingtoasurveyconductedbyPricewa-terhouseCoopers,only25%ofrespondentsbelieve most companies handle their sen-sitive personal data responsibly, and only 10%ofthemfeeltheyhavecompletecon-trol over their personal information. More-over, 71% of them find companies’ priva-cy rules difficult to understand, and 71%wouldstopdoingbusinesswithacompanyfor giving away their sensitive data with-out permission.85 As systems begin to pull together financial data from various pro-

vidersfordifferentusecasesandcombinethem with other uniquely personal datasets (i.e. healthcare, employment), con-cerns around data privacy will multiply.While financial institutions stand to gainfrombreakthroughsthatarecatalyzedbydata sharing, there are inherent risks asso-ciatedwithintegratingsystemsfordataac-cess.Ifdatasharingisdonewell,ithasthepotential to enhance know-your-custom-er, identity validation, and fraud detection capabilities.86Inordertoharnessthepow-er of data and technology and build a path to trust simultaneously, financial servicesproviders must be transparent, thought-fulandcarefulwithhowinformationisac-cessed, collected, stored, used, and shared.

Theneedtostrengthencybersecuritywillalsoincrease,asfinancialdataaboutwork-ers issharedwithahostofprovidersandcustomerswhowillbemanagingimportantdatastreams.Encryptionwilllikelycontin-ue to improve but adding more actors to theecosystemwillheightencybersecurityrisks exponentially. There are centraliza-tion risks for customers storing their data in a handful of large-scale identity, verifi-

ii. Reestablish Trust

P. 47

cation,andfinancialservicesdatafortress-es. The most serious cybersecurity risks, such as data breaches, credential theft, andcredentialreuse/abuse,cancausetan-gible harms and undermine trust for the entire ecosystem. EY’s 21th Global Infor-mation Survey captured responses from over 1400 C-suite global leaders in 2018 and found that only 8% of organizationsreported having the information security functions that fully meet their needs.87 A Deloittestudyfindsthat institutionsthathave reached the highest implementation tier intheNational InstituteofStandardsand Technology (NIST) framework arecompanies where accountability for cy-bersecurity starts at the top, responsibil-ities are shared across functions, multiple lines of defense are maintained, and cyber risk exposure is distributed and insured against.88Beyondimprovingsolutionssuchas multifactor authentication and tokeni-zation, financial services providers needto continuously improve ecosystem-widerisk management infrastructure and adopt best adaptive practices to lower cyberse-curity risks, build cyber resilience, and im-prove the digital literacy and cyber hygiene of customers.

Platforms and marketplaces have a social and cultural dimension that can make it hard for certain groups to break in as pro-viders in these markets, not to mention accesstoconnectivityasafirstorderen-try barrier. The financial services ecosys-tem needs to make concerted efforts atremoving biases that may have been pre-built intofinancialservicesinordertoes-tablish and strengthen fairness as a basis of trust. Ideally technology and data can be

leveraged to deliver objective analytics and decisionsthatbringusclosertoaworldofequal opportunity, but there are also realrisks for technology to amplify and scale discriminatory biases if underserved pop-ulations are poorly or under- represented in a data set that is used to train an al-gorithm, or if biases are encoded into the training data and algorithm. The full po-tentialoffinancialtechnologywillonlyberealized if biases are eliminated to enablefair outcomes. If algorithms that replace loanofficersandmortgagebrokersaretobe trusted, they ought to be free from par-tiality and prejudice.

The financial instability and insecuritycausedbythefinancialcrisisin2008isoneof the major reasons that there’s a trustdeficit in the financial system globally.Technology can help to introduce competi-tionintothefinancialservicesmarketandtherefore reduce systemic risk. Moreover, financialtechnologysolutionsarecurrent-ly being integrated with existing financialinstitutions and lack the scale to pose ma-joruniquefinancialstabilityrisks.Butthesituationmaywellbedifferentin20years.To the extent that the model for deliver-ingfinancialservicesandproductsremainssimilar, then technological advancements may inadvertently magnify some of the stability risks (i.e. overleveraging of credit) that have traditionally been at the center offinancialservices,bymakingthedeliveryof those services faster than the system can handle. This could lead to a challenge for regulators and policymakers to keep up withthespeedwithwhichtechnologyisin-novating and raising inherent risks. Again, reforming financial services at its core to

P. 48

focus in on financial health could help toallay, at least in part, this concern.

If individuals do not trust financial tech-nology, then all of the tremendous poten-tial for product innovation and financialempowerment are moot. The financialecosystem must tackle this issue head on and establish the highest standards fordatastewardshipwithastrongethicalframework. “People need to stop mov-ing fast and breaking things,” said Wayne Hennessy-Barrett of 4G Capital, a fin-tech upstart operating across Africa. Alex Fankuchen of Tala echoed the sentiment and emphasized that “financial servicesproviderswillneedtogetitrightthefirst

timewhenworkingwithcustomerssothatthey can maintain and build trust in their services. If new technology doesn’t takethetimetoestablishitselfasatrustworthyandreliablesolution,that’sit.”

“Financial services providers will need to get it right the first time when working with customers so that they can maintain and build trust in their services. If new tech-

nology doesn’t take the time to establish itself as a trustworthy and reliable solution, that’s it.”

Alex Fankuchen, Tala

P. 49

Financial technology has brought a wave of new actors into the financial services eco-systemoverthepastfewyears.Bothtraditionalandnewinstitutionshaveanopportu-nity to reimagine and fundamentally adjust their approach to financial services in lightofthechangingnatureofworkandincome.Aswetakeaportfolioviewtowardsincomeearningopportunities, itmaybehelpfultoadoptthesameportfolioviewtowardspeo-ple’smulti-facetedfinancialneedsastheinstitutionalbasisforinnovation.Thefollowingrecommendationsreflectbestpracticeslearnedfromleadersfromfinancial institutionsaroundtheworld.

Leaders of several technology startups thatweinterviewedforthisresearchproj-ect mentioned that their greatest strength was not in their technology solutions perse, but rather in their ability to truly un-derstand the needs of their customers. Quinten Farmer, Chief Operating OfficeroffintechstartupEvenacknowledgedthathiscompanyuses“newformsofdatamod-eling and machine learning” but pointed to “deepmemberresearch”asthecorediffer-entiatingfactorbehindthecompany’srap-id rise. A deep understanding of custom-ers iswhatallowsthecompanytodeploythese new technologies effectively. Tech-nologyenablesaprovidertoofferproductswithanunprecedentedlevelandcombina-tionofpersonalizationandstandardizationat scale, precisely as more people are going to be living less standardized lives in thefuture. Thus, being able to understand the commonalities and the individualized dif-ferencesinpeoplewillbekeytosuccessinthe future. Focusing on people over prod-ucts as institutions will have significantimplications on the company strategy, process, structure and culture, including whetherandhowhuman-centereddesignand innovation takes place.

Financialservicesproviderswouldbewell-served by recruiting individuals and busi-nesses that have variable income streams and that have struggled financially in theprocessofdesigningnewproductsandser-vices.Peoplewhoarenotunderservedbytheexistingfinancialsystemmightstrug-gle to truly understand the needs of those whowouldbenefitmostfromproductin-novation. Individuals who have dealt withfirsthandsomeofthemajorchangesand

II. Institutions

i. People over Products

P. 50

challenges associated with the future ofwork trends described above will be ableto inject deep empathy and personal un-derstanding into the process and culture through which financial institutions planandimplementreformsthatwillbeneces-sary in the future.

Many of the future of work experts wespoke with suggested financial literacyas a silver bullet to some of the challeng-esposedbythefutureofwork.However,almost none of the financial services ex-pertswespokewithagreed.AsPeterKer-stens from the European Commission put it, “Quitea lotof folkswhohavefinancialliteracystillbehaveinirresponsibleways.”Instead,financialservicesexpertspointedto the need for more tailored and precise financial services that take into accounttherealworldneedsofrealpeople,ratherthan creating products before understand-ing the customers.

Financial services providers may need to reimagine their approach to product de-sign to meet people’s needs rather thanpigeonholing them into preexisting prod-uctcategories.KateGriffinfromProsperityNowremarkedthat“savingsandcreditareessentially doing the same thing: giving you an ability to get a lump sum of money that youdon’tcurrentlyhave–oneleveragingpast income and the other future income. But we tend to keep savings and creditproduct people separate, so it is challeng-ing to design for the right solution for the need in that particular moment in time. I haveseensomebankstrytobreakdownsome of these barriers; financial institu-tions need to start thinking differently.”Thereisawealthofresearchshowinghow

people who are poor and underserved bytheformalfinancialsystem,don’ttendtochoose between alternative instrumentsbutinsteadmaximizeaccesstobothsav-ings and credit, since neither fits theirneeds perfectly and their strategy is to patch together a portfolio of general-pur-pose liquidity tools.89 As we move into anew world where more and more peopleexperience income volatility, uncertainty, and insecurity, financial institutions needtorethinkhowtobeststructureitsorgani-zationtobestfacilitateteamstosolveforcustomers’financialneedsholistically,anddeliverproductsthatwilltrulyadvancefi-nancial health.

Financial services providers may need to reimagine their approach to product design to meet people’s

needs rather than pigeonholing them into preexisting product categories.

A deep understanding of customer needs mayalsoopenupnewpossibilitiesinhowfinancial institutions approach differentcontexts and markets. For example, 64%ofrespondentstooursurveywithvariableincome said they prefer to receive income from work more frequently, whereas only44%ofthosewithconsistentincomespre-ferredmorefrequentaccesstotheirmon-ey. Also, embedding a high-touch approach into high-tech products can enable the ad-aptation and creation of more culturally relevantfinancialservices.Oursurveydatasuggest clear differences across marketsand regions. Survey respondents in emerg-ing economies, i.e. Brazil, China, or India,are123%morelikelytobeabletocover6ormoremonthsofexpenseswithsavings,

P. 51

if they lost their main source of income, holdingeverythingelseconstant.Knowingwhetherasocietyhastraditionallyover-orundersaved could help to design a prod-uct that better steers savings behavior to buildfinancialresilienceforaworldwithin-creasedjobchurn,lessofgovernmentand/or employer safety nets, and more person-al responsibilities. Also, our survey results seem to indicate a greater openness to us-ing new fintech tools in emerging econo-mies.Surveyrespondents inBrazil,China,and India are 54.5% more likely to preferreceivingincomefromworkviadigitalpay-ment apps.

A deeper focus on people may enable more granular customer segmentation and also personalization.Currentlyfinancialinstitu-tionstendtoofferabasicsuiteofproductsthatarenotverywelltailoredtoindividualneeds. Putting people at the center of the

institutionsfocuswillalsobuildinanotionof ethics into the individual products that are created. Francisco Mardones, President ofChileTecandCEOofMentorGraphicsinChile,challengedfinancialservicestothinkof themselves more as an “adviser” to peo-ple rather than as a transactional provider.

Byplacingtheprimaryfocusonpeopleoverproducts,financial institutionscandeliverproducts that are far more accessible, user friendly,andthattrulyleveragethepowerof technology to improve the lives of cus-tomers.AsFredericdeMarizfromUBSputit, “If fintech is just about getting a nicerapp,thenwearemissingtheopportunity.”

ii. Get the Full StoryThere needs to be a fundamental change inthewayinwhichfinancialservicesseekto understand their customers. Current-ly,financial institutionssecuresomebasicdata elements from a customer in order to signupforanaccountandwillthengatherup more data about the customer as the customer uses the provider’s products.Developing a more holistic understanding of customers’ financial life could lead tomoreeffectivesolutionsthatbettermeetcustomer needs and help create more sat-isfying user experiences. Moreover, finan-cialproductsarecurrentlyoffered insilosand fail to take into account the full picture

“If fintech is just about getting a nicer app, then we are missing the opportunity.” FredericdeMaris,UBS

that contains important information about underlying and even unarticulated needs.

Asmorepeopleturntoindependentworkand entrepreneurship, financial institu-tions will have to understand all of theseseparate traditional accounts through a unified system. Moreover, financial in-stitutions must help people understand which of their assets might have finan-cial value (i.e. space, physical objects, ar-able land, and data) and how they couldbeeffectivelyandmaximallyleveragedforshort-term or long-term monetary value. Dr. Robert Wolcott, Clinical Professor of

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51%ofrespondentsintheonlineplatformeconomy have paid a bill late and incurred

fees,comparedto38%ofpeoplewhodonotparticipate in the online platform economy.

Innovation and Entrepreneurship at the Kellogg School of Management, North-western University noted that financialinstitutions could also help advise people on issues such as corporate structure and governmentprogramsbaseduponthewaytheyareworkingsothattheymighttakeadvantage of available incentives or tax deductions.Thiscouldbeabeneficialser-vice as more individuals in the future willbe earning an income through platforms or entrepreneurship. Financial institutions mustalsostarttounderstandtheuniquefinancial challenges that their customersmight have even though they might be generating higher income overall. For ex-ample,51%ofrespondentstooursurveyinthe online platform economy have paid a bill late and incurred fees over the past 12 months, compared to 38% of people whodo not participate in the online platform economy.

In recent years, open banking has become a tremendous area of focus for financialregulators around the world. Open bank-ingcanbedefinedasacollaborativemodelinwhichdataflowsthroughtheintelligentconduit of application programming inter-faces(APIs)betweentwoormoreunaffil-iated parties.90 The notion that banks can and should open up their data to non-bank financialservicesprovidersisanimportantinnovationthatwillenablenon-bankpro-viderstoprovisionmoreefficient,accurate,andeffectiveproducts.However,securingdataaboutbankingbehaviorisjustafirststep in better understanding a consumer orbusiness’fullfinanciallife.

Data could also be culled from HR provid-ers,platforms,andprofessionalnetworkstoenablebetterprovisioningoffinancialser-vices.Understandingwhenapersonmightbe receiving a bonus or might be heading into a bear month based on data from an employer or platform would be incrediblyhelpful in financial planning, as is alreadyincorporated into the services offered byNudgeintheUK.91 Piecing together infor-mation about individuals’ work across gigplatformsandhowthatcomparestooth-ers could also prove very valuable for fi-nancialhealth.Übank,afintechstartupinMexico,hasbeenbuildingintegrationswithmultiple gig economy companies, so their drivers and delivery partners can allocate apercentageofeachcompletedrideand/ordeliverytowardssavings.92 Honest Dol-lar,afintechstartupintheUS,hasaverysimilar arrangement with transportationplatform Lyft.93 A fuller picture of relation-shipsandtransactionswiththeemployersand/or the platforms of a given customer

P. 53

will also be helpful in underwriting; if theplatform is growing then the opportunityforwagegrowthfortheindividualmayalsogrow.Professionalnetworkplatformscon-tain valuable information about an individ-ual’sskillsandprospectsthatcouldhelpafinancialservicesprovidertobetterpredictincomeandcreditworthinessinthefuture.

Interoperability is going to be key to achiev-ing the goal of putting together disparate fragmentstopaintthefullfinancialpictureof an individual. An open and interoperable system can mitigate or even remove the friction of moving data across previous-ly siloed systems and enable dissimilar or previously disconnected financial institu-tions that are provisioning different ser-vices to share information such that better financial decisions can be made. Linkingin with government systems about iden-tity, benefits, and government paymentscould enable far more intelligent financialservices provisioning. Data about govern-ment loans for education that people have securedwouldalsobeahighlyusefuldatapoint in future lending decisions. Social and behavioral data can also be analyzed tohelptocreateamoreholisticfinancialpic-ture of an individual or business. In addi-tion, interoperability can mitigate against concerns about concentration of data and power.

Portability is also an important factor in ensuring an open innovative environment

inthefutureforfinancialservices.Custom-ers should be able to choose the provider that best meets their needs and easily port theirdataovertoanewprovider.Thecon-cept of portable benefits is becoming in-creasinglyimportantinthefutureofworkconversation, particularly with regardsto new models and packages of portablebenefits for independent workers, whichare good reasons for financial services toengage and evolve in response to the de-mand for greater portability.

Interoperability is going to be key to achieving the goal of putting together disparate fragments to

paint the full financial picture of an individual.

If financial institutions adopt this holisticapproach, possibilities of many new in-novations will follow. Seeing and under-standing a fuller picture of an individual or business’lifeandfinancialneedswillformthe foundation for intelligent and flexibleproduct designs (discussed further in the next section). For example, an interoper-able open system can enable financial in-stitutions to help anticipate changes in in-comeaswellasmaximizeexistingincome.Itwillalsohelppeopletotakeadvantageofgovernmentandnon-governmentbenefitprogramsthatcouldhelpfillcertaingaps

P. 54

Traditionalfinancialproductswerelargelydevelopedforaworldwhereindividualsworkedahandfulof jobswithsteadyincomeoverthecourseoftheir lives.Creditscoringalgo-rithmswerebaseduponthatsinglesourceofsteadyincome.Savingsprogramswereset-uptomatchabi-weeklypaycheck.Financialmanagementwasrelativelystraightforwardasa steady income thatwas likelyto increase asa personagedandcouldbematchedwithsteadyexpenses.Financialservicesproviderscannolongerholdthesesimplisticas-sumptionsabouthowpeoplewillbeearningincomesinthefuture.Inadditiontobeingsecure,convenient,reliable,transparent,andaffordable,financialproductswillneedtobefarmoreflexibleandintelligenttohelpmanagesomeofthecomplexityandvolatilitythatarelikelytocomeinthefutureofwork.

“Workers want flexibility in how they do their work, when they do their work, and probably flexibility in terms of how they earn their money.”

John Scott, PewCharitableTrusts

When people move from one job to an-other,theydon’twanttohavetosetupanew financial services solution; they wantit to be a seamless transition. Alexia Lator-tua of the European Bank of Reconstruc-tion argued that individuals in the future will choose financial services that provide“movement,flexibility,andadecentpricepoint.” People are going to need a platform through which they can add, subtract,and rearrange income earning opportu-nities, match those with expenses (bothshort- and long-term) in order to easily understand their net savings or overages. Advances on future earnings is another ex-ampleofaproductthatenhancesflexibili-tybyenablinganindividualtohandleafi-nancialshockwithoutdippingintosavingsorutilizingcredit.

Jake Kendall from Caribou Digital raisedtheimportanceofa“phonenumberforfi-nance”inthefuturebecausepaymentswillbeflowinginfromsomanydifferentsourc-es and being able to easily secure payments regardless of the location or payment type beingusedbythepayerwillbekey.Asmorepeople move into cities in order to secure a good job and pursue economic mobility, a newproductlikeamigrationloancouldbehighlybeneficialinemergingmarketssuchas India.94

A major application of flexibility will becreating more tailored and micro versions of traditional financial services that canbe reconciled with people’s variable cash-flows.Micro-loanscannowbeprovisionedsimply using information from a mobile phone and can be provisioned directly to

III. Products

i. Flexibility

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the mobile device for immediate use. Solu-tions that round up purchases to enable micro-savings for retirement, can expand into variations that also enable access to those funds at various time horizons willbecome increasingly critical. Micro-in-surance is also growing in importance asworkers are in need of short-term insur-ancefortheirassetswhilebeingleveragedformonetarygain,whentheyhavetotrav-elforwork,or inordertosmoothgapsinincome.Theseflexibleinsuranceproductsenable someone to take advantage of them onlywhentheyareneeded.Manyemerg-ing economies are leapfrogging directly to micro-financial services transmission.AsSelormAdadevoh,CEOofMTNGhanaputit,“Peopleneedbite-sizedsolutions.Ithinkabouthowalocalketchupcompanybeattheworld’sleadingketchupproducerin an emerging market because it offeredindividual packets instead of bottles, and thisiswhatpeopleneeded.”

Technology can help enable flexible waystostructureproductsthatsimplyweren’t

possible in the past. Credit products that don’t have fixed monthly repaymentschedules are likely to be far more neces-saryandeffectivefortheincreasingnum-ber of workers whose income sources aremultiple, variable, and unpredictable. Also, digitalsocialnetworkscanbeleveragedtoprovide community-based savings tools where savings can be shared easily andtransparently between family membersand communities to help cope with bareperiods. Flexible and helpful variations of RoSCAs (rotating savings and credit asso-ciations) and ASCAs (accumulating savings and credit associations) may also be more easily facilitated by technology.

Therewillbeanexpectationinthefuturethatdigitalfinancialserviceswillbeabletodeliverthesameorhigherqualitycustom-er service and experience as in-person vis-its do today. Delivering the right product at therighttimeisreallywhereintelligenceisgreatly needed. When a worker in the fu-ture has a very high paying month, service providers must be able to understand that this income stream is higher than normal

and thereby encourage the customer to storesomeofthatincomeawayforapo-tentialfutureshockortowardsachievingalonger-termfinancialgoal.

Integrating with HR providers could en-able financial services to better under-standincomestreamsandbenefits,whichwouldenablefarbetterloanunderwriting.Deductions that people get in a paycheck could help a financial services provider

“People need bite-sized solutions. I think about how a local ketchup company beat the world’s leading ketchup producer in an emerging

market because it offered individual packets instead of bottles, and this

is what people needed.” SelormAdadevoh,MTNGhana

ii. Intelligence

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determine consumption smoothing and credit needs. Fiona Greig from the JP Mor-gan Chase Institute described the concept ofa“smartpaycheck”whereanemployeror financial services provider could deter-minehowthepaycheckcomparestoprevi-ous paycheck amounts, payroll deductions, andspecificexpenses.Adjustmentscouldbe made to the paycheck to pre-allocate savings or advance funds on money that is going to be earned.

Smart and adaptive budgeting tools that can make recommendations on how tocontrol certain expenses or earn certain forms of income to bridge liquidity gapscouldbecomemoreviablewithenhanceddata aggregation and analytics.

Sophisticated and intelligent algorithms must be built to understand exceptions that exist in the real world, which mightmitigate the typical recommendation that would be given. As Jennifer Tescher, CEOof the Center for Financial Services Inno-vationputit,“Stuffhappens,andthema-chinemustunderstandthataflattirecanhappen. It is tough to train a machine on this type of event because it is the excep-tion and not the rule.” Leveraging and op-timizingthecombinationofintelligencetoanticipateshocksandflexibilitytomanageshocks is the new sweet spot that couldyieldafarmorebeneficialfinancialservicesproduct suite in the future.

Intelligent designs can also help to identify individual, social, and cultural differencesthatmightimpacthowfinancialdecisionsare made. Certain societies have a history ofhighsavings,whereasothershaveahis-toryoflowsavings.Someindividualsspend

moneyassoonastheyhaveit,whileotherstrytosquirrelmoneyawayforlargerpur-chasesorrainydays.Nuancedunderstand-ing around preferences, standards, habits and attitudes towards saving, spending,credit, and risk, across generational and socioeconomic lines, can be deployed into powerfulservicesthatoffertherightprod-uct at the right time in the future.

Thisriseinautomationoffinancialservicescan leave customers feeling a bit power-less,andthatiswhybuildingtransparency,and the ability to choose, control and cus-

P. 57

tomizeintoautomatedservicesisincredi-bly important. Providing the right informa-tion at the right time can help a customer stay engaged and make the right choice of financial product. Moreover, learningsfrom behavioral economics can be lever-agedtonudgeconsumerstowardschoicesand behaviors that yield more financiallyhealthy outcomes. An interesting example ofthepowerofdefaultoptionsandchoicearchitecture comes from retirement sav-ings,wherethe401(K)productonlybegantogainrealtractionswhenindividualem-ployeeswereautomaticallyoptedintotheproduct(withtheabilitytooptout)ratherthan having to opt in themselves. There is a growing body of evidence on the effec-tiveness of nudges, commitment devices, and other applications of behavioral eco-nomics. For example, reminder messages that mention both savings goals and fi-nancial incentives can effectively increasecommitment attainment for clients whorecently opened commitment savings ac-counts, whereas gain versus loss framingalso have similar effects.95 For new long-term savings products that will be de-signed for a world of increased job churnand income volatility, it must be designed with nudges towards positive financialbehaviors such as long-term saving. Re-gardlessofvarying levelsoffinancialedu-cation, intelligent nudges can push people towardsmorefinanciallyhealthydecisions,whilealsoincreasingtheirfinancialliteracyand enabling them to maintain control of their financial lives. The balance betweenflexibilityandstructure,betweenfreedomand discipline, and between control andautomation, is not an easy one to strike, but increased data aggregation and better

machine learning could improve nudges that yield better outcomes for people.

An intelligent product suite is also one that overcomes the current challenge of solving many discrete problems in a largely siloed fashion. One can now obtain a tailoredcredit product, a personalized paymentproduct, and intuitive savings product all atlowcostandthroughtechnology.How-ever, none of these product providers talk to one another, leverage data from one an-other,orhelpauserdecidewhichproductis actually best for his or her short term andlong-termfinancialsituation.“Chronicfinancialillnesseshavemultipledriversandrequiresolutionstailoredtoeachcustomeruse case that directly address the underly-ing structural and behavioral drivers,” said MohamedKhalil,GeneralManagerofDig-ital Banking at the Commonwealth Bankof Australia. “Intelligent, evidence-based tools thoughtfully designed for how hu-mans actually behave should help people understandwheretheyare intheirfinan-ciallives,helpthemmakebettertradeoffsandchoiceswithregardstotheirfinancialgoals,andthenmatchthemwithasystemof products and experiences that drive meaningful, measurable outcomes.”

Regardless of varying levels of financial education, intelligent nudges

can push people towards more financially healthy decisions, while

also increasing their financial literacy and enabling them to maintain control of their financial lives.

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Humans have long created economic value and meaning through a portfolio of workactivities. The phenomenon of “steady jobs” only emerged in the post-World War IIworld,ascompaniesinindustrialecono-miesplacednewpremiumonstabilityandlong-termplanning,andunionsorganizedto demand better work arrangements.96 While the practice spread to many devel-oping economies, informal and indepen-dent labor has persisted, and making a living through multiple and uncertain gigs has been an enduring reality for many, if notmost.Unsteadywork isnotunprece-dented, but what is new and noteworthyis the increasing portion of the labor mar-ket losing steady jobs and returning to un-steadywork in industrialeconomies,con-verging with developing economies. Thereversal presents an opportunity for retail financial services around the world to re-form and innovate for the goal of universal financialhealth.

This report is an attempt to take a more holistic view on opportunities to reform andadaptfinancialservicesinlightofthechangesthatarelikelytooccurinthefutureofwork.Weacknowledgethattherearestillmanyaspectsofthefutureofwork(e.g.theimpactofclimate change, impact of changes in labor legislations, changes in the role of government and/orcorporations)thatwehavelargelyoverlooked,andtheywillhaveadrasticimpacton the future.

Wealsoacknowledgethatreformingfinancialservicesisnotasilverbulletthatwillresolveall thechallengesthatarisewiththe futureofwork.AsDr.ChrisBrummer,DirectorofGeorgetownUniversity’sInstituteofInternationalEconomicLawsaid,“Fintechatitsbestcanhelptoempoweryoungpeoplewithinformationandtoolswithwhichtheycantrans-formtheirincomeintowealth.Butnofintechapplicationwillbeabletohelpthembuildwealthiftheycan’tgetthejobstocreatetheincomeinthefirstplace.”Whilefinancialservices cannot alter the social contracts that undergird the three pillars of government, employer,andindividualsafetynets,itcanprovideoptionsandimprovepeople’scapacitytomanagetheirincreasingshareoffinancialresponsibilitiesthatshapetheirlives.

Conclusion

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What we are advocating is that when wethink about how to reform financial ser-vices,wedoitinthelightofthefutureofwork. It is imperative that leaders in theprivate and public financial sector takethis more holistic approach, tying in learn-ings from a diversity of stakeholders and sectors. It is only through cross-sectoral partnerships and collaboration that wecan begin to tackle some of the enormous challengesthatwewillfaceinthefuture.AtPayPal,wearecommittedtoastrategyfo-cused on partnership that seeks to understand some of the unique needs that will beposedbythefutureofwork,anddesigningproductsthatwillmeetthoseneeds.

Wearegoingtobelivinginaworldwheretechnologyisgoingtodrivethefutureofworkandthefutureoffinancialservices.Butitisimportanttorememberthatitwillbehumanbeingswhowillmakechoicesabouthowtechnologyisbuiltandutilized.Ifwefailtomakethoughtful and responsible choices in financial services that benefit people’s financialhealth,thenthechallengesofthefutureofworkmayonlybemagnified.

Wehopethatthisreportwillsparkimportantconversationsamongleadersinthefinancialsectorabouthowtoleveragetechnologytobetterunderstandthewaysinwhichpeoplewillbeworkingandearning incomeinthefuture,andhowfinancialsolutionscanbuildbetter financial health outcomes for individuals, families, and communities around theworld.

We are going to be living in a world where technology is going to drive

the future of work and the future of financial services. But it is important to remember that it will be hu- man beings who will make choices about how technology is built and utilized.

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ThisresearchispartofacollaborationbetweenPayPalInc.,theCenterforSocialSectorLeadership,UniversityofCaliforniaatBerkeley,andtheCentreforPublicPolicy,IndianIn-stituteofManagementinBangalore.TheprincipalresearchersandauthorsofthisreportwereUsmanAhmedandIvyK.LaufromPayPal.TylerSpalding,MattHolton,AmritaNair,PaulDisselkoen,andFranzPaaschefromPayPalwerealsoinstrumentalforthesuccessoftheoverallresearchproject.ThisresearchstudyalsobenefitedfromtheguidanceofBenMangan,ExecutiveDirectorandLecturerattheHaasSchoolofBusiness,UniversityofCal-ifornia,Berkeley,andPulakGhosh,ProfessorofDecisionSciencesattheIndianInstituteofManagementinBangalore.ThesurveyresearchwasconductedbyLilahKoskiandDan-ielKoechleinofLogicaResearch.ThesurveyanalysiswassupportedbySimonSchropp,KornelMahlstein,andOlim LaptiovofSidleyAustin.ThereportdesignwascreatedbyNadeemMazenandEhabAlatrebiofNimblebot.

Appendix I. Acknowledgements

P. 61

Name Organization Geography

Michele Chang ReworkAmericaTaskForce,MarkleFoundation US

Darrell WestCenterforTechnologyInnovation,BrookingsInstitution

US

RichardWartzmanKHMoonCenterforaFunctioningSociety,theDrucker Institute

US

Daniel Runde & Romi-naBandura

Center for Strategic and International Studies US

Matt Homer UnitedNationsCapitalDevelopmentFund US

Arun Sundararajan NewYorkUniversity’sSternSchoolofBusiness US

Vikrum Aiyer Postmates US

Dmitry Vishnyakov Nike,andformerlyVisa Russia

Peter WhitefordCrawfordSchoolofPublicPolicy,AustralianNationalUniversity

Australia

BenjaminFernandes NALA Tanzania

Ida Radamacher Aspen Institute US

Jennifer Tescher Center for Financial Services Innovation US

Jennifer Van Dale Eversheds Sutherland HongKong

Amias Gerety QED Investors US

MatthewBlake World Economic Forum US

Tilman Ehrbeck & Arjuna Costa

OmidyarNetwork US

Thefollowingindividualswereinterviewedforthisproject.Wearegratefulfortheirinsights,whichformedthebasisformanyofthefindingsinthereport:

Appendix II. List of Expert Interviewees

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RositaNajmi Bill&MelindaGatesFoundation US

Premal Shah Kiva.org US

Zia Qureshi BrookingsInstitution US

MominaAijazuddin International Finance Corporation US

RossBaird Village Capital US

RuthGoodwin-Groen BetterthanCashAlliance US

GretaBull CGAP US

BrandeeMcHale Citi, and Citi Foundation US

Annie HarperProgram for Recovery and Community Health, YaleSchoolofMedicine

US

Tammy Halevy AssociationforEnterpriseOpportunity US

MelissaKoide FinRegLab US

Jake ColvinGlobalInnovationForum,andNationalForeignTrade Council

US

Corey StoneCenter for Financial Services Innovation, and formerlyConsumerFinancialProtectionBureau

US

KatyDavis ideas42 US

KateGriffin ProsperityNow US

Fiona Grieg JPMorgan Chase Institute US

Gina Harman Accion US

Carmen Rojas the Workers Lab US

RayBosharaCenter for Household Financial Stability, Federal ReserveBankofSt.Louis

US

Micheal Masserman Lyft US

PhillipKudakweasheChikwiramakomo

Samasource Kenya

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DipakBasu Anudip Foundation India and US

DavidDodwell HK-APECTradePolicyStudyGroup HongKong

Michael WattBureauforWorkers’Activities(ACTRAV),InternationalLabourOrganization

Switzerland

Rebecca Lentchner BNYMellon HongKong

Rupa Ganguli Inclusive Trade UK

Michael Frank Economist Intelligence Unit HongKong

Shane ShinShorooqInvestments,Sarwa,andRentSherMiddle East

UAE

Selorm AdadevohMTNGhana,DigitalImpactAllianceattheUnitedNationsFoundation,andWomen’sWorldBankingGhana

Ghana

Wayne Hennessy-Barrett

4G Capital Group

Kenya,Uganda, Ghana, Mauritius

Hala ZahranArabBank,formerlyWorldEconomicForumandliwwa,Inc.

Jordan

Jonas Hedman CopenhagenBusinessSchool Copenhagen

MonicaBrandEngel Quona Capital US

Alex Fankuchen Tala US

Tim Perkins Nudge Uk

Alejandro CosentinaAfluentaS.A.,CamaraArgentinadeFintech,andFinTech IberoAmérica

Mexico, Argentina, Peru, Colombia

Laura Ripani Inter-AmericanDevelopmentBankLatin America and the Caribbean

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AnilKumarGupta MicroSave India

AnnieKoh Singapore Management University Singapore

FranciscoGuzman Tala Mexico

JakeKendall Caribou Digital France

Deepak Menon Village Capital India

Chen Chen Lee SingaporeInstituteofInternationalAffairs Singapore

Amit Singh Uber US

Mijael Feldman Übank Mexico, Chile

Saadia Zahidi World Economic Forum Switzerland

ChrisBrummerInstituteofInternationalEconomicLaw,GeorgetownUniversity

US

CherPongNg SkillsFuture Singapore Singapore

MohamedKhalil CommonwealthBank Australia

FredericdeMariz UBSBrazil,andColumbiaUniversity Brazil

ShaunDawson Devon Cresa UK

JuergenBottHochschuleKaiserslautern,UniversityofAppliedSciences

Germany

KarthikSankaran Eurasia Group US

Heather Canon Elevate (previously Good World Solutions) US

Tia Hodges Citi Foundation US

AsifFaruque Level39 UK

KayTurner US Department of Treasury US

PeterKerstens European Commission Europe

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AndrewCharlton AlphaBeta Australia

Randy Shuken BizEquity,panOpen,andformerlyMastercard US

Qing Cao University of Illinois US

Aaditya Mattoo WorldBankGroup US

Adam Greene InternationalLabourOrganization Switzerland

Jin Feng Fudan University China

Donna GambrellAppalachian Community Capital, Southern Bancorp,Inc.,FederalReserveBankofAtlanta

US

Quinten Farmer Even US

Snigdha Poonam Freelance journalist India

Daryl CollinsBankableFrontierAssociatesGlobal,andU.S.Financial Diary

US

AmoloNg’weno BankableFrontierAssociatesGlobal Kenya

Albert Francis Park HongKongUniversityofScienceandTechnology HongKong

Francisco Mardones ChileTec, and Mentor Graphics Chile

TaoKong Peking University China

Adam Hemphill, Wel-by Leaman & Gayatri Agnew

Walmart US

Martin Fleming IBM US

George Castineiras Formerly Prudential Financial US

MelissaNetram,ErikRettig,BradfordWal-ton

Intuit US

Alexia Latortue & KerrieLaw

EuropeanBankforReconstructionandDevelopment

UK

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BorisBatin ID Finance Spain

Alex Forrester Rising Tide Capital US

AnnYomSteel American Chamber of Commerce in Singapore Singapore

Hollie Heikkinen iWorker Innovations US

Daniel Tsiddon Viola FinTech Fund, and Tel Aviv University Israel

Louis Hyman Institute for Workplace Studies, Cornell University US

Robert Patalano OECD Switzerland

Greg Medcraft OECD Australia

JohnScott&AndrewBlevins

ThePewCharitableTrusts US

Arjan Schutte Core Innovation Capital US

Carl CamdenIPSE US - the Association of Independent Workers,andformerlyKellyServices

US

MichaelKleinFrankfurt School of Finance and Management, and Johns Hopkins University

Germany/US

NejiraNalicMcCarrick FormerlyMI-BOSPO Bosnia

Sharon Zhang ManpowerGroup China

Tamara Cook FSD Kenya Kenya

Lisa A. Massena Ascensus US

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Financialhealthisacomplexmatter,soweperformedamultivariatelogisticregressionanalysisonoursurveydatatomathematicallysortouthowdifferentfactorsimpactpeople’sfinancial lives.Weanalyzeddatacollectedfromsurveying8000workingageindividualsin 8 markets - Brazil, Canada, China, France, Germany, India, the United Kingdom, andtheUnitedStates.Regressionresultsshowtherelationshipsbetweenvariablessuchasparticipationintheplatformeconomyandconfidenceintheirabilitytoretireatadesiredage. We hypothesize that outcomes related to financial needs and health (dependentvariables), such as the likelihood of paying a bill late and incurring fees in the past 12 months, is a function of a set of independent variables, namely age, gender, education, country,location,incomelevel,numberofearnersinthehousehold,andtype(s)ofwork.

To better understand the impact of different independent variables, we undertook athought experiment and anchored the economic interpretations of the regression analysis ontheprofileofanaverageworkerwecreated–Sam.Whiletheanalysisisnotexhaustive,thefollowingresultsfromscenariosimulationsarestatisticallysignificant,andtheyrevealinterestingconnectionsthatwarrantfurtherattentionandstudy.

Anchor Profile:Samisamarried30-year-oldfemalephysicaltherapistwithamas-ter’sdegreeandafull-timesteadyjobatahospitalinacityintheUS.Shebelongstoatwo-incomehouseholdwithabove-medianincome.

Holdingeverythingelseconstant,andbasedona90%confidenceinterval,

Appendix III. Regression Analysis

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Probability More/ less likely

Sam 85%

If Sam lived in an emerging economy(Brazil,China,orIndia)

93% 8.8%

IfSamweremale 90% 6%

IfSamwereanonlineplatformeconomyworker

89% 4%

IfSamwereaGenXer 82% -4%

IfSam’sincomewasbelow-median 63% -26%

IfSamwerethesoleearnerinthehousehold

76% -11%

Probability More/ less likely

Sam 74%

If Sam lived in an emerging economy(Brazil,China,orIndia)

84% 13.5%

IfSamweremale 78% 6%

IfSamwereanonlineplatformeconomyworker

85% 16%

IfSamwereasmallbusinessowner 80% 8%

IfSam’sincomewasbelow-median 60% -19%

1. Dependent variable: Ability to cover all expenses each month with current income

2. Dependent variable: Likelihood of feeling a sense of control over how much income is made each month

P. 69

Probability More/ less likely

Sam 43%

If Sam lived in an emerging economy(Brazil,China,orIndia)

29% -33%

IfSamwereanonlineplatformeconomyworker

56% 29%

IfSam'sjobwasathighriskofautomation

49% 13%

IfSamwereasmallbusinessowner 53% 22%

IfSam’shighesteducationattainmentwasahighschooldiploma

47% 9%

IfSamwereaGenXer 38% -12%

IfSam’sincomewasbelow-median 45% 5%

IfSamwerethesoleearnerinthehousehold

45% 4%

3. Dependent variable: Likelihood of having paid a bill late and incurred additional fees or interest as a

result in the past 12 months

P. 70

Probability More/ less likely

Sam 51%

If Sam lived in an emerging economy(Brazil,China,orIndia)

83% 62.7%

IfSamweremale 62% 22%

IfSamwereanonlineplatformeconomyworker

57% 12%

IfSamwereasmallbusinessowner 59% 15%

If Sam lived in a rural area 39% -25%

IfSam’shighesteducationattainmentwasahighschooldiploma

46% -10%

IfSam’sincomewasbelow-median 28% -46%

IfSamwerethesoleearnerinthehousehold

48% -7%

Probability More/ less likely

Sam 84%

If Sam lived in an emerging economy(Brazil,China,orIndia)

75% -10%

IfSamwereanindependentcon-tractor

40% -53%

IfSam’sjobwasathighriskofautomation

77% -8%

IfSamwereasmallbusinessowner 61% -27%

IfSam’sincomewasbelow-median 80% -4%

5. Dependent variable: Ability to cover 3 or more months of expenses with savings, if main source of income is lost

4. Dependent variable: Likelihood of making consistent income each month

P. 71

Probability More/ less likely

Sam 28%

If Sam lived in an emerging economy(Brazil,China,orIndia)

62% 123%

IfSamweremale 36% 30%

IfSam’sjobwasathighriskofautomation

24% -15%

If Sam lived in a rural area 23% -17%

IfSam’shighesteducationattainmentwasahighschooldiploma

23% -17%

IfSamwereaGenXer 32% 13%

IfSam’sincomewasbelow-median 16% -43%

IfSamwerethesoleearnerinthehousehold

28% -1%

6. Dependent variable: Ability to cover 6 or more months of expenses with savings, if main source of income is lost

P. 72

Probability More/ less likely

Sam 47%

If Sam lived in an emerging economy(Brazil,China,orIndia)

42% -10.6%

IfSamweremale 35% -25%

IfSamwereanonlineplatformeconomyworker

39% -18%

IfSam’sjobwasathighriskofauto-mation

51% 9%

If Sam lived in a rural area 58% 23%

IfSam’shighesteducationattainmentwasahighschooldiploma

55% 18%

IfSam’sincomewasbelow-median 78% 66%

IfSamwerethesoleearnerinthehousehold

58% 24%

7. Dependent variable: Likelihood of below-median savings

P. 73

Probability More/ less likely

Sam 8%

If Sam lived in an emerging economy(Brazil,China,orIndia)

13% 62.5%

IfSamweremale 11% 31%

IfSamwereanonlineplatformeconomyworker

11% 27%

IfSam’sjobwasathighriskofautomation

7% -15%

IfSamwereasmallbusinessowner 11% 31%

IfSam’sincomewasbelow-median 6% -22%

Probability More/ less likely

Sam 36%

If Sam lived in an emerging economy(Brazil,China,orIndia)

47% 29.6%

IfSamwereanonlineplatformeconomyworker

39% 9%

IfSamwereaGenXer 31% -12%

8. Dependent variable: Likelihood of remaining confident about the ability to make the money needed each

month, if main source of income is lost

9. Dependent variable: Likelihood of finding the ability to manage all earnings and expenses in one place helpful

P. 74

Probability More/ less likely

Sam 82%

If Sam lived in an emerging economy(Brazil,China,orIndia)

75% -9.1%

IfSamwereanonlineplatformeconomyworker

88% 7%

IfSamwereasmallbusinessowner 88% 7%

IfSamwereaGenXer 79% -4%

IfSam’sincomewasbelow-median 76% -8%

Probability More/ less likely

Sam 59%

If Sam lived in an emerging economy(Brazil,China,orIndia)

76% 28.8%

IfSamweremale 65% 10%

IfSamwereanonlineplatformeconomyworker

70% 18%

IfSam’sjobwasathighriskofautomation

55% -7%

IfSamwereasmallbusinessowner 68% 16%

IfSam’sincomewasbelow-median 43% -27%

10. Dependent variable: Likelihood of thinking income will be more predictable in the next 5 years

11. Dependent variable: Confidence in ability to re-tire at desired age in the future

P. 75

Probability More/ less likely

Sam 60%

IfSamweremale 65% 9%

IfSamwereanonlineplatformeconomyworker

73% 21%

IfSamwasinsteadanindependentcontractor

71% 18%

IfSam’sjobwasathighriskofautomation

71% 17%

IfSamwereasmallbusinessowner 80% 33%

IfSamwereaGenXer 52% -13%

Probability More/ less likely

Sam 22%

If Sam lived in an emerging economy(Brazil,China,orIndia)

34% 54.5%

IfSamweremale 26% 14%

IfSamwereanonlineplatformeconomyworker

32% 41%

IfSam’sjobwasathighriskofautomation

25% 12%

IfSamwereaGenXer 19% -16%

12. Dependent variable: Preference for receiving income from work more frequently (i.e. daily, weekly, when I sell/produce

something, as soon as the work I do is complete”)

13. Dependent variable: Preference for receiving income from work via digital payment apps

P. 76

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83 Collins,Daryl,JonathanMorduch,StuartRutherford,andOrlandaRuthven.2009.Portfoliosofthepoor:howtheworld’spoorliveon$2aday.Princeton:PrincetonUniversityPress.

84 Edelman.2018EdelmanTrustBarometer.Edelman.AccessedJanuary09,2019.https://www.edel-man.com/trust-barometer

85 PwC.“ConsumerIntelligenceSeries:Protect.me.”PwC.AccessedJanuary09,2019.https://www.pwc.com/us/en/services/consulting/library/consumer-intelligence-series/cybersecurity-protect-me.html.

86 Brodsky,Laura,andLizOakes.“DataSharingandOpenBanking.”McKinsey&Company.Septem-ber 2017. Accessed January 09, 2019. https://www.mckinsey.com/industries/financial-services/our-insights/data-sharing-and-open-banking.

87 Ernst&Young.“IsCybersecurityaboutMorethanProtection?EYGlobalInformationSecuritySurvey2018-19”October2018.AccessedJanuary09,2019.https://assets.ey.com/content/dam/ey-sites/ey-com/global/topics/advisory/GISS-2018-19-low-res.pdf. p.16

88 Deloitte. “The State of Cybersecurity at Financial Institutions.” Deloitte Insights. May 21, 2018. Ac-cessed January 03, 2019. https://www2.deloitte.com/insights/us/en/industry/financial-services/state-of-cy-bersecurity-at-financial-institutions.html.

89 Collins,Daryl,JonathanMorduch,StuartRutherford,andOrlandaRuthven.2009.Portfoliosofthepoor:howtheworld’spoorliveon$2aday.Princeton:PrincetonUniversityPress.

90 Brodsky,Laura,andLizOakes.“DataSharingandOpenBanking.”McKinsey&Company.Septem-ber 2017. Accessed January 09, 2019. https://www.mckinsey.com/industries/financial-services/our-insights/data-sharing-and-open-banking.

91 NudgeGlobal.“HowNudgeGlobalIsMakingMoneySimplerforEmployees.”NudgeGlobal.Ac-cessed January 09, 2019. https://www.nudge-global.com/making-money-simpler/.

92 InterviewwithMijaelFeldman,CEOofÜbank

93 Lyft.“LyftxHonestDollar:IntroducingSavingsandRetirementSolutionsforLyftDrivers.”No-vember 19, 2015. Accessed January 03, 2019. https://blog.lyft.com/posts/lyft-x-honest-dollar

94 InterviewwithDipakBasufromAnudipFoundation

95 Karlan,Dean,MargaretMcconnell,SendhilMullainathan,andJonathanZinman.“GettingtotheTopofMind:HowRemindersIncreaseSaving.”NBERWorkingPaperNo.16205,July2010.AccessedJanuary3,2019.doi:10.3386/w16205.

96 Hyman,Louis.(2018).Temp:howAmericanwork,Americanbusiness,andtheAmericandreambecametemporary.NewYork,NewYork:Viking,animprintofPenguinRandomHouseLLC