Banks are missing the mark with the products they offer freelancers, gig workers, and sole proprietorships, leaving them to either languish on personal banking platforms or make the jump to an overly complex business or commercial banking option. This has left the door wide open for savvy incumbents or a range of nonbank upstarts to design options that cater to the scaled-back needs of such one-person businesses.

In “How to Hit the Digital Banking Sweet Spot for Sole Proprietors,” Javelin Strategy & Research lays out what makes these small businesses different and what they need in their ideal banking product. The time is now to build “tweener” solutions that meet the present needs of sole props and grow with them. FIs can foster win-win relationships by offering sole proprietors separation of their personal and professional finances, the features of a business bank account they need, and resources to help them grow. Failing to do so risks yielding these growing companies to upstart challengers not yet on their radar, with no way to reel them back in.

Key questions discussed in this report:

• How are the business banking needs of freelancers, gig workers, and sole proprietors different from those of larger businesses?
• Why are nonbanks a serious threat to incumbent banks’ relationships with these customers?
• What digital banking features are sole props most willing to pay for as they grow?
   

Companies Mentioned:

Brex, FIS, Kabbage, Lending Club, Mercury, NorthOne, Novo, OnDeck, Q2, QuickBooks, Shopify, Square, Stripe, Xero