Friz

Neobank for freelancers and digital entrepreneurs

How lending is evolving for the future of work

Freelancers and creators are frustrated with being turned away from credit cards and personal loans. With disparate incomes from multiple sources no one current account or asset based analysis from banks has a good understanding of project based income. This makes income data from multiple freelancing platforms as the only source of hope for project work. In this piece we take you through the evolution of lending for freelance, the future of work.

Payroll is the next frontier for credit scoring. This has been evidenced by the rising popularity of buy now pay later and salary advance innovations in fintech that have taken the industry by a storm.

Evolution of Payroll Data

1. First generation: Taxes
Payroll providers would provide company and employee data to the government in order to pay the payroll and income taxes.

2. Second generation: Benefits
Companies began offering their employees private benefits like health insurance, so payroll providers shared data with asset managers, and health insurers.

3. Third generation: Open finance
Payroll companies are recognising the central role they play in consumers’ financial lives, and offering fintech services. Enabling consumers to control their payroll data expands consumers’ access to the fintech ecosystem.

Customers are turning to payroll based lending solutions since they are immediate and offer a user experience that is seamless. Lenders also see benefits in terms of adopting payroll based data for lending as it is usually cleaner and at source instead of financial transaction data or bank account data because they need to factor in outflows and potential fraud.

Single front payment credit such as personal loans and payday loans are declining year on year at a 10% rate in mature financial markets and are quickly being replaced by prepaid payroll solutions and instalments at checkout. While financial institution lenders have the licenses to keep pace with these changes, non-financial institution lenders are turning to innovating different ways to credit score customers using open finance and payroll data.

A typical freelance customer tends to earn income from multiple income sources and does not have 1 definitive source of payroll data to prove their incomes. Naturally payroll based lending for freelancers poses lots of hurdles. Even financial and bank account data is not a great proxy to understand credit worthiness of freelancers since their incomes are also collected in disparate accounts and do not all make it to 1 single current account that can act as a source of truth. Payday loans, although they are quickly declining, are usually the only source of borrowing for project based workers and freelancers.

Friz recognises these gaps and believes that there should indeed be a single source of truth when it comes to lending to freelancers. We are proud to announce a partnership with Funding Societies and the launch of the Friz credit line for freelancer business in Singapore. This is a first of its kind partnership to lend to freelancers based on employment and invoice data and lay the foundation of lending for the future of work.

The beauty of the Funding Societies x Friz Credit Line is that freelancers only pay for what they spend in the form of a simple transaction fee — no hassle with complicated terms and interest rates. Further they get immediate decision making tailored to the nature of their work — no more tedious waiting times to access credit. Lastly for a small fee, freelancers can revolve credit and benefit from longer periods of credit as well. The product has been designed after multiple customer interviews and focused feedback understanding the challenges faced by project based individuals.

Shrawan Saraogi, Head of Partnerships and Products at Funding Societies Singapore believes that “As a digital financing platform, we have always tried to cater to the financial needs of the underserved. For example, our Bolt product provides an easy and quick financing option to Micro SMEs. However, until now we were not able to serve the freelancer community because of a lack of reliable and structured data for underwriting. Through our partnership with Friz, we are excited to provide a much needed flexible financing option to freelancing businesses, developed with their needs and situation in mind.”

This partnership is the first of many funding society initiatives that focus on lending payroll based lending innovations. Customers of Friz are excited to finally have access to working capital finances that they have truly struggled to gain access to even though they have had a steady stream of projects and employment.

Apply for the Friz x Funding Societies Credit Line through www.usefriz.com today.

  1. Source: https://s3.amazonaws.com/cfsi-innovation-files-2018/wp-content/uploads/2020/01/31170215/2019-Market-Size-Report.pdf
  2. Source: https://plaid.com/blog/payroll-data-access/

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