# Income diversification is not just the future: it is now Author: Pal Sinha, Barnali Author URL: https://financedigest.com/author/pal-sinha-barnali Published: 2022-08-31 Category: FINANCE Category URL: https://financedigest.com/category/finance Meta Title: The Rise of Income Diversification in the Gig Economy Meta Description: Learn how the gig economy is shaping new trends in income diversification for workers in the UK. Find out about the benefits and challenges of having multiple URL: https://financedigest.com/income-diversification-is-not-just-the-future-it-is-nowhtml ![undefined](https://prod.superblogcdn.com/site_cuid_cm5qst7v3003gwirgwqtxn8i8/images/istock-1362571535-1736815317955-compressed.jpg) _![Ali Hamriti, Co-Founder and CEO at Rollee](https://prod.superblogcdn.com/site_cuid_cm5qst7v3003gwirgwqtxn8i8/images/089-1736815318027-compressed.jpg)_ _By **Ali Hamriti,** Co-Founder and CEO at Rollee_ As the [“self-employed status” is booming](https://www.businessinsider.com/side-hustles-self-employment-entrepreneurship-boom-jobs-pandemic-online-2022-4), younger generations have embraced the changes in employment that have come with it. More and more, new technologies and platforms require task-based and freelancer missions—pushing workers to pursue income diversification and entrepreneurship. But how can financial institutions streamline how they evaluate customer’s income in this new age of employment? **What is income diversification?** Diversifying one’s income means pulling earnings from several sources rather than from just one job. In recent years, more and more [workers have joined the gig economy by becoming drivers](https://www.financedigest.com/amazon-loses-bid-to-throw-out-case-by-uk-drivers-seeking-worker-rights.html "Amazon loses bid to throw out case by UK drivers seeking worker rights") and couriers for ride-sharing and food delivery services. Almost half, (48%) of gig workers in the UK also have a full-time job, [offering them work flexibility](https://www.financedigest.com/britain-urges-banks-to-offer-mortgage-flexibility-in-cost-of-living-crisis.html "Britain urges banks to offer mortgage flexibility in cost-of-living crisis") while providing two or more streams of income. Today’s digital world gives workers countless opportunities for side hustles. In addition to task-based work, workers can increase their opportunities by using several platforms instead of just one. One can be a driver in the morning, a teacher in the afternoon and working on a side project in the evening, providing the right service at the right time and optimising one’s income and time. **Why is it happening?** Traditional employer-employee work relationships remain uncertain as new technologies and trends reshape the workplace. Full-time [workers aspire to more flexibility & ownership of their work](https://www.financedigest.com/1-in-5-uk-workers-believe-there-is-a-gender-divide-with-work-uniforms.html " 1 in 5 UK workers believe there is a gender divide with work uniforms"). The pandemic has been a trigger for many employees to focus on their expertise and aspirations, instead of being stuck in a 9-5 job. This newly [created labour market breaks down traditional full-time jobs](https://www.financedigest.com/italy-jan-jobless-rate-edges-up-to-7-9-with-35000-jobs-created.html "Italy Jan jobless rate edges up to 7.9%, with 35,000 jobs created") into targeted tasks and projects.  [Studies have shown that up to 19.2 million Europeans now identify as independent workers](https://www.statista.com/statistics/946989/self-employed-persons-in-eu/#:~:text=Number%20of%20self%2Demployed%20people%20in%20the%20EU%202011%2D2020&text=There%20are%20approximately%2019.2%20million,estimated%20to%20be%2019.4%20million.), [4.4 million of which are based in the UK.](https://www.ipse.co.uk/policy/research/the-self-employed-landscape/the-self-employed-landscape-report-2020.html#:~:text=Executive%20summary&text=The%20number%20of%20solo%20self,total%20of%2040%20per%20cent.) **Millennials and future generations** The strained financial reality for many millennials has also spurred the need for income diversification. [Student loan](https://www.financedigest.com/student-loans-hurting-workers-ability-to-save-for-retirement.html "STUDENT LOANS HURTING WORKERS’ ABILITY TO SAVE FOR RETIREMENT") debt, low wages, and a scarcity of work have forced younger generations to modify their job search, seeking innovative and skill-targeted work. This presents a major break from their predecessors who sought stable long-term employment relationships. Their financial worry has also given rise to the [sharing economy](https://www.financedigest.com/the-sharing-economy-whats-in-it-for-accountants.html "THE SHARING ECONOMY: WHAT’S IN IT FOR ACCOUNTANTS?"), which prioritises access over ownership to services and goods. Fewer people from younger generations are buying homes, cars, or luxury products. Instead, [digital natives rely on technology and platforms](https://www.caixabankresearch.com/en/economics-markets/labour-market-demographics/who-are-millennials) to source and pool goods—complete with instant access to product information and peer reviews. The sharing economy feeds the gig economy by producing more demand for targeted platforms. As a virtuous circle, [every platform needs](https://www.financedigest.com/10-secrets-every-entrepreneur-needs-to-thrive-in-2023.html "10 Secrets Every Entrepreneur Needs to Thrive in 2023") gig workers to keep it running, and every person has a new opportunity to earn additional income thanks to the sharing economies platforms. Income is getting more complex: we are moving from a regular one-time income at the end of the month to several income sources, paid from multiple sources. **What are the benefits of income diversification?** There are several benefits of having a diversified income. With multiple incomes, a worker can gain more [financial security](https://www.financedigest.com/5-steps-to-strengthening-your-online-financial-security.html "5 Steps to Strengthening Your Online Financial Security") than in a single job. For example, if one of several [jobs is cut](https://www.financedigest.com/icrc-to-cut-some-1500-jobs-as-humanitarian-budgets-seen-sliding.html "ICRC to cut some 1,500 jobs as humanitarian budgets seen sliding") down, you can still invest your time in other ventures. Another benefit of having several incomes is the gain of flexible work. A worker can focus on the income that delivers the most at a given time, and flexibly shift to his other activities if the income is stagnating. The flexibility that comes with diverse income sources leads to a greater choice of [investing in the area that will help a worker reach its ideal life: be it investing in a new skill](https://www.financedigest.com/quantamental-investment-trends-to-make-profits-through-creative-skills.html "Quantamental Investment Trends to Make Profits Through Creative Skills") to develop an additional income source, or reaching your financial goals. Having different income sources (and protecting your income with insurance) allows workers to adapt and continue to provide labour when and where possible. All employee benefits are also available for self-employed workers. **Case studies in the developing world** As developing nations continue to see surges in their economic development, several recent studies have shown a positive correlation between income diversification and poverty mitigation. These studies have shown that a diversified income can help empower families to overcome systemic issues embedded in poverty. Access to food, water, housing, and eventually, education [become more realistic as multiple income streams pave the way](https://www.financedigest.com/ways-to-become-a-millionaire.html "Ways to become a millionaire") for a stable livelihood. [Researchers](https://www.google.com/books/edition/Income_Diversification_and_Poverty_in_th/hPsqPU-7Jy0C?hl=en&gbpv=1&dq=income+diversification+in+vietnam&pg=PR4&printsec=frontcover#v=onepage&q=income%20diversification%20in%20vietnam&f=false) with the IFPRI (International Food Policy Research Institute) found that the general surge of economic activity in Vietnam since 1990 can be largely traced to income diversification. **Navigating the economy of freelancers** The reality is that task-based, freelance, and on-demand work is here to stay. Continued [changes in automation](https://www.financedigest.com/10-ways-automation-has-changed-the-role-of-the-cfo.html "10 ways automation has changed the role of the CFO") and a need for financial flexibility have pushed us to the point of no return. The new focus is now on how to adapt our current financial and banking systems to account for an economy of freelancers. Current financial systems operate manually to administer and verify the data of an individual who is self-employed. With multiple income streams, this data is separated and dispersed from one platform or paper record to another. This makes it painfully time-consuming for [financial institutions](https://www.financedigest.com/the-future-of-financial-institutions-in-2023.html "The Future of Financial Institutions in 2023") to verify an individual’s employment and income data making it difficult to make decisions such as granting mortgages. Often, [financial institutions do not have the time which is resulting in freelancers being excluded from accessing financial services](https://www.financedigest.com/the-future-of-financial-services-tech-evolution-not-revolution.html "The future of financial services: Tech evolution not revolution "). **The missed opportunity** An untapped market of 4.4 [million freelancers in the UK presents a wide business opportunity if financial institutions can analyse data](https://www.financedigest.com/exclusive-binance-moved-346-million-for-seized-crypto-exchange-bitzlato-data-show.html "Exclusive-Binance moved 6 million for seized crypto exchange Bitzlato, data show") faster without the current barriers. To increase business, they must move from manual to [automated data verification](https://www.financedigest.com/red-box-recorders-launches-worlds-first-automated-audio-recording-compliance-verification-tool.html "RED BOX RECORDERS LAUNCHES WORLD’S FIRST  AUTOMATED AUDIO-RECORDING COMPLIANCE VERIFICATION TOOL") processes. This requires adopting a fully digitised process to enable secure access to multiple dispersed data sets in real-time. Automation plays a key role in consolidating and standardising the [data to avoid](https://www.financedigest.com/the-race-to-avoid-data-dinosaur-extinction.html "THE RACE TO AVOID DATA DINOSAUR EXTINCTION") going through painful manual processes. It can help [save significant time and money](https://www.financedigest.com/how-to-save-money-for-a-car.html "How to save money for a car") spent on analysing the data to inform financial service decisions. By speeding up the process, [business conversions](https://www.financedigest.com/smishing-is-a-new-virus-plaguing-big-business-conversational-commerce-to-the-rescue.html "‘Smishing’ is a new ‘virus’ plaguing big business – Conversational Commerce to the rescue!") such as selling mortgages can be made quicker with the ability to verify the data much faster than before. To make this a reality, data sets must be compatible which is often a barrier that [financial institutions](https://www.financedigest.com/what-the-future-holds-for-financial-institutions-in-2023.html "What the Future Holds For Financial Institutions in 2023") come up against. However, data verification APIs can securely provide [compatibility between payroll records and systems](https://www.financedigest.com/is-your-erp-system-industry-4-0-compatible.html "Is your ERP system Industry 4.0 compatible?"). They can also help to guarantee the reliability of the data and protect against fraudulent documents. [Financial institutions can also benefit from enhanced data security as data is managed](https://www.financedigest.com/managing-the-hidden-security-gap-in-financial-services-the-office-printer.html "MANAGING THE HIDDEN SECURITY GAP IN FINANCIAL SERVICES: THE OFFICE PRINTER") in one central, monitored system. It also empowers individual workers to remain the owner of their own data, giving permission to share on-demand access to the data without sharing the data itself. **Stay competitive** As the number of independent workers grow and accumulate multiple income streams, financial institutions have no choice but to evolve towards adopting digital processes to verify employment and income data to stay competitive. It will be the only [way to do business with a currently excluded market that partly represents the customers](https://www.financedigest.com/customer-engagement-whos-leading-the-way.html "Customer engagement – who’s leading the way?") of the future. --- This blog is powered by Superblog. Visit https://superblog.ai to know more. ---