Digital gig work and financial inclusion: Examination of links, promises, and early evidence

Executive Summary

The rapid expansion of employment opportunities through digital labor platforms in low-and-middle-income countries (LMICs) offers a promising path to formalize the extensive informal job sector and aid in efforts to alleviate poverty (World Bank, 2022). Additionally, employment via these platforms could improve workers’ financial inclusion by providing access to a broader and potentially more appropriate set of financial tools. Currently, limited access to essential financial services like credit and savings options impairs the ability to manage cash flows, invest in profitable opportunities, and guard against financial uncertainties (Giné, Goldberg, & Yang, 2011). 

Many workers entering digital work in LMICs are financially excluded (CGAP Road Ahead 2023).  Those who do have access to financial tools still use informal means to save and borrow. In the review of 5-country quantitative interviews, CGAP Insights 2022 reports that about three-fourths of platform workers have access to saving instruments, but for a majority of them, these are limited to informal savings groups that don’t bear interest rates and are likely less secure than formal saving instruments. Less than a sixth of the sample reports having access to loan or insurance products. A study of delivery platforms in India reports that about a quarter of the current digital delivery drivers who receive salaries in bank accounts were paid in cash in their previous occupations, suggesting that merely working on the platform may have already improved access to banking services (NCAER 2023). In Malaysia and China, 84% of gig workers reported earning a savings account, 24% had insurance coverage, and only 3.5% contributed to a retirement plan (UNCDF Centre for Financial Health, 2020)

The goal of this review is to outline early thinking on how digital platforms can facilitate financial inclusion, and provide any early evidence on the success of these efforts. Given the novelty of these products and limited scale, the review is predominantly sourced from gray literature and consists of qualitative studies. The focus of the review is on direct channels that impact individual workers, but wider economy-wide multiplicative effects may be achieved through broader financial inclusion of the population. ¹