During the last decade, businesses not only have grown but also expanded their variety. The main reason is the rapid development of the internet and information technologies that created new fields for establishing companies and earning money. However, banking policies appeared to be not ready for these changes and caused significant issues for the new businesses that still needed a financial operation to proceed within the banks. This paper aims to discuss that banking policies need to keep up with the times because many business processes depend on them.
At first, many people made a fortune by selling art or becoming influencers by creating and selling their content. However, there is no banking policy to deal with them, so content creators cannot use any of the banks’ services. As there is no approved financial status written in banking terms that define such people, they cannot get loans, global insurance, credits, or even buy a house (Faldin, 2020). Considering the world’s pandemic-related situation, the number of people who create content will keep increasing, and the lack of services from banks will severely affect the authority of the banking system.
Secondly, as the issues with irrelevant banking policies affect more businesses, new projects that aim to replace the banking system appear. For example, the software company ChannelMeter launches a banking service for content creators. ChannelMeter’s executives hope that the income analytics that the project registers would help a content creator be treated more seriously when they reach any bank for help (Hinchliffe, 2020, para. 3). Furthermore, there are many payment systems utilized in the online business or content creation, such as Patreon or Twitch, to provide a direct payment between a consumer and a creator. Banking policies have to take them equally to the standard banking operations, so people with businesses “unusual” for banks will be able to have the official income.
Lastly, by having the policies that are out of the times, the banking system harms itself. People cannot pay taxes properly as their income cannot be registered, and, to find a compromise, they pay taxes as self-employed. Willon et al. (2017) state that “a subsidy to encourage entry into self-employment and flat taxes, rather than progressive taxes, encourages more individuals because of the increased aftertax value of right-tail earnings” (p. 2). Such a tendency is not good for the national financial system, and policies update could reduce the number of self-employed.
To confirm this paper’s statement, several facts and statistics about banking policies and issues must be mentioned. At first, such businesses as adult entertainment generate billions of dollars in revenues, yet banks refuse to cooperate appropriately. Adult content companies are forced to pay 15% billing fees compared to the standard rate of 3% or less (Mallett, 2016, para. 7). Secondly, ChannelMeter service mentioned above got $4 million of investment, which shows the urge to issue banking policies. Thirdly, the number of content consumption via social networks increased by 32% in the United States in 2020, and more people started earning by creating such content (Statista, 2020).
Moreover, returning to the paid work preferred by banking policies is not attractive anymore. 72.2% of workers who choose to stay on self-employment get more projected earnings than 48.6% of those who returned to the paid sector (Dillon et al., 2017, p.24). Lastly, being unable to get assistance from a bank increases the number of money-related crimes or forces people to make shady financial schemes to achieve their goals.
Banks need to keep their terms and policies up to date as the world is changing fast, yet their services are still in high demand. People adapt to the changing world by creating different ways of living, earning, and progressing. If banking policies are capable of dealing with new businesses, jobs, and industries, the system’s authority will stay stable, and it will have a good impact on the national economy.
References
Dillon, E. W., & Stanton, C. T. (2017). Self-employment dynamics and the returns to entrepreneurship. National Bureau of Economic Research. Web.
Faldin, S. (2020). Content creators are businesses. The Startup. Web.
Hinchliffe, R. (2020). ChannelMeter raises $4m for content creator banking service. Fintech Futures. Web.
In-home media consumption due to the coronavirus outbreak among internet users worldwide as of March 2020, by country. (n.d.). Statista. Web.
Mallett, W. (2016). How banks make it hard for sexy startups. Fast Company. Web.