20 Nov The “sharing economy” and Financial Services: friend or foe?
In its essence, the P2P-services are not a new phenomenon.
The historic foundation of our economic system is based on people exchanging goods or services directly with one another, based on mutual benefit. Only with the creation of enterprises and money, our economy has gradually become more centralized. Today, through technological evolution, we experience a shift back towards a more decentralized economy by making it easier for people to connect, communicate and trade.
In customer’s everyday life, this has sparked the rise of yet another phenomenon: the “sharing economy”. Peer-to-Peer (“P2P”) and sharing initiatives such as airBnB and Uber are challenging existing business models throughout different industries. Also within Financial Services more and more initiatives are starting to spark. Today, they have become large enough to merit reflection on the side of traditional players. This is especially the case given that these initiatives typically touch the core activities of financial players, being it payments (e.g. Paypal, Venom, Snapchat), lending (e.g. Lendingclub, Crofun) or risk underwriting
(e.g. Friendsurance, Inspeer).
One has to keep in mind though, that the Financial Services industry provides more natural barriers to large-scale adoption of P2P initiatives compared to other industries. Therefore, digital distribution and sales, a prerequisite for P2P initiatives to reach clients, are less developed and less adopted than is the case for say online hotel bookings, a domain which AirBnB revolutionized. This is driven by two key factors. First, the services are less transparent and less commoditized, making it more difficult for P2P initiatives to differentiate and position themselves as equal substitutes both with the advantage of either higher convenience
or lower price. Second, relating to this point, there is more at risk for the client. A negative taxi drive ordered via Uber will not significantly alter a customer’s life. In contrast, a negative experience with P2P initiatives in Financial Services might have a more substantial impact (e.g. loss of savings money on P2P lending, no
refunding of house fire damages on P2P insurance platform).
Get the insights of this report conducted by Roland Berger here!
