Implications of the sharing economy for the financial services industry
Like an unruly teenager, the sharing economy is famously disruptive. From multi-billion dollar companies such as Airbnb and Uber to less well known but no less influential brands such as Fiverr, Upwork, ZipCar and FLOOW2, traditional industries are finding that these technology-based start-ups are forcing them to rethink their entire business strategies. It is no longer acceptable to continue with business as usual: everything from how companies connect with their customers to how they handle internal business functions are being reassessed in the light of this new competition. But what does this mean for the financial services industry?
1. Should traditional financial companies be worried?
Banking as we used to know it is rapidly becoming a thing of the past. With banks either being cut out of the loop entirely – peer-to-peer lending being a prime example – or seeing their monopoly eroded – international transactions, equity crowdfunding – it’s not an easy time for the big banks. While the older generation of customers might be slow to switch, Generations X and Y and millennials can cast customer loyalty aside in favour of the latest app.
2. Watch out, Uber is coming
If proof were needed that traditional industry boundaries are being crashed through by 21st-century businesses, at the end of last year Uber announced its push into the financial service industry. Its new division, Uber Money, will start by giving its 4-million-plus drivers around the world access to a mobile bank account so they will be paid immediately after each ride. This is seen as a forerunner to Uber moving into the consumer banking arena.
Companies not traditionally known for being in the financial space such as Amazon, Apple and Google are already in this sector, and if the sharing economy has taught us anything, it’s that nothing should be taken for granted.
3. It’s time to get app-savvy
Even before Uber motored onto the scene, the fintech revolution has been shaking up traditional banking services for years. Financial services companies who are yet to embrace payment apps, mobile wallets and online lending risk getting left out in the cold. The speedy rise of tech-heavy disrupter banks such as Monzo, Revolut and Starling in the UK and Varo, Chime and BankMobile in the US are taking a huge chunk out of the traditional banking sector and consumers are taking their money where they can get the functionality.
4. Embrace the challenge
Seeing your old-school High Street bank trying to embrace the millennial market might be an alarming prospect, but the benefits of disruptor banks is already being seen, from improved customer services – chatbots, banking by text – to enhanced capabilities such as being able to freeze and unfreeze your debit card via your banking app, and to categorise your spending so you know exactly where your pay packet goes: all these are a result of new challengers on the scene.
5. Seek out those skills
Gone are the days when technology roles were an afterthought, bundled in with other positions or even seen as an internal rather than external issue. Nowadays, fintech roles are crucial to every financial services business, from open banking and platform models to collaboration with account aggregators, where customers can see their financial situation across many accounts.
Customer expectations of 24/7 banking access, total financial control and personalised services are core to their banking choices, and banks that don't have the skills to provide a total service will find themselves left behind. Unlike the days of building bulky IT infrastructure in-house, however, banks that succeed will be those that collaborate with fintech start-ups. We see a strong surge in hiring of higher-level positions combining project managerial and IT expertise.