Collaborative consumption and financial services

From The Social Cost of the Loss of Job Stability and Careers

McKinsey had Yankelovich survey the attitudes of young people a decade ago, and even then, the results were pretty disturbing. Yankelovich projected that college graduates would average 11 jobs by the time they were 38 (!), yet found they were demanding of their employers, wanting frequent feedback (as in lots of attention) and quick advancement. But if you are not likely to be around for very long, no one is likely to want to invest in you all that much (McKinsey, which was competing for a narrow slice of supposed “top” talent and not offering Wall Street sized pay opportunities, might have been more inclined to indulge this sort of thing than other employers).

But these rapid moves from job to job, and now a much weaker job market, are producing behaviors that old farts like me find troubling. One is rampant careerism. I’ve run into too many polished people under the age of 35 where the veneer is very thin. It isn’t hard to see the opportunism, the shameless currying of favor, and ruthless calculations of whom to help and whom to kick, including throwing former patrons under the bus when they are no longer useful (I can cite specific examples of the last behavior). The world has always had its Sammy Glicks, but now we seem to be setting out to create them on a mass basis.

While I do not share the idea that this new behaviour is by choice only, the current job instability is probably here to stay.

In the same time, probably not uncorrelated, we are seeing the rise of collaborative consumption:

Collaborative Consumption describes the rapid explosion in traditional sharing, bartering, lending, trading, renting, gifting, and swapping reinvented through network technologies on a scale and in ways never possible before.

WHAT’S MINE IS YOURS from rachel botsman on Vimeo.

Leveraging assets’ idle time makes a great economic sense, especially if incomes are becoming less constant than in the previous career framework.

The impact for financial services is major. If we take the example of the 2 major purchases that require credit : house and car, the current credit score system is based notably on stability of income over time as a way to measure reimbursement capacities. However the current career instability will have a negative impact on lending, making it less easy to access property.

However, if you consider the supplemental income that could be generated over the life time of an asset (House via Airbnb or Car via Getaround), then the decision for lending could be made using another basis than stability of the main source of income. Especially if these assets are built around the possibility of collaborative consumption. Taking the example of a car, Ford could pre-equip cars with the necessary equipment for sharing, allowing a wider population the access to car ownership.

Calculating risk and evaluating value over time is at the core of financial services. Applying those to new behaviours is not innovation, it’s just servicing customers.

Accounting and Banking: design issues

I am no designer, nor a marketing specialist but as a bank customer (with different banking relationships) I can tell you I think my banking experience is pretty bad. Because I switched to a more corporate finance job, I finally realised what could be the root cause of this issue : accounting.

Accounting to be honest is not the most sexy topic, though it serves its use. It allows keeping track of a corporation financial situation by embedding control in the way it is done (double entries) as well as allowing a common language for several people working on the same topic or transitioning. Also in pre-computer era, it was built in relation with its support : books. Accounting on paper makes sense.

Good design (at the time)

But since I am not a corporation / nor an accountant by trade / nor doing my personal finance on paper, why are banks sending me banks statements in the format of accounting statement?

This makes no sense. Accountants must represent 0.01% of the population of bank customers.

Mint is a good example of design applied to financial information (while not the first and the best one). This makes much more sense than the previous statement.

Other startups, such as Simple [Note: Anthemis is an investor] are trying to redefine how financial information should be presented to customers. The first difficulty is to bring understandable information to each spending transaction. A better identification of the vendor and its category is key, notably for searching past transactions (also keeping more than 2 months of transactions helps).

Additionally, presenting not only an historical account of financial transaction, but also a forward looking view of a customer financial situation is moving from an accounting statement to a personal finance overview. This is not new as startups such as Rudder (http://mashable.com/2008/10/13/rudder/), have tried to show forward looking information. The concept of Safe to Spend balance used by Simple is in the same concept.

Fast Company has an interesting review of Simple design decisions: http://www.fastcodesign.com/1665303/first-look-banksimples-iphone-app-aims-to-reimagine-your-money

Other interesting design choices used by financial services that could be added to this post?

[Ember] – Predictions for 2012 (and beyond)

Most of the people in the world still don’t have a personal computer, whereas in three to five years, most people in the world will have a smartphone…. If you’ve got a smartphone, then I can build a business in any domain or category and serve you as a customer no matter where you are in the world in just gigantic numbers–in terms of billions of people.

Marc Andreessen: Predictions for 2012 (and beyond)

http://fnd.gs/rxoITt

[Ember] – A new social model?

This GigaOm post: My 10 years of blogging: Reflections, Lessons & Some Stats Too: http://gigaom.com/2011/11/26/10-years-gigaom/ made me think I should blog more / differently. While the frequency of big posts will probably be the same, I will publish daily links, picture, quotes that are part of the creation of the longer posts. These posts will be tagged as Ember, short form (twitter like you could say) but as important.

Does technology allow for sustainable large scale P2P model?

The receipt revolution!

I am mad about receipts. As I have written before:

- The receipt is the perfect example of a broken experience, as defined by Seth Godin.

Seth Godin at Gel 2006 from Gel Conference on Vimeo.

Look at any typical receipt and you would have a hard time understanding most of it. Batch numbers, RRN, Terminal Id, Merchant #, and other random pieces of numbers and letters. In most cases the product name is not even recognizable and the merchant name is broadly defined. If you try to remember where you bought a product, how much it was etc, chances are al receipt will not help you because it is not designed for the customer.

But improving the receipt is not just about making it more clear, sending it by email, putting it on the web… Making receipts an experience may become a key aspect of mobile payments. The question is : what needs to happen when payments disappear?

One of the goals of Square (and Card Case is a first step in this direction) is to change the payment experience:

“This is truly the most seamless way to pay,” said Megan Quinn, director of products for Square. “It becomes more about the interaction between customer and merchant and that relationship rather than the actual act of the payments. We want to make payments fade away. People don’t appreciate that; they enjoy making a purchase and feeling like a regular at places they shop.”

Square’s “magic” has nothing to do with its dongle but is with its capacity to be the first coherent and complete link between the merchant and the customer. Controlling the all experience is key to extract the most benefit from the payment graph : always accurate product catalog, real identity, metadata on payment (localization, time, previous payments and patterns), all these elements create a rich data set for each payment, that can benefit both the merchant and the customer. In the middle of this, as a memento of each purchase made, is the receipt. But a purchase is not/ should not be a static event. If your best customers are regular customers, you need to maintain a constant relationship with them and they may be interested as well in engaging more with your business. Receipts could become implicit social graphs.

The first and most obvious use of social in receipt is for guarantees, support and repairs. No more digging around for a piece of paper when your computers fail, no more search for cryptic reference numbers (most people have a printer at home, not a HP Laserjet P2015-G). This becomes even more important for companies that aim at sustainable product management such as Patagonia: Patagonia Asks Its Customers To Buy Less.

“We realized that what was really needed was a mutual responsibility between company and customer for the full lifecycle of stuff,” Rick Ridgeway, Patagonia’s environment VP. “So we would try to reduce the amount of stuff that people buy, fixing products if they were broken, and asking people to clean out their garages and closets, so that if you have clothes you are no longer using, you put them back into circulation.”

Receipts are also the best resource to create community of users around products. These communities already exist, in a relatively unstructured way, in forums, blog posts … a central point of reference per product would help structure this content, link it together or link to a platform maintained by the producer. Receipts could also be used in collaborative consumption to track the use of a product when it is reshared, recycled with others.

In VRM, intelligent receipts could play an important role, as it empowers customers with data that represent their relationship with a merchant. This information could be leverage by them to reverse their relationship with merchants.

Using this data is not new … some digital companies have been doing it for some time. Tripit is a good example. It mines data contained in flight / hotel receipts to create a travel plan or even share this information with others. In theory, it could also mine price data to determine if you are overpaying for your trip.

Interest in receipts is growing and several companies are trying to position themselves in this market. Onereceipt, Lemon, Slice are all trying to aggregate users receipts and transform them in usable data. Most focus on expenses management for users, but I am not sure this is the best angle to adress this market.

Hopefully these will be soon definitely something of the past.