21 Sep 2015
Looking past the technology and tools that are delivering it, we find the progress being made today is the best outcome for the modern consumer, who is both completely informed and technologically-enabled.
"Essentially we've seen a revolution of all industries led by the best deal for the consumer."
Alex Kewley, Director, client insights and solutions at ANZ
This outcome is unthinkable to the corporations of yesterday. Think about music streamed by the song for free, global maps for free and HD cameras as an incidental freebie on your phone (not that many of us use them as phones any more). Essentially we've seen a revolution of industry led by the best deal for the consumer.
This tipping point has been reached for almost all consumer product markets. Rising smartphone penetration, increased mobile network speeds and the falling cost of computing power has democratised the ability to access and exploit data analytics.
Information asymmetry - for so long an opportunity to squeeze margin from the value chain - is no longer a genuine competitive advantage for large, wealthy organisations. With modern tech and data in the consumers hand a LOT of traditional business models are now at risk.
How to make this post-revolution business model economically viable is now the problem of the service provider, not the consumer.
I know a few London black cab drivers and they are lovely people. But they are employed in a dying or at least mortally threatened business model. Three key reasons in my mind make them a prime candidate for disintermediation.
The first is the pure convenience and brilliance of the Uber app. The first time I used Uber I had been waiting 20 minutes in the rain for a black cab.
I downloaded the app and had an Uber car within six minutes. I would challenge any black cab driver to use Uber and, under a lie detector test, be honest about the better experience.
The second is the sweeping removal of excess fees in every industry by competition and information availability.
Arguably the average black cab driver is overpaid for the service provided (ferrying people about in a car. Although I do know many would argue the opposite).
In any other country without the artificial market there is in London, the service of driving people in a car simply is not remunerated the same way. Uber has demonstrated that London has many people willing to perform the same task for less.
The last is the failure of 'The Knowledge' as a rationale for black cab drivers – this is the tough exam London cabbies have to pass which involves memorising most of London's roads and landmarks.
'The Knowledge' is simply no longer required. Sat nav and Google already made it largely redundant. Free sat nav in both the driver and consumers pocket made it completely obsolete.
I'm not saying it isn't hard to pass - it absolutely is. But while Latin is a difficult language to master, it is probably also no longer an essential communications skill.
Those are three of the biggest nails in black cab drivers coffin for now but we're on a tipping point.
Our presence and attention is now worth money. Taken to the natural conclusion, the next possibility is that Uber (or the new companies that disintermediate them) are free for the consumer. In fact the company and driver are remunerated some other way – in-car advertising, service provision en route or data gathering perhaps.
After all, this is the best outcome for the consumer. Add autonomous vehicles to the equation and the impact on not only cab drivers, but on the wider automotive industry, is profound. Shared autonomous vehicles, ferrying people about for free.
There is a reason people who use Uber are evangelical about it. It is what we want and you can't stand in the way of what we want – even though Transport for London is now looking to clamp down on the company.
As a consumer, I look forward to not only the next generation of Uber but the same devastating progress across every other industry to deliver a best outcome. As a banker, I'm trying to accelerate this from the inside.
Alex Kewley is a director, client insights and solutions at ANZ.
P.S. - If it helps shake off any final sympathy for the black cab driver's protest, it might be worth imagining the pollution caused by their protest, involving diesel cabs, compared to the largely hybrid Uber vehicles which were silently ferrying people about their business at the same time...
The views and opinions expressed in this communication are those of the author and may not necessarily state or reflect those of ANZ.
21 Sep 2015
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