.As they mature, digital startups are now turning their attention from customer acquisition to becoming profitable. With no branch networks and legacy IT systems, digital challengers have a substantially lower cost-to-serve than incumbents of £20-£50 per account compared to £170. Meanwhile, deposit balances for challengers have increased from £70 to £350 per customer. However, this is still dwarfed by the £9000 average for incumbents.However, the majority of new entrants are still not profitable, with the average digital bank losing £9 per customer
That’s according to TransUnion’s “Auto Insurance Shopping Index,” which found that 21.7% of consumers shopped for personal auto insurance in 2018, versus 20% in 2017. With 44% of their cohorts shopping, Millennials and Generation Z consumers shopped for auto insurance than other ages.
The reason? Digital distribution and marketing seem to be huge drivers to increase shopping for Millennials. According to David Drotos, VP of insurance solutions at TransUnion, “Technology is fueling the experimentation and development of new business models for insurance that cater to the Millennial lifestyle.”
Barcelona, Berlin, Brussels, Budapest, Chicago, Dublin, Hamburg, Helsinki, Kaohsiung, London, Los Angeles, Lyon, Madrid, Mexico City, Montreal, New Taipei City, Rio de Janeiro, San Francisco Bay Area, São Paulo, Toronto, Vienna, Warsaw, and Zurich.
In such scenarios incumbents risk ending up as “dumb pipes”, holding bloated balance-sheets and originating products such as mortgages and loans that someone else sells to consumers. If they were to lose the ability to build a brand and the transaction data needed to understand their customers and cross-sell, their wares would become interchangeable. Margins would be driven down, even as they continued having to abide by onerous banking regulations and hold balance-sheet risk.
There is an old-timey model in which the key elements of banking are, like, having a local branch, looking customers in the eye and giving them a hearty handshake, knowing their parents, etc. But in modern banking the importance of having a website and a payments app and, uh, “keeping track of customer deposits” is relatively higher, and the handshaking is relatively less important. For big banks, this means that they are increasingly and self-consciously becoming tech companies, building apps and hiring developers and blathering about blockchain. For small banks, it means that they are increasingly and unhappily becoming franchises of tech companies.
When you browse select posts from those brands, you’ll now see a blue “Checkout on Instagram” call-to-action. Click it, and you can select your size, color, billing and shipping details. Instagram will take an undisclosed cut of sales.
Makes a whole lotta sense:
For fashion brands in particular, Instagram shopping adoption has jumped from 12% to 42% year-on-year, proving that the industry is ready to leap at the opportunity to link content and commerce. It’s not just lower price points that are getting in on the action, with adoption rising to 25% among high-end prestige price-point brands. Notably, Louis Vuitton was one of the first fashion brands to leverage shoppable stories during the World Cup in 2018.
Disrupters gonna disrupt, loans edition:
This type of loan is typically reserved for retailers who bring in more than $1 million in revenue, and requires a lot of paperwork.
Original source: Square expands its bank-like offerings, letting sellers charge customers in installments
“The preponderance of drugs in the U.S. is consumed by an older population, whose habits change slowly or not at all. Accordingly, it’s likely that Amazon’s online pharmacy will not significantly impact the existing drug industry…. Here’s why: Americans currently spend $450 billion a year on drugs. Walmart is the fourth-largest pharmacy in the U.S., with sales of $21 billion, or 4.6% of the company’s total sales. Let’s say that over the next five years Amazon gets to Walmart’s sales level of $21 billion. If the U.S. pharmaceutical industry grows 2% a year over that time, total drug sales will have increased by $45 billion, or the equivalent of two Walmarts (we are ignoring compounding here), to $495 billion. Walgreens, with its pharmacy selling about $70 billion a year, would barely notice Amazon’s presence.”
Original source: Investors Have Misdiagnosed Amazon’s Push Into The Pharmacy Business
‘Amazon has “all the tools to succeed” and is a bigger threat than Alphabet Inc.’s Google, which also made a play for the U.K. price-comparison industry a few years ago’
For the change or die files.
Original source: Amazon takes aim at U.K. insurance market | Digital Insurance
All the tech-driven competition in hotels:
“We have seen more and more business shift to our direct channels. We’ve seen loyalty continue to drive a higher share of the business that is coming into our hotels. And we think we’re competing or we compete against these platforms quite well.”
Original source: Marriott CEO on Tech Giants: ‘We Are in an Absolute War for Who Owns the Customer’
“Amazon’s Indian venture is probably a springboard for a move towards more established markets. India is some way away from Amazon’s key US and European markets, suggesting that it’s using India as a test lab for expanding its insurance operations. However, Amazon’s decision to flex its insurance muscles in India is probably also down to the fact that Amazon has stronger competition in this market in the form of home-grown rival Flipkart — which has also begun stepping into insurance. In Europe and the US, meanwhile, Amazon has fewer real competitors. As such, it’s likely that if Amazon’s venture with Acko succeeds, we’ll see it striking similar partnerships closer to its core markets to bulk out its insurance presence there. If this were to happen, legacy insurers and smaller insurtechs would be up against some stiff competition.”
Original source: Amazon pushes further into insurance with its latest investment
“While UK insurers are investing in tech and providing digital services, the majority are light years behind Amazon,” noted Davies. “If insurers are not careful, they may be pushed out of having a direct relationship with customers and be relegated to the role of a price-driven risk carrier at the back end (assuming Amazon doesn’t want to hold the risk too).”
Original source: Amazon is coming for the insurance industry – should we be worried?