Why Uber Is Killing the Bank (And What That Means for Everything Else)
The Uberization of the world is not about creating a ubiquitous app in a specific sector, but redesigning the world around us for optimal technology-based interactions that don’t require humans.
Image: Gary Waters/Getty
Everyone wants to be the Uber of something. In Silicon Valley over the last couple of years, I think VCs probably heard the "we are the Uber of …" pitch more times than there are atoms in the universe. (That's probably a slight exaggeration, but you get the idea.)
The fact is, however, that the Uberization of the world is undermining long-held business models, and nowhere is that more apparent than in financial services.
In 2015, Uber came and visited Moven's offices in New York City and asked us to pitch for their business to enable new Uber drivers to seamlessly get a bank account at the time of sign up. At the time, they told me a stat that blew my mind: in some cities across the US, upwards of 30 percent of new drivers applying had never had a bank account. Prior to signing up for Uber, they had been in the cash economy only, but the incentives for driving with Uber were enough to pull them out of the cash economy and into the banking system. If only they could get a bank account.
Uber is now opening bank accounts for drivers as part of the driver onboarding process. As I pointed out in my previous blog on this, this makes Uber one of the largest acquirers of small business, entrepreneur bank accounts in the United States today—a phenomenal statistic. (Meanwhile, major banks are closing branches at a rapid clip, some even announcing closures of half their branches or more.)
So that's pretty cool, but why does this represent a fundamental shift for banking?
Uber is one of a handful of companies focusing on redesigning the way we experience the world through technology. This is not simply about process automation or appification of the world, it's about rethinking day-to-day events, interactions and experiences through a new lens of what is possible.
In their positioning against Uber, the New York City taxi companies classify Uber as a simple "taxi hailing" app, but that's selling Uber's rethink of the taxi experience short. Uber went back to first principles: The company didn't start by redesigning how taxis worked, it went after rethinking the entire journey experience. Uber didn't build a taxi app, it built a journey experience that happened to include driver onboarding, driver performance management, billing and payments, hailing/ordering, driver bank account opening, and many other capabilities. Banking and payments now just became embedded into an experience that had been reimagined from top to bottom.
The Uberization of the world is not about creating a ubiquitous app in a specific sector, but redesigning the world around us for optimal technology-based interactions that don't require humans. Some examples might include ordering McDonald's or Starbucks via self-serve technology, having our groceries or Amazon packages delivered by a robot, an autonomous self-driving Uber car ride, a smartwatch that can predict a heart attack before we even know we've got an emerging health problem, and so forth.
Over the next 5-10 years, we're pretty much going to need to redesign most service interactions around these new embedded technology interactions. To do that we're going to need some new building blocks:
This is really what Uber taught us. The best experiences in the future will be designed optimally around new technologies integrated into our daily lives. These aren't iterations or sticking a mobile banking app on your phone, this is changing the way a bank fits in your life. So instead of buying a mortgage from a bank, you simply just go out and buy a home or an apartment and the ability to access credit is designed into the home buying experience.
As a gigging economy worker, instead of setting up a company, going to a branch to open a bank account, and then struggling to build up credit history so you can grow your business, this will all be redesigned into a process that helps an entrepreneur incubate their new startup. (My startup Moven is working on something similar to this with the Freelancers Union based in New York, the largest association of gigging economy workers in the USA.) You won't buy a car loan from a bank, you'll just buy a car and have credit options built into the purchase. You won't get a credit card from a bank, you'll just get access to credit in a store on your phone.
AI eliminates humans
In my new book Augmented I tackled this in a lot more detail, but simply put, AIs have massive data synthesis capabilities that enable them to suck in tons of data and provide more accurate and better personalized advice than you'd get from a human advisor like a lawyer, account, bank teller or financial advisor. Integrating advice into our world through new experiences supported by AIs and algorithms will give us incredible, augmented real-time decision making that simply isn't possible with human advisors in a bank branch.
For example, you might tell your personal AI in your handset that you want to limit your spending to $50 per day so that you can save for that holiday at the end of the year, and your phone will tell you when you are getting close to that limit. You might walk into a car dealership and your augmented reality glasses will have an app showing you which cars you can afford comfortably. The market might take an unexpected turn and stock prices could start plummeting, but your robo-advisor can already have adjusted your portfolio without having to wait for your instructions.
Hundreds of thousands of daily interactions are about to get a reboot.
Humans just can't compete with machine intelligences that are dedicated to tasks involving the synthesis of information in a predictable format or method, and that can react in real-time with context when required.
Alexa, or Amazon Echo, is just the first primitive application of voice-based commerce that is going to revolutionize the way we think about commerce and payments. In the TV spots for Echo, actor Alec Baldwin can be seen ordering $200 cashmere Bresciani socks, snacks and supplies for the Super Bowl, and other purchases simply by telling Alexa to "re-order a pair of Bresciani socks."
This is an early example of how voice, AI and commerce will change very quickly over the next few years. Bots, agents and voice commerce will give rise to a world where 60-70 percent of commercial transactions will be machine-to-machine. None of them will require the swipe of a plastic card. In fact, you won't even need a card at all—Alexa will just be linked to your bank account and manage payments automatically (based on your controls or preferences).
Just like Uber showed us how to re-think the journey, Alexa and voice will allow us to rethink tasks like booking a restaurant, movie tickets, flights and other day-to-day commerce interactions.
When there are one trillion sensors embedded in IoT devices around the world, we'll need to track these assets, and enable machine-to-machine interactions in an intelligent way that doesn't involve humans tapping keys on a keyboard. Automation of interactions between these machines, including for commercial interactions, will be coded on top of a new way of tracking these assets, how they are supposed to work (e.g. legal contracts), and how they pay and get paid for those tasks, when required.
A self-driving car may be owned by a community in the future (say you and your friends, or by you and some co-workers), but in its downtime it could log on to the Uber network for a few hours and make itself available as an autonomous vehicle. If you live in a city like Boston, Chicago or Los Angeles, you may not need to own a vehicle in 10 or 15 years, but you could either rent car time or you could own a share of a vehicle and get so many hours a week of access.
Just because that vehicle isn't owned by Uber doesn't mean it won't get paid when it drives for Uber on their network, but that car will obviously need a bank account or wallet to get paid. That "value-store" will just be a type of digital wallet sitting on the blockchain and it won't need to be linked to an individual—it could be dedicated to the car.
This type of scenario would mean Uber gets access to resources that can be used dynamically to manage load, but Uber won't need to own those vehicles. The owner(s) of autonomous vehicles can generate some cash on the side by renting them out to Uber or some other autonomous network where they could monetize capacity.
The blockchain is emerging as the new operating system by which these new experiences can be implemented at scale, in real-time, without the need for humans.
The Uber of Banking is not a company, or a new banking app. It is a design philosophy that will render most of what is considered a "bank" today unworkable in the Augmented Age or the redesigned world we're moving to. The value creators of tomorrow are those that will figure out how value can be embedded in this world, and without friction—forms that require signatures, or humans sitting in a building that tick a box that says yes, you can get that loan, or no, you can't.
The value of Uber is in redesigning the experience of getting from point A to point B in its entirety. And that is just one of hundreds of thousands of daily interactions that are about to get a reboot.
Brett King is an Amazon bestselling author, the host of Breaking Banks Radio Show, a globally recognized speaker, and the founder and CEO of the mobile banking startup Moven. His latest bestseller AUGMENTED: Life in the Smart Lane is out now.
Uber Earth is Motherboard's exploration of the ways Uber has already changed the world and how it stands to do so in the future. Follow along here.