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Payments and the future of mobility
What you need to know about the new mobility ecosystem
Payment continues to be one of the most disruptive and dynamic banking businesses. Consumers are used to seamless payments for most daily transactions. As the mobility ecosystem is about to change dramatically, they will soon expect integrated and secure ways to pay for mobility as well. How can payment providers create value and what opportunities does the evolving mobility system offer them?
Rising consumer expectations
Innovative retailers and technology companies have raised the bar for the financial services industry. Consumers have become used to a high level of ease and convenience in these areas. As the mobility ecosystem is evolving, their expectations will expand to easy payment methods for integrated transportation. With the future of mobility arriving, including new players and services, financial transactions are expected to offer transparent, seamless, integrated and highly convenient services. In fact, we already see how tech companies are entering the financial world, including the Netherlands, with services such as Apple Pay being introduced to the Dutch market. If payment providers are looking for future success, they need to rethink their role in the mobility ecosystem.
Payments and the future of mobility
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The future mobility ecosystem
Although the speed of transition is unclear, technology and solutions develop quickly. It’s been estimated that by 2040, shared autonomous vehicles could travel more than half of US road miles (source: Deloitte analysis). In the Netherlands, the situation will most likely be similar. In urban areas in particular, travellers will share various types of transportation for each trip, based on “intermodal travel on demand”. Passengers will prefer to pay for these products and services seamlessly, quickly and reliably, as a bundle of services covering one or multiple modes of transportation as well as ancillary services - a sort of mobility-as-a-Service (MaaS) platform.
Beware of the mobility manager?
As Deloitte, we expect that the key roles in the integrated, multimodal journeys of the future will be threefold. Mobility consumers are the end users of all services. Mobility merchants (such as ride-sharing providers and bicycle rental companies) are businesses offering services to these end consumers indirectly via a mobility platform. Mobility managers provide end consumers with tailored, integrated travel options, including ancillary services such as entertainment and shopping. Payment providers should be particularly aware of this last role and identify who is most likely to become a mobility manager, since these new players might set up their own “closed-ended” network between customers and their suppliers, cutting out current payment providers. We already see a number of businesses vying for this position, such as technology companies, some payment networks, MaaS entrants, automakers, and ride-hailing providers.
Opportunities for payment providers
As the contours of the future mobility ecosystem are beginning to appear, payment providers have two strategic choices: engaging with emerging mobility managers – planning, booking and ticketing all transactions related to mobility requested by its users – and go big or focus. Going big means aiming to become a platform provider or even a mobility manager. However, players such as MaaS operators and automakers might be better equipped for this business. The alternative is focus: identifying and servicing new niche markets such as peer-to-peer car rentals. In both cases, a variety of new capabilities is required: fleet optimisation, dynamic route planning, integrated electronic ticketing and close collaborations with e.g. city governments and mobility operators. Successful players also need data analytics and a solid underlying digital infrastructure. By leveraging their current technology and expertise to partner with mobility companies, payment providers can prepare themselves for the changing landscape.
Three business models
We have identified three business models that might be successful in the future mobility ecosystem. The first is: enabling seamless intermodal mobility, offering a Maas-specific platform that follows the value chain. Such a portal should integrate all payment options that customers need for their trip. The second option is a next-gen “fleet” card: payments facilitated by connected vehicles - the vehicle itself becomes a platform to ease the payment process. Payment providers are already intermediaries between e.g. gas retailers and logistics companies, so why not expand? The third business model is peer-to-peer shared mobility, where individual car owners rent out their (self-driving) vehicle for others to use. A payment provider could create a simple plug-and-play solution to suggest an ideal rental price.
The Deloitte report Payments and the future of mobility contains more detailed information. For instance, who are the other players that are interested in the business models mentioned above? What do these business models look like in detail? And what steps do you need to take to get there? The report also contains helpful figures and other publications that might inspire you. Do you want to talk with us on the opportunities the mobility ecosystem has to offer for your financial services? Please contact Frank de Bont or Roeland Assenberg van Eysden.
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