Exploring the future of financial institutions in the mobility ecosystem: Otomoto PAY
In this interview, we delve into the visionary insights of Arkadiusz Zaremba, Managing Director of Otomoto PAY, as he navigates the dynamic intersection of finance and the future of mobility.
In this interview, we delve into the visionary insights of Arkadiusz Zaremba, Managing Director of Otomoto PAY, as he navigates the dynamic intersection of finance and the future of mobility. Zaremba shares his perspectives on the evolving landscape of financial institutions within the mobility ecosystem, the pivotal role of financial services in shaping the automotive industry, strategies for adapting to changing consumer needs, and the essential elements for success in this rapidly transforming arena.
How do you envision the evolution of financial institutions within the future mobility ecosystem? How quickly do you expect this evolution to unfold?
The future mobility ecosystem has been a topic of extensive discussion, encompassing advancements such as enhanced public transportation, shared autonomous vehicles, robotaxis, e-scooters and public electric bikes, among others. These transformations are projected to materialize over the next decade. However, it's crucial to acknowledge that this macro trend primarily applies to large, well-developed cities. The mobility landscape in smaller towns and rural areas is likely to remain relatively unchanged, underscoring the necessity of discussing a two-speed evolution of the mobility ecosystem.
In tandem with the electric vehicle (EV) revolution, automobile manufacturers are anticipated to cease the sale of electric cars, pivoting instead towards long-term rental models. This shift essentially transforms the product into a financial service. Urban dwellers are expected to blend various commuting options, anticipating an all-encompassing service that consolidates all transportation costs (car, public transport, robotaxi, etc.) into a single payment. This could take the form of a flat-rate subscription or a pay-as-you-go model, culminating in a single, aggregated payment for all services at the end of each month. Notably, EV charging is expected to be incorporated into this comprehensive settlement.
For those residing outside of metropolitan areas, a shift from car ownership to long-term rental is anticipated. These rental agreements would include comprehensive packages covering insurance, service and EV charging. This shift represents a significant change in the way we perceive and utilize mobility services, highlighting the evolving dynamics of the mobility ecosystem.
Financial institutions will have to follow and create more flexible technological infrastructure to exchange data, manage micropayments and microcredit lines for commuting.
To what extent do you view financial services as a driving force behind the future development of the automotive ecosystem, and what do you think will be banks’ and insurers’ most notable contributions?
The transition of automobile manufacturers from a traditional car ownership model to a long-term leasing model will necessitate substantial capital investment. The financial capacity of captive banks may not be robust enough to shoulder this responsibility alone, necessitating the inclusion of other financing partners.
This shift will present customers with the opportunity to rent new vehicles through multiple partners, potentially leading to an increase in online sales. Consequently, banks will need to adapt to the processes designed by car manufacturers. This will have a significant impact on Know Your Customer (KYC) methods, creditworthiness analysis and anti-money laundering requirements.
Furthermore, insurance companies will need to demonstrate greater flexibility and meet the demands of car manufacturers in the context of online sales. The scope of insurance coverage will need to expand beyond car-related accidents to encompass all mobility-related risks. This expansion will primarily be driven by the emergence of comprehensive mobility subscriptions.
In summary, this paradigm shift in the automobile industry will have far-reaching implications for various stakeholders, including banks, insurance companies and customers. It will necessitate significant changes in financing models, risk assessment methods and insurance coverage.
With the evolution of mobility services, such as ride-sharing, electric vehicles, usage-based models and mobility-as-a-service platforms, how can financial institutions adapt their product portfolios and engagement strategies to align with the changing needs of consumers?
The advent of mobility-as-a-service (MaaS) platforms will likely limit the number of sales and marketing touchpoints accessible to banks and insurance companies. These entities may find their roles reduced to merely providing financing and insurance services. They will need to adapt to operate in a banking-as-a-service and insurance-as-a-service mode, where their responsibilities will be confined to managing risk, compliance obligations and infrastructure management – areas that are largely unfamiliar to the automobile industry.
MaaS platforms will permit a select number of partners to serve their customers. However, the final choice of provider will be determined by the platform, not the customer.
Several banking groups have already attempted to sell cars using a long-term model, but none have achieved significant success to date. I anticipate this trend will continue. Due to their lack of positioning within the automobile industry and customer perceptions, these projects are likely to fail. The winners in this evolving market will be those entities that demonstrate technological flexibility as providers of financial products.
The need for cooperation among established financial institutions, fintechs, and companies in the mobility sector seems essential. Can you share some insights on successful partnerships (your own or in the industry), what they enabled both parties to unlock that they couldn’t do alone, and what factors made the partnership effective?
Otomoto, the eighth largest automotive classified platform worldwide according to AIM Group, launched an embedded financing solution last year called Otomoto PAY. This innovative feature allows users to undergo a proprietary credit scoring process in up to 2 minutes, assessing their creditworthiness across 18 institutions.
In collaboration with one of our financing partners, we introduced a loan bundled with an extended warranty for cars up to 10 years old, which essentially functions as an insurance product. We engaged a financing company and an insurance provider, and thanks to our technology, we were able to implement this in our embedded financing solution.
The project has been successful, and in the next phase, we plan to bundle credit with car insurance. Customers appreciate the convenience of having insurance included in their monthly installments.
While customers are receptive to such innovations, the financial institution market has so far shown limited innovation. However, we believe that with continued efforts and technological advancements, we can drive change and bring more innovative solutions to the market.
Considering the significance of climate change and sustainability, how might financial institutions actively contribute to promoting the adoption of environmentally conscious and sustainable mobility solutions?
All resolutions related to Environmental, Social and Governance (ESG) factors will likely motivate the finance industry to favor collaborations with platforms and partners that promote sustainable mobility. These platforms will benefit from more affordable financing, which in turn will make their services more cost-effective for customers.
As a result, new electric vehicle rental offers will become significantly cheaper than leasing or loans for petrol-fueled used cars. This shift will not only make sustainable mobility more accessible to a broader customer base, but also align with global efforts to promote environmentally friendly practices.
From your perspective, what will be the biggest factors differentiating the financial services ‘winners’ and ‘losers’ in the future mobility ecosystem?
Flexibility is indeed the cornerstone of success in this evolving landscape. Technology must be responsive to the needs of customers, car manufacturers and mobility platforms. Companies that can deliver product releases more rapidly will have a competitive edge, and plug-in solutions are also likely to prevail.
However, the most significant winners will be those capable of serving multiple countries within the banking-as-a-service and insurance-as-a-service models. Manufacturers and mobility platforms operate on a global scale, while banks often operate locally. Even when banks are global brands, they tend to have different processes and procedures for each country.
Therefore, entities that can transcend these geographical and procedural boundaries to provide seamless, global services will be best positioned to capitalize on the opportunities presented by this shift in the automotive and financial industries.
This interview series is a part of our exclusive partnership with CVA. Visit CVA's website
Mobility community
With Qorus memberships, you gain access to exclusive innovation best practices and tailored matchmaking opportunities with executives who share your challenges.