Exploring the future of financial institutions in the mobility ecosystem: Baloise
In this interview with Patrick Wirth, Vice President of Mobility at Baloise, we discuss the evolving role of financial institutions in the changing mobility landscape, including their contributions, successful partnerships, sustainability, and the key factors that will set apart ‘winners’ from ‘losers’ in the future mobility ecosystem.
In this interview with Patrick Wirth, Vice President of Mobility at Baloise, we discuss the evolving role of financial institutions in the changing mobility landscape, including their contributions, successful partnerships, sustainability, and the key factors that will set apart ‘winners’ from ‘losers’ in the future mobility ecosystem.
How do you envision the evolution of financial institutions within the future mobility ecosystem? How quickly do you expect this evolution to unfold?
The evolution of financial institutions in the mobility sector is closely tied to the ongoing changes in mobility itself. Mobility is rapidly transforming, primarily driven by the major trends of sharing, electrification, connectivity, autonomy and sustainability. While certain aspects, such as autonomous vehicles, may take more time to become widespread, sharing and electrification are already a reality.
In the realm of electric vehicles, there's a notable impact on residual values, particularly for leasing companies and banks. Questions arise about the longevity of batteries, similar to how we see concerns with software updates on smartphones. Moreover, customer expectations are shifting; a digital experience is no longer a luxury but a necessity. All this is relevant for financial institutions financing assets in the mobility space like cars.
Regarding insurance, we are witnessing significant changes in enabling digital experiences through an API-driven approach and adaptable IT systems that can seamlessly integrate with other systems. Furthermore, new insurance products are emerging, utilizing data to develop risk models more rapidly and addressing the unique needs associated with new mobility trends, like the risks associated with car-sharing and other emerging services.
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?
Certainly, the financial industry, including banks and insurance companies, plays a pivotal role in enabling the future of mobility. Banks provide the necessary capital for acquiring assets such as cars, e-scooters and bikes, which are essential for offering mobility services. Furthermore, insurance companies are integral to the viability of new business models in the automotive ecosystem. Without robust insurance solutions, running shared fleets becomes unfeasible. For instance, ensuring the affordability of electric car insurance, considering various factors, is crucial to sustaining innovation in this sector.
While financial services may not be the primary driving force behind the evolution of mobility, they are indispensable enablers. Without their offerings and services, the mobility landscape would face significant impediments.
Moreover, it's worth noting that some financial players, like Baloise, are not only fulfilling core financial roles but are also actively investing in new mobility solutions. This support for visionary founders with groundbreaking ideas is a testament to the collaborative efforts driving positive change and innovation in the mobility industry.
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?
Indeed, the crux of the matter lies in tech and product development capabilities. When we delve into product development, it becomes apparent that the key lies in accelerating it by a factor of 5 to 10, primarily through expediting the go-to-market process and adopting a more risk-tolerant attitude. Notably, managing new risks is a formidable challenge for insurance companies, given their historical reliance on decades of data for building risk models.
However, we are now witnessing the emergence of novel business models that necessitate equally innovative solutions. These solutions demand embedding, real-time pricing structures, the utilization of new parameters for risk assessment (pertinent not only for insurance but also for loans and asset financing), and a high degree of automation to meet customer demands and do so cost-effectively.
The true game-changer for the insurance industry will come when we witness the scaling of usage-based models, underpinned by new risk models and driven by technology. This transformative shift has the potential to revolutionize the entire insurance industry landscape.
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?
Let's take the example of Gowago. Gowago is a startup and fintech company that focuses on making it easy for people to lease a car and manage it during the lease period. What makes Gowago special is that they do everything online, so you don't have to sign any papers or documents in person. They offer a complete package that includes insurance, car services, and more. Plus, they handle all customer interactions through digital means.
To make this customer-friendly approach work, Gowago collaborates with Baloise for car insurance and Migros Bank for financing. They seamlessly integrate all these services. Right now, you can find Gowago on the Tesla website in Switzerland, making it super convenient for anyone leasing a Tesla.
This partnership between Baloise, Migros Bank and Tesla has allowed Gowago to grow rapidly and serve much more customers.
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?
As mentioned earlier, when it comes to new ways of getting around, we need insurance that fits these new methods. This includes making sure that sustainable transportation options are properly covered. Our role in the financial industry is to help launch new insurance products and businesses that support these innovations.
To highlight the importance of insurance, let's take Baloise's partnership with GoMore as an example. GoMore is a company that allows people to share their cars with others in six European countries. For this kind of sharing to work, there must be insurance coverage when someone rents out their car on a platform like GoMore. GoMore needs to find an insurance partner to provide this coverage, often called gap insurance, before they can start their service in a new place.
When people share their private cars on platforms like GoMore, the cars are used much more frequently, often two or more times as much. GoMore is an excellent example of how we can make transportation more sustainable. Without insurance – no business!
From your perspective, what will be the biggest factors differentiating the financial services ‘winners’ and ‘losers’ in the future mobility ecosystem?
Let's revisit some of the earlier points and keep in mind the high dynamics in the mobility ecosystem.
It's crucial to have the right people on your team who understand what customers really need. Once you understand those needs, you need to turn that knowledge into technology that can help to interact with customers anytime, anywhere. Creating new products based on data, even with a lot of uncertainty, is another important skill. And making your operations more efficient by using automation and AI is key to winning in a very competitive market, especially when the product is something like insurance, which is pretty standard for a typical user.
Just doing things a little better than before might not be enough to be the winner in the future. You have to think about new and innovative ways to meet customer needs and stay ahead of the competition.
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