TEL AVIV — There’s OnDemandEconomy.org, and even @ondemandeconomy.
The on-demand economy has even made its way into the presidential election. Republican presidential candidate Marco Rubio last month vowed to stifle government regulation of “on-demand” startups like Uber and Airbnb that he “considers models for a changing national economy.”
The on-demand economy is generally defined as the fulfilment of consumer demand via immediate provisioning of goods and services by technology companies. In other words, Uber and the like.
The focus is on “immediate provisioning of goods and services,” but is that really what is meaningful for fintech about the on-demand economy? The short answer, courtesy of Tom Glocer, is no.
Glocer, in case you don’t know, ran Thomson Reuters, the information companies, from 2001 to 2012. He is credited with rescuing a struggling Reuters, which allowed for its eventual sale to Thomson Corp for about $17.2 billion in 2008. In addition to blogging at TomGlocer.com, he has been an active investor since his departure from his former employer, making at least 20 investments, according to Crunchbase, including in OpenFin, ShopKeep, CommonBond, and Orchard Platform.
To Glocer, the on-demand economy is not just about the “immediate provisioning of goods and services,” but more so the maximization of underutilized assets. He gives the example of Uber. Glocer pointed out during Bank Innovation Israel here today that not every car service company with a mobile app is Uber. Rather, Uber allows for a more efficient allocation of its resources, namely its cars by using algorithms to more effectively distribute its cars to its customer base.
This more efficient allocation of assets is what will fuel the next phase of fintech advancement, Glocer says. Take savings accounts. For most consumers, those funds languish in a bank, gaining little if any interest and certainly being underutilized. Glocer argues that the “resource-maximization economy” will turn its attention to savings funds and maximize their utility for their owner.
While acknowledging that this is done more readily in corporate banking, Glocer suggests that there are umpteen ways in which financial resources can be maximized, and done so via technology.
When you start thinking about it, he’s right. Think of all the underutilized financial resources out there — credit lines, savings, advisory, illiquid assets. All are ripe for maximization. On some level marketplace lenders are positioned as a means of utilizing assets (i.e. invest in a marketplace loan, rather than leaving your money languishing), but it’s not exactly on point. A startup that presented at Bank Innovation Israel today, Wayerz, somewhat does this in the case of bank wires, by allowing financial institutions to choose — i.e. maximize — their wire’s geographic path. Again, not exactly what Glocer was talking about, but getting warmer.
Thinking about resource maximization, rather than “immediate provisioning of goods and services” is far more relevant in financial services, especially since “immediate” might not even be desirable, especially when it erodes “trust.” But maximizing resources? That just screams futurebanking.