Can Indian IFAs get “Uberized”?

Sharing is the new normal…

Yes you read right. In today’s world, which is an integration of the physical and the digital world, sharing is the new norm.

All of us must have used taxi services from Uber. Did you know it belongs to a novel concept of business, called, maximum utilization of spare capacity? Till a few years ago, we had a generation that thought buying a house and owning a car was the most secure way to live life. Today we have a generation of millennials who don’t want to be burdened down by EMIs for home loans and car loans. They rent a house when needed and use a taxi to travel. They believe in a concept called shared economy.

Today’s generation lives in a phigital world, a union of the physical and the digital world which is a digital portrayal or description of reality. In this phigital world, it is very easy to integrate various dynamics. One such concept is the integration of spare capacity with demand. Like what we read earlier, uberization is a disruption, where there is maximum utilization of spare capacity to give the best to customers and monetize on that.

Uber was the first company to come up with this concept. They became the taxi service that provided services without owning cars. If you had a car and a few hours to spare, you could sign up to drive with Uber. They would give you details of customers to be picked up and transported in these few hours. It is a win win situation for both parties. You, instead of idling away your spare time can make use of the opportunity to earn some money and Uber will have no dearth of drivers. Customers too are a happy lot. Instead of standard yellow cabs, they travel in cleaner, neater well maintained cars, have more friendly drivers and feel good that they can rate them and also be rated, to cull out the letdowns.

Taking up the same concept, Uber has started the Uber Eats, an online food delivery platform. This app helps customers choose menus from hotels, with Uber arranging for it to be delivered to their homes. The customer pays using the app. The delivery people do not handle cash. Deliveries are consolidated to improve efficiency, prevent wastage of time and duplication of work. Think about this – instead of every restaurant employing its own delivery men, many of who may land up in the same apartment building at the same time, a consolidator like Uber Eats offers economies of scale to these restaurants and at the same time faster deliveries to consumers.

The concept of shared economy, where owners rent out something they are not using, like a car, bicycle or even a house using peer to peer services is very popular now. Such popularity has given rise to the fact, that people have stopped buying stuff that they can rent.

In the case of Airbnb, another disruptor, travelers can lease or rent a room, a house or experience homestays and guided tours. This company does not own any real estate or property. If you have a room to spare in your home or a house to be let out to people, then you can become part of this. This poster child of the peer economy sector is also known as collaborative consumption.

Such ideas are also very viable where there are numerous offices, on various floors, in a building. Instead of each office having a reception area, facilities and utility spaces; the whole building can have one common such area on each floor. This eliminates the need for more people to handle the reception and maintain facilities, saving time and energy.

Uberization in the phygital world of financial products distribution

We know that robo-advisory is the hot new trend globally in the world of financial products distribution. We also know the investor’s preference for a “phygital” experience rather than a purely digital experience when considering where to invest her hard earned money.

So, you have a situation where digital players are trying to supplement their proposition with a physical presence – through phone based / skype based engagement while players in the physical world (larger IFAs and distribution houses) are ramping up their digital presence to offer a phygital experience to their investors.

All you now need is for an Uber moment in financial products distribution – where one large digital platform comes in and signs up thousands of IFAs across the country to offer a phygital experience to their investors. IFAs will be free to do their own business as before, but if they have spare time, they can sign up with this platform, which will then pass on leads to the IFA at a time he signs in as available, in the territory that he prefers to operate. So, if an IFA is having a relatively quiet day – no meetings lined up with his clients or prospects today – he can log into this “Uberized” platform as “available” and then pick up leads that the platform sends him for delivering that phygital experience that some of its clients want.

There will of course be extensive training required and so on, but the point here is that spare capacity in the independent distribution space can be leveraged on a win-win basis by a digital platform. There will of course be many issues to be tackled – on customer ownership, on revenue sharing, on ongoing service for the investor who availed the phygital experience and so on – but when an idea is seen as powerful enough, intelligent minds get together to find solutions to all of these issues in order to deliver a win-win proposition to all.

Think ahead – if you have such an “uberized” proposition in financial distribution, will it not attract many more entrepreneurs to become IFAs? A new IFA can sign up with this platform and at the same time pursue his own business. He can switch on and switch off from the platform based on how busy he is in his own business – that way, he gets to utilize his capacity to the maximum and therefore is able to boost his earnings, while the digital platform gets to use “spare capacity” in the physical distribution world as and when it is made available to them, without incurring any fixed costs. A true win-win-win for the platform, the IFA and the investor.

If sharing is indeed the new normal, can it be too far away from our own world of financial products distribution?

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