Published on the 02/05/2016 | Written by Beverley Head
Consumers are a demanding bunch – and it’s forcing established enterprises to disrupt their modus operandi, and on occasion to take a hefty financial stake in the disruptors…
Digital business models demand robust technology platforms and sophisticated software solutions that reach out to the consumer, but still plug into back end systems. Developing that sort of platform is often beyond the technical reach of existing enterprises – forcing them to instead partner with start ups.
Financial services has already been profoundly disrupted by technology – now the insurance sector is joining in with US start up Trov announcing that it will launch its on-demand app based insurance product in Australia this month. Called Trov Protection the service is being launched in association with Suncorp, initially to insure individuals’ technology – though this is expected to broaden to other categories in the future.
The mobile phone app allows people to simply click on images of the products they want to insure, see how much the premium is, pay for that insurance, and make claims through the app also. Suncorp has been working with Trov since 2014, and has invested $US5 million in the latest round of financing.
It’s far from the first established finance company to buy its stake in the future.
The Australian Stock Exchange has taken a five percent $15 million stake in New York’s Digital Asset Holdings, which is now working with the Exchange to develop a blockchain based distributed ledger that is intended to reduce the settlement period from two days to closer to real time in a bid to reduce risk for the ASX, and create the opportunity for new trading models.
Westpac meanwhile has established the $50 million Reinventure business, that has taken strategic stakes in businesses from peer to peer lender Society One, bitcoin startup Coinbase, and big data and analytics company Zetaris, giving Westpac a stake in technologies that are likely to reshape financial services.
Other sectors are also buying rather than building innovative solutions. Online real estate business REA was one of the investors in the Pozible crowd funding for Melbourne virtual reality gaming company Zero Latency. Last month it announced a $25 million deal to buy share accommodation business Flatmates.com.
REA CEO Tracey Fellows has acknowledged that where a start up already has a strong base it makes sense to buy that in rather than reinvent the wheel.
Through its partnership with Trov, Suncorp’s ambition is to launch a product that will attract millennial consumers, who are often underinsured compared to older consumer cohorts.
Attracting millennials was also behind ANZ Bank’s decision to be the first of the majors to allow its customers to use Apple Pay. Although Apple Pay has been available in Australia – it’s only been offered to American Express customers with the banks holding out because of the high transaction clip that Apple was demanding.
ANZ – which was the first major Australian bank to offer a mobile banking app – has now caved into customer demand expressed through social media according to the CEO. ANZ customers with a Visa or American Express card can use Apple pay on a variety of Apple platforms including the watch.
