November 13, 2019
Studying the properties and composition that make up the FinTech ecosystem
Welcome to this week’s industry analysis with the FinTech Chemist. Just like how gasoline became the preferred automobile fuel because of its high energy of combustion as well as capacity to mix readily with air in a carburetor, supporting drivers through digital products is now the preferred method for Uber. Uber recently announced Uber Money, solidifying its push into financial services. So, what does this all mean for the ride-sharing giant?
According to Uber’s blog, Uber Money is now responsible for all things pertaining to financial products designed to support drivers, “all at Uber speed.” The effort is designed to support Uber’s 4 million+ drivers around the world to give them access to a mobile bank account so that they can get paid after each ride. Uber Money includes a digital wallet and upgraded debit and credit cards. Peter Hazlehurst, Head of Payments at Uber, said, “We wanted to help everybody understand that there’s a new part of Uber that’s focused on financial services, and that has a mission of giving people access to the type of financial services they were excluded from.”
By pushing further into financial services, Uber is banking on retaining a loyal driver and rider base. An article by CNBC stated, “Uber is rolling out globally a debit card with an enhanced “instant pay” service it has been testing in the US and a few other markets. The feature has taken off in the US, with more than 70% of driver payments made using instant pay, according to Hazlehurst. It is essentially a no-fee banking account, with the debit card in the US linked to an account provided by Green Dot.” Uber is investing heavily in creating financial products and further cementing its commitment to the mission by creating a FinTech outpost with several engineers in New York.
While Uber Money aims to help its drivers, it does shed light on the harsh reality of the gig economy, where many people are struggling to make ends meet. Hazlehurst also claimed that “Uber’s ambitions could bring drivers into the realm of digital finance in parts of the world where cash is still king, like Pakistan and Bangladesh. About 40% of all Uber trips globally are paid using paper currency; Uber is eager to bring that figure down.” So, will we ultimately see Uber turn into the next challenger bank? Thanks to Uber’s also massive global scale, I wouldn’t be surprised.
Now, onto my next scientific… I mean FinTech hypothesis adventure. And, as always, remember to take your vitamins!
Read the previous edition of The FinTech Chemist.