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Zopa | Disruption and Response Oliver Wyman Institute – James Alexander 15th October 2015
2004No garage, no idea
Ethnographic perspectiveSelf-reliant freeformers will become the dominant audience
Socio-economic perspectiveWe’ve been here before – a new common sense
Industrial Revolution
Steam and railways
Steel, electricity, heavy
engineering
Industrial Consumer Ageof oil, automobiles, mass production,
distribution and retail
Digital Consumer Age
of information technology and
resource scarcity
• Economies of scale and scope• Hierarchical and market power• Broadcast brand• Short-term shareholder value
• Digital network economies• Collaborative and connected success• Purpose-led, conversational brand• Long term stakeholder value
Source: Adapted and developed from Carlota Perez ‘Technological Revolutions and Financial Capital – the Dynamics of Bubbles and Golden Ages’
Technology Revolutions
The world’s first marketplace where people meet to save and borrow money. With no bank in the middle, everyone gets a better dealSavers
• Great Returns
• It’s human
• It’s safe
• You’re in control
Borrowers
• Low, low rates
• No banks
• It’s fair
6
Zopa.com, Launched May 2005
A marketplace where people meet to save and borrow moneyDisruption from structural and operating advantage
Source: Adapted and developed from Carlota Perez ‘Technological Revolutions and Financial Capital – the Dynamics of Bubbles and Golden Ages’
Financial return and social reward Working, differentiated, compelling• Most trusted provider
• Great customer service
• >£1.1Bn through Zopa
• Cheapest personal loans
• Lender returns >5%, after fees
• Appropriately risk managed – and Safeguard fund now in place
77
Creating value for customersFinancial return and social reward
UK P2P Cumulative Volume>£4.5Bn and still accelerating
8
A marketplace where people meet to save and borrow moneyDisruption from structural and operating advantage
DisruptionChanges the way a market operates for customers and the competition
• LV=
Innovation is…
Disruption is…
Finding new and better ways to fulfil an organisation’s purpose
When a market ceases to function in the established manner, typically demonstrated by rapid, large and irreversible changes
There is increased value for customers that sticks and stays
There is a decrease in value in the market as traditionally
defined, at least for a while
Customers
The longer I stay the better it getsThe better it gets the more satisfied I amThe more satisfied I am the more I trust
The more I trust the less I look elsewhereThe more I’m satisfied the more I recommend
The more I recommend, the better it gets, for me
For the disruptor
We pay less for acquisitionWe pay less to service
We have lower loss ratiosWe have more to reinvest
We create better customer solutionsWe have more opportunity to differentiate
We can campaign against toxic practices
A changed value creation dynamic is established …
9
A marketplace where people meet to save and borrow moneyDisruption from structural and operating advantage
Schumpeter’s “gale of creative destruction”A new common sense
• Economies of scale and scope• Hierarchical and market power• Broadcast brand• Short-term shareholder value
• Digital network economies• Collaborative and connected success• Purpose-led, conversational brand• Long term stakeholder value
The Industrial Consumer Age The Digital Consumer Age
Currency exchange
Loans
Risk assessment
Financial management
Transfers & micro-financing
Angel funding
Blockchain and Crypto-Currency
Payments
Credit card issuing/authorisation
Transactions
Cheque deposit
Investment management
Banks rarely trusted
Regulation constraining
Legacy everything
Commoditisation endemic
Fixed cost base too
high
Value creation mis-matched
Savvy customers
Switching
10
A marketplace where people meet to save and borrow moneyDisruption from structural and operating advantage
e.g. Collaborative consumptionCreating enormous customer and business value
Vulnerabilities
Redundancies
Waste
Limited access
Broken trust
Better utilisation
Empowerment
Directness (e.g. in the value chain)
Reduced cost to serve from crowd service
Enablers to make the system work
Safe & secure
Create & enable trust between strangers
Build trust in the brand
Put the customer in control
Create a quality market
Create social currency & gaming fun
Transparent & open
Be in it for the long term
Advantages
Complexity
Simplicity
Efficiency
Identify the fundamental customer needs (or failure of the existing business model)
Create and grow a real operating advantage
Use the business model to deliver increasing customer benefits
Grow critical mass, creating a virtuous circle of customer benefits, reduced costs and increased profit and revenue
Build a community with mutual benefit and a sense of belonging
Better offer & social reward
$6Bn $1Bn$25Bn$50Bn
Open eyes to the inconvenient truthDeliberate focus and attention to also see the world outside-in
Courageous leadership to embrace disruptionProviding clarity and energy to act and learn
The world’s leading open foresight program
Thank you
jamesalexander1969@mac.com|@jamesgreenthingwww.futureagenda.org
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