No industry is immune to the impact of digitalization. But the financial services industry is developing at a faster pace than almost any other business sector. While traditional banks and insurance companies appear more and more old-fashioned, innovative financial service providers are surging into the market and competing ever more strongly with traditional providers. According to a survey by the German federal finance ministry , the country counts 433 fintech companies since 2007, with almost 350 of them currently active.
No. 1 among the most successful fintech companies worldwide is the Chinese insurance company Zhong An. In contrast to traditional insurance companies Zhong An is paperless, has no offices and no representatives. The company does all of its business online.
And it is making tons of money in the process. Currently the company is worth approx. 8 billion US dollars , with almost 370 million clients. Zhong An offers more than 200 different kinds of insurance policies – some of which differ substantially from those of other providers. The company’s Chinese customers, for example, were able to buy insurance policies last summer for temperatures that climbed above 37° Celsius. And for the 2014 World Cup Zhong An compensated its customers if they drank too much alcohol watching the games and ended up needing to pay a visit to the hospital.
For a while now you can also insure yourself against flight delays: If the plane starts later than scheduled, the insured party gets a coupon mailed to their smartphone which they can then use to buy food, drink or other services at the airport.
Apart from these niche products, the company naturally also offers standard insurance policies – but the main idea is the same for all of them: the entire insurance process is digital, resulting in tailored products which are based on big data analyses and social marketing .
The idea behind Lunchit is not quite as elaborate as the above. At first glance, it appears to be a simple matter of food. But a closer look reveals that it all comes down to money after all. That’s because the motivation of the two founders, Florian Gottschaller and Dr. Ralph Meyer is to ensure that employees keep more of their wages – through government tax breaks!
The idea is to promote tax-free lunch money from the employer, so that both parties end up saving money. Up to now that has usually functioned using so-called restaurant checks, which could be redeemed at participating eateries. But, using Lunchit, employees no longer have a limited range of options: They can have lunch wherever they want, and simply need to photograph the receipt using their smartphone. The startup takes care of all the rest.
At the end of the month the employer gets a proper invoice which is recognized by the German tax authority. According to founder Florian Gottschaller: "The nice thing about it is, you can eat out anywhere, as long as you keep the check. From a coffee shop or supermarket to a gourmet restaurant." He added that employees can achieve a net monthly refund of up to 120 euros.
While Lunchit is dedicated to promoting higher pay, the ProGlove startup is focused on optimizing work processes: By combining an intelligent glove with a scanner, the company wants to revolutionize working procedures, particularly in the field of logistics.
How it all works: Instead of needing to use additional devices, the glove allows the worker to read information from machines or even measure temperatures and power. To do this, the startup integrates a series of different sensors in a glove. A display shows the data and can give direct feedback – for example, whether work procedures were correctly performed or mistakes were made.
This novel new idea not only earned founders Thomas Kirchner and Paul Günther the 2016 German Founder's Award but also gained them numerous customers from industry, particularly the automotive and subcontracting industry. The mechanical engineering company Festo for example is already playing with the idea of putting this new wearable to use in all its production locations. Not bad for a startup which is barely two years old.
What do all these three examples have in common? None of the above-mentioned startups is overwhelmingly impressive due to completely new ideas or some new technological breakthrough. But instead of simply introducing a me-too product or a new app to the marketplace, they have carefully analyzed a niche opportunity and developed the right tool to fill the gap. And they have all done it by exploiting the opportunities offered by digitalization. Now that’s what we call a recipe for success.
SCALE11 at CeBIT is a showcase for up-and-coming startups from across the globe (http://www.cebit.de/de/ausstellung/startups-scale11/). Companies both big and small are welcome here, and they come to take advantage of cooperative opportunities for their innovative business models to help them make the decisive leap. Last year the event featured 350 exhibiting startups from 40 different nations.
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