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Saturday, March 31, 2018

From car insurance to banking, a new digital age is dawning | Money - The Guardian

How we handle money, what we drive and how we even divorce will become cheaper and simpler soon, says a leading futurist Gerd Leonhard and Juliet Stott, Freelance Journalist & Content Creator.

Borrowing cash may soon come from friends in your social network.
Photo: Donald Iain Smith/Getty Images/Blend Images

The way we bank, borrow money and buy products such as insurance, cars and legal services will change dramatically due to exponential advances in technology. Leading futurist Gerd Leonhard, whose clients include Vodafone, Prudential, Lloyds Bank and UBS, spoke to Guardian Money about how handling money will change more in the next 20 years than it has done in the previous 300.

“What’s happening in finance is what has already happened in music. Spotify digitised it, made it easier to access, more convenient and cost-efficient. People can access 20m songs for £10 a month, rather than £1 per song as before. A very similar change is going to happen with money and financial services,” says Leonhard.

In the not-too-distant future, transactions such as cross-border payments, small business and personal loans, and sharing the bill with friends, will be conducted within social networks and run by artificially intelligent systems. “Increasingly, things will be done by cloud apps and intelligent assistants. You won’t need the banks for that. It will be a boon for consumers,” claims Switzerland-based Leonhard.

Borrowing money
Forget going to a bank – soon you will turn to your friends and family, or those in your social network. The borrowing process will all be facilitated by digital platforms such as Facebook, Google, Alibaba and Baidu, divisions of which all have banking licences, so it’s not a question of if, but when. Currently, Leonhard says, this isn’t happening fast enough, but “within the next five years, low-level loans will be increasingly done via leading digital platforms”...

Car sharing and the rise of self-driving cars will eventually make motor insurance, as we know it, obsolete, says Leonhard.

“It’s very likely that you won’t need this kind of traditional insurance any more. The vehicles will be insured, not the drivers, and self-driving cars will have a greatly reduced accident rate. Manufacturers will bundle insurance into the car package, so you’ll always be insured,” he says. Of course, this month’s accident in the US in which a pedestrian was killed by a self-driving car has cast a cloud over the sector. But Leonhard says that as the technology gets better and cars aren’t used for racing around the city, “there will be very few accidents. Less accidents means lower premiums”.

Other types of insurance, such as for buildings, will be upended due to the “internet of things” (IoT). As homes begin to accumulate smart gadgets connected online, the chances of unexpected failures leading to fire, flood etc will diminish – and, as risk is reduced, premiums should fall. Or at least that’s the theory. With all the data available from the IoT, drones and so on, Leonhard says “an algorithm can either augment or even replace a human actuary and accurately predict the chance of a fire”.

Source: The Guardian

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