Since the mid 20th century, consumerism has grown into a powerful force driving economic growth all around the world. Consumer spending was generally seen as positive but in the 1980s when over consumption and greed started to become more socially prevalent, people began to question whether things were getting out of hand. Soon, people were more aware of the dangers of conspicuous consumption (such as getting into more and more debt) and worried that the pool of resources were not infinite.
While people were starting to become more aware of their overspending, there was not the urgency to curb spending until the economy began showing cracks in the new millennium. By the 2008 recession, consumers were looking for ways to share the burden of ownership and businesses were started to address that need.
From Shared Cars to Shared Spaces
Rachel Botsman and Roo Rogers, authors of the 2010 book, “What’s Mine Is Yours: The Rise of Collaborative Consumption” identified three systems that illustrates collaborative consumption in today’s economy:
1. Product Service Systems
This is the way to avoid collecting too much stuff. Instead goods can be shared or rented across a group of people. Each person gets the benefit of enjoying the product or service without the (higher) cost or upkeep of full ownership. An early example of this approach would be time share properties and in many cities today, car and bike share programs.
2. Redistribution Markets
Add another “r” to the list. Like recycling or reusing, people are now taking their used or pre-owned products and giving it away for free, selling it, or swapping it for something else. eBay or craigslist are examples of redistribution platforms
3. Collaborative Lifestyles
In this system, people with similar needs or interests come together to share and exchange time, space, skills, or money. Shared workspaces, like Toronto’s Centre for Social Innovation have become popular alternatives for entrepreneurs. Peer-to-peer systems such as the UK based Zopa lending group provides an alternative to banks; and travel stay options offered by Airbnb allows travelers to bypass hotels.
According to an in-depth report published by Vision Critical and Crowd Companies called “Sharing is the New Buying” (March 2014) 24% of the population (in North American and the UK) have engaged in some aspect of collaborative consumption and almost half of these consumers are Millennials. This is not a fad. With the many ways in which collaborative consumption is influencing the economy, traditional companies need to step back and assess what they are doing to address the consumers’ desire to own less and share more.
Implications and Opportunities: A Glance at Consumer Banking
Some industries have been affected by collaborative consumption more so than others. With automotives and travel, new players have forced the traditional players to reassess their growth opportunities and revenue models. With peer-to-peer lending, consumers can bypass the financial intermediary and access the much desired funds with less hassle.
If peer-to-peer lending groups grow to become a more viable alternative to banks and credit unions, would the traditional players’ hands be tied? I think not, rather, they should look at their value proposition and ensure it’s aligned to the needs of customers. Credit unions are in a particularly advantageous position to reap the upside of collaborative consumption. There is already a cohesive glue – the membership – that unites credit union customers with each other, making it a platform primed for collaborative sharing. Furthermore, with the co-operative model of credit unions, working together should be seamless, and it creates another system for sharing of resources at the organizational level. Just as individuals are looking for more inventive ways to stretch what they own or gain access to things they don’t own, credit unions can and should do the same.
This is a creative commons image courtesy of Paolo Bellesia