This was a very interesting read, thank you! While I’ll continue to be a luddite and go to grocery stores and farmers’ markets well into the future, I’m the last one among my housemates who’s resisted the pull of Instacart (a start-up that allows customers to choose their groceries through a mobile app and have them delivered within an hour or two). I wonder if supermarkets will all need to build their own logistics networks in the future, or if they will eventually all need to partner with the few surviving intermediaries to provide delivery services, lest they be disintermediated by Amazon.
Interesting read Chad! I hadn’t heard of Pono before your post, and am skeptical like Amit above that it will ever be anything other than a niche product for those who want more than Spotify but can’t commit to traditional media. For the hardcore audiophiles, like Josefin above and others, the reemergence of vinyl (an “ancient” analog technology) seems to be the major trend in the space — vinyl record sales recently hit a 28-year high. Additionally, certain high-end classical record labels, most notably the Mariinsky, are making use of new technology to record higher-quality CDs and remaster historical recordings (although some purists feel that this creates “too clean” or scrubbed a texture — for some, the crackle of a record is a timeless sound).
Interesting post Vicente! While I agree that La Caixa (and all traditional banks) must accelerate their efforts to adapt to the digital world and compete with FinTech startups, banks do have one major advantage over these players: their low-cost deposit funding, which will always give them a leg-up on their net-interest margins when they make loans. Ultimately, even if customers use services like Venmo or Paypal to transfer money, these funds are still coming from one bank’s deposits into another’s. Banks are then able to use these low-cost deposits (where they are paying ~0% interest to depositors), to turn around and make loans at higher rates. While yes there is the potential for credit card interchange fee revenue to be disrupted by services like ApplePay and SamsungPay, because the regulatory environment is so stringent, licensed banks should be able to use their ability to take deposits cheaply and make loans at higher rates sustainably into the future.
Great post David! I’ve also been following M-Pesa for a couple years now, and totally agree that it’s been an incredible tool to expand access to financial services and as a result, quality of life, for rural Kenyans. Another step that M-Pesa has recently taken is to allow remittances to tap into cash flows back to Kenya from its diaspora around the world. Through partnerships with companies like WorldRemit and HomeSend, M-Pesa is able to capture part of the $862 million remittances sent from abroad back home to Kenya annually. Coincidentally, I had a great conversation with a Kenyan Uber driver I had last week, who said that he’s been using the service to send money back home to his family!
Very interesting post, Fangfang! China is such a fascinating case study of mobile enablement of financial services leapfrogging cards and the integration of payments into social/chat, something that Facebook and others are only just beginning to explore here in the US. Another area Tencent’s incredible user base (~700 million users!!) presents the opportunity to monetize is credit reporting. Because so many merchants have connected payments through TenPay, Tencent now has access to a wealth of payment behavior data between its users and these merchants, which could be analyzed to form credit scores. China currently lacks a reliable private sector credit bureau (the People’s Bank of China’s bureau has data on only 300 million Chinese); using its data, Tencent has begun building credit files for its customers, and is one of eight private companies who received permission from the government to do so. Unfortunately, the government currently restricts private credit bureau operators from using their own data to extend credit to their own customers, but should the law be relaxed on this front, Tencent would have an opportunity to begin providing loans to its customers through WeChat or TenPay.
Brandon — great post, well-written! It’s always encouraging to read about dedicated non-profit organizations that are working to preserve ecosystems and wildlife around the world. However, it’s equally disheartening to learn of the free rider problem that continues to drive the destruction of common goods with no “market value” attributed to them. Obviously as a non-profit, the National Wildlife Federation doesn’t have any direct jurisdiction or control over regulation or designating predicted areas or species. It would be great to further explore what steps the organization is taking to influence or lobby governments in order to shape actionable regulation in individual countries or at the supranational level.
NY777, very interesting and well-written post! While I totally agree that a supranational organization like the World Bank has unique ability to transcend regional and country-specific squabbles in order to fund projects that would benefit the whole world, I do think that it will be difficult for the World Bank to ultimately separate itself from driving the agenda of its largest contributor nations (i.e. the US & Japan). I also worry that separate funding from the World Bank won’t help to overcome the major disputes that developing nations (who are bearing the brunt on two fronts: being hit the hardest by the impacts of climate change that was primarily caused by carbon emissions by the developed world, while also potentially being forced to bear the cost of growing an economy with less carbon-intensive forms of energy) have with developed ones who are trying to reign in global carbon emissions more quickly. There’s a question of fairness on who should be bearing the financial cost of climate change abatement initiatives, and while the World Bank’s plans could certainly help get projects off the ground, ultimately the financed loans will need to be repaid, by someone…
Great post Patrick! As the author of a post about the carbon footprint of cardboard packaging, this was very illuminating. While companies in general have made strides to rightsize packaging, the significant growth of e-commerce (of which Amazon is a not insignificant percentage!) has continued to drive demand for cardboard packaging, and because of the durability requirements, packaging can’t be made from 100% recycled material, and so requires the cutting of new trees. This certainly drives my guilt every time I take my recycling out for the week.
It’s encouraging to see Amazon making an effort to reduce the amount of packaging and ensuring that it is all 100% recyclable, but I worry that our insatiable consumerism will only continue to exacerbate the problem. I wonder if there are ways Amazon can incentivize more eco-friendly consumer behavior like they’ve already begun to do with $1 credits on music/digital media for “no-rush” shipping, doing something similar to encourage customers to “batch” several products from a basket into a single box. I understand that there may be logistics issues if the three or four items in a customer’s basket are from different sellers, but I’m sure there is some optimization that could be done. I’ve often ordered several items at once, only to have them arrive at my house, each in their own separate boxes…
Great post, JFW! Your post hits the nail on the head with respect to the hopelessness and short-sightedness of the political gridlock that is blocking significant progress on not only climate change mitigation initiatives, but infrastructure investment in general in the US, with NYC and the MTA as a metaphor for the whole planet. It also strikes a personal nerve for me, as someone who rode the MTA almost every day for the last three years, and whose neighborhood and subway train will bear the brunt of the nearly 200,000 displaced L-train riders, who will be forced to look for other transit options as the tunnel that the train runs in is closed for 18-months to repair residual damage from Sandy with the last of NY’s Sandy-related FEMA funds.
I disagree with EBS’s assertion above that federal and state governments are unwilling to help NYC because of its party-leanings, and see the lack of progress more as a result of the fact that no imminent risk exists (and FEMA funds will be there in that emergency case) and since governments are constantly making trade-offs between projects for which they never have enough funding, critical long-term improvement projects are frequently delayed until the last possible moment or crisis point. There are a couple different solutions that I would suggest further exploring:
– Whether NYC could raise additional funds for transportation projects through increasing tolls on existing bridges/tunnels or adding tolls on bridges in the city (e.g. all the East River bridges) that are not already tolled. This would place an increasing burden on car drivers to absorb some of the cost of the negative externality of climate change that they are contributing to by driving fossil-fuel powered cars.
– Whether private-public partnerships or an entirely private investment (enticed by tax incentives) could be used to drive faster progress on this issue. NYC has already begun to explore these options as solutions to its affordable housing crisis, by permitting rezoning for private real estate development projects that allot a certain percentage of their buildings to affordable or middle-class housing.
JM – great post! I thought you highlighted very well the negative impacts that climate change poses to MunichRe’s business model and their efforts to mitigate these effects. I also totally agree with RYR’s comment above that the reinsurance and insurance industries are fairly lucky in that the risk of climate change could actually be a significant driver of future business opportunities, but like every business, they will be forced to adapt to the new warming world.
You’re right that more uncertainty in underwriting models will increase the risk of losses to the insurer, but climate change will also provide a unique increased opportunity for insurers to write increased coverages and extract higher premiums on existing policies (e.g. flood or hurricane risk in coastal areas) or expand entire new lines of business that may arise as climate change threatens businesses and consumers in new ways and they seek to be covered for these risks.
I also thought your point about the growing catastrophe bond market was interesting and validated some trends I observed in my pre-MBA job. I was investing in early-stage financial services businesses and came across several entrepreneurs pitching innovative new structures for insurers and reinsurers to manage, price, and trade risk, including cat bonds and other insurance-linked securities. While risk might be increasing, these new securities provide insurers with the opportunity to diversify their balance sheets by selling all or parts of the risk that they underwrite to investors, allowing the industry to grow in a less capital-consumptive manner, giving reinsurers and insurers some relief on their capital cushions and the room to write more premiums.