Be a ‘Disruptor’ – and save cash with high-tech upstart brands
No, they aren’t sci-fi stars in a computer game – but these new businesses do have the power to cut your bills... from hailing a taxi to selling a home
‘I’ll get an Uber’ trips off the tongue as easily as ‘I’ll call a cab’, confirming how upstart operations are now disrupting traditional businesses. From travel and holidays to property and finance these ‘disruptors’ threaten the stranglehold of incumbents by smart use of technology. SALLY HAMILTON shows how the winners are consumers who enjoy convenience and more competitive prices.
HIRING A CAB OR SHARING A CAR
THE Uber minicab app has made hailing a taxi simple when there isn’t one in sight, as well as chopping cab bills for millions of travellers in cities such as London, Birmingham and Manchester.
Passengers who sign up on a smartphone are connected to background-checked, private drivers who pick them up where they want, on average within three and a half minutes of booking. Payment is taken automatically from a preregistered credit or debit card – so there is no scrabbling around for cash at the destination. Drawbacks include passengers not being able to book far ahead – for example, holidaymakers wanting a car to the airport tomorrow. And if you choose a busy time to hail an Uber on the app, ‘surge’ pricing may apply that can push up the cost of the fare.
Drivers must take out their own insurance – but if it transpires they have none following an accident then Uber has back-up cover.
Uber and its ilk are part of a ‘people-powered’ revolution in transport that has spread to car sharing, lift sharing and even parking.
Digital marketing executive Debbie Cass is a big fan of Uber and uses it regularly for both work and play.
But she likes another disruptor of the transport business even better – car sharing business BlaBlaCar.
The 27-year-old from New Cross Gate, South-East London, uses the service to take her to Truro in Cornwall, where her partner Liam works as a hospital doctor.
She says: ‘Relocating to Cornwall is not feasible for me so we visit each other as much as possible at weekends.’
But the sky-high cost of rail or air travel was a serious hurdle so they hunted round for other options. Debbie says: ‘Liam tried BlaBlaCar first as I was a bit nervous. But he had no problems so I felt comfortable having a go.’
Debbie searched its website, which presented drivers planning to make the journey she wanted and included names and profiles and even how chatty they were. Debbie booked and paid £20 in advance (£2 of which went to BlaBlaCar) to travel the 300 mile, five and a half hour journey from Truro to London with a woman called Helen, who lives in Cornwall at weekends but commutes weekly to the capital by car.
Debbie says: ‘The train can cost more than £100 return. But with car sharing you save a fortune and have company all the way.’
Debbie sometimes drives her own car, often taking three customers with her. ‘That covers all my fuel costs and then I have a car down there. They have always been friendly people.’ She also likes the fact she can choose to share only with other women if she wants.
The company says it aims to build a more efficient and social form of transport by making use of Britain’s empty car seats – the average occupancy is 1.6 but for those using BlaBlaCar it is 2.8. Drivers do not need extra insurance because they are just covering costs and not making a profit from their passengers, although it is worth checking with their existing insurer. BlaBlaCar also offers free breakdown cover when the ride is being shared.
Car clubs, where people pay to use cars when they need them rather than commit to ownership are also growing in popularity. Mark Walker, general manager of Zipcar UK, which has 155,000 members in London, says: ‘Disrupting a market can help consumers save money by accessing goods and services in a different way. This is made simple by today’s technology. It not only saves money, but frees them from the hassle that comes with owning a car.’
Membership of Zipcar, which operates in London, Bristol, Oxford, Cambridge and Maidstone is £59.50 a year or £6 a month and costs £6 an hour to use, including insurance, fuel and, for London users, the congestion charge.
Customers can usually find a car within a five minute walk and unlock it with a special card.
TOP DISRUPTORS: Try car and lift sharing with BlaBlaCar, City Car Club, GoCarShare, Liftshare. Cut taxi costs with Gett, Hailo, Kabbee, Minicabster, Uber. Beat expensive car parking fees by sharing someone’s drive or garage: JustPark, ParkLet, Park On My Drive, YourParkingSpace.
BOOKING A HOLIDAY
AIRBNB has taken the travel market by storm by putting more power in the hands of holidaymakers. It is now easy to book accommodation direct with homeowners renting out spare rooms or properties for short periods all over the world. By cutting out agents and offering social networking feedback most holidaymakers can book more cheaply – and with confidence.
If the owner reneges on a deal, Airbnb will refund payment.
Swapping houses is another way of sidestepping high holiday bills. Pay an annual membership fee of £100£150 to one of many property exchange agencies and it is possible to swap your home with other members at no extra cost.
TOP DISRUPTORS: Chop accommodation bills with Love Home Swap, HomeLink, HomeExchange, HouseTrip, Roomorama. Boost holiday spending money: WeSwap allows holidaymakers travelling in different directions to exchange currencies privately for a flat fee of as little as one per cent (more if needed within a week), cutting out banks and bureaux de change.
BANKING AND SAVING
UPSTARTS are working hard to subvert dyed-in-the wool banks and building societies with modern branch-free approaches. They are shaping up to offer internet-only banking, whether for savings, home loans or current accounts.
Aldermore and Shawbrook focus on savings or mortgages, while Atom, Starling and Mondo, which are still in the planning stages, hope to take on the current account mar- ket. They say their leaner business models mean they could offer better service and deals.
Ann Boden is chief executive of Starling Bank and hopes to gain a banking licence by the end of this year to launch a current accountonly operation in 2016. She says the bank is targeting smartphone users wanting to do their everyday banking on the move.
Boden says: ‘We want to help customers understand their financial life better. People already do a lot of mental accounting so they can survive the month financially. We hope we can help them manage that better, such as alerting them if their money looks like it is running out before the end of the month.’
Mediocre savings rates have also turned the spotlight on Peer-to-Peer (P2P) lenders. Devised a decade ago these online providers allow savers to ‘lend’ money direct to individuals or businesses at a rate they choose without the anonymous (and pricey) middleman of a bank or building society.
Demand for all types of P2P has soared, with funds invested doubling from £666million in 2013 to £1.74billion in 2014, according to a recent report by innova- tion charity Nesta and the University of Cambridge.
No wonder, when rates earned are up to six per cent for lending to individuals – eight times the amount paid on the average instant access savings account – and significantly more if lending to businesses. A drawback is the Financial Services Compensation Scheme offers no protection if a provider goes bust.
Anna Heaton, 27, from Battersea, South-West London, is saving monthly through P2P lender RateSetter, earning 2.9 per cent. She says: ‘I was tempted by a three-year fixed rate of 5.5 per cent available but I don’t want to tie up my money long term as I may need access to buy a property with my partner Peter. But the rate is much better than I can get from my bank.’
Anna, says: ‘I’m a fan of disruptor services and regularly use Uber for taxis, Amazon for shopping and Rightmove for househunting. I recently returned from a lovely holiday in Sardinia where we booked a villa with private pool and breakfast through Airbnb – all for £518 for the week for both of us.’ TOP DISRUPTORS: You can beat poor savings rates by turning your attentions to Zopa, RateSetter, Lending Works, Funding Circle, ThinCats, Landbay, Abundance Generation, Trillion Fund. Ditch the traditional high street banks for Aldermore and Shawbrook and – coming soon – Atom, Starling and Mondo.