Connect with us

Top Stories

How the rental industry can revolutionise to serve the gig economy

Published

on

How the rental industry can revolutionise to serve the gig economy

 By Tahir Farooqui, Founder & CEO, Canopy Rent

 In the UK the rental economy is booming, with the number of privately rented properties seeing an increase of 63% between 2007 and 2017. Furthermore, an additional 560,000 households are expected to be in private rental accommodation by 2023.

Today, that equates to a fifth of the population living in privately rented accommodation – that’s around 4.7 million households. This growth is partly driven by the increased cost of buying a home; rising house prices in the UK have outpaced salaries, with the average home (outside London) now costing  £230,292 (up from just £70,000 in 1998). That’s almost eight times more than the average salary of £29,588 a year. Due to this large expense, first-time buyers typically spend eight years saving to buy a home, with those based in London saving for an additional two years.

The rental industry’s current relationship with the gig economy

Despite the huge rental economy in the UK, the industry is still tricky to navigate for renters. In the last ten years digital transformation has impacted almost every industry and a number of technology-driven startups have sprung up in the proptech space, revolutionising everything from mortgages to property management. Buyers, landlords and estate agents have streamlined processes however, renters are yet to be provided with the same level of service.

Renting is extremely expensive and for gig-economy workers, the irregular income associated with part-time/frequently changing shift work means something as necessary as renting a home can become a challenge.

The average tenancy deposit in England is currently valued at £1,110 and, given the average wage in the UK is £29,588, an average renter based in England is expected to put down a deposit that is over half of their monthly income. Without a consistent ‘pay-day’, gig-economy renters are often classified as ‘high-risk’ and, as a result, asked to pay a bigger sum of money up front or seek a guarantor.

As the gig economy accounts for 4.7 million British workers, it is crazy that a flexible financial lifestyle has not been further taken into account. Using today’s technology, it’s possible to create a rental system that is financially beneficial for both renters and landlords in a way that generates and maintains financial security for all.

Deposit free renting 

Liberating gig-economy workers, young renters and those from disadvantaged backgrounds who cannot afford the over-the-top fees can be done ditching the deposit.

Rental affordability remains the number one priority for tenants when choosing a property. But renters are currently  expected to pay a deposit over five weeks rent before they are eligible to move into the property.

A recent poll found 40% of working age Britons have less than £100 in savings, with the proportion increasing to more than  50% in specific regional locations. Thus, many renters can be living paycheck to paycheck and a deposit of this size this can be prohibitively expensive. In worst case scenarios, renters can become trapped in unsuitable and substandard accommodation.

By offering renters the option of deposit protection insurance, the landlord is still covered for any damage or loss of rent (for a higher value than is covered by the traditional deposit) without the need for the renter to pay out a large lump sum at the beginning of their tenancy. This can enable renters to save some money – whether that is for a house deposit or just in case of a rainy day.

Open banking

One way the property industry can further streamline the process for renters is to harness disruptive technology available. One of these services is open banking – a service that provides third-party financial service providers open access to consumer banking, transaction, and other financial data from banks and non-bank financial institutions.

For the property sector, open banking brings with it the opportunity to re-set the precedent of incoherence that has been established by traditional processes. Currently landlords have to request and wait for paperwork such as bank statements, references and proof of previous addresses to be collated and sent by the renter. The validity of these documents must then be checked, which can mean renters wait weeks before they are allowed to move into a property.

Through the innovative technology of open banking,  it is now possible to automatically verify a renter’s income and past rental payments using their transactional history. Because data should belong to the person it concerns, renters can then access this on-demand and share it with different letting agents and landlords, should they want to. Not only does this speed up the process enabling landlords to make informed and fast decisions regarding a tenancy, it ultimately streamlines the rental  process for all parties involved.

Rent tracking

Other technologies can also help build financial resilience for renters. For example, rent tracking technology that records monthly rental payments and allows them to build up a credit history, ultimately improving their credit rating during the course of their tenancy. A strong credit score translates into higher savings for renters, with lower financing rates and better access to a range of financial products.

At the moment, the rental landscape does not cater for renters in the same way it does for landlords. The industry has a way to go, but the steps to getting there are exciting and revolutionary exciting time ahead of it, as old systems die and technology takes the reigns, the process of renting should and must accommodate flexible workers and those at a financial disadvantage. At the end of the day, every human being has the right to a safe roof over their head and the opportunity to build a better life and it is the responsibility of the industry to make sure it is fully equipped to do so.

Top Stories

Deloitte: Middle East organizations need to rethink their workforce in the wake of COVID-19

Published

on

Deloitte: Middle East organizations need to rethink their workforce in the wake of COVID-19 1

Organizations in the Middle East have had to take immediate actions in reaction to the COVID-19 pandemic, such as shifting to remote and virtual work, implementing new ways of working and redirecting the workforce on critical activities. According to Deloitte’s 10th annual 2020 Middle East Human Capital Trends report, “The social enterprise at work: Paradox as a path forward,” organizations now need to think about how to sustain these actions by embedding them into their organizational culture.

“COVID-19 has created a clarifying moment for work and the workforce. Organizations that expand their focus on worker well-being, from programs adjacent to work to designing well-being into the work itself, will help their workers not only feel their best but perform at their best. Doing so will strengthen the tie between well-being and organizational outcomes, drive meaningful work, and foster a greater sense of belonging overall,” said Ghassan Turqieh, Consulting Partner, Human Capital, Deloitte Middle East.

According to the Deloitte report, many organizations in the Middle East made quick arrangements to engage with employees in the wake of the pandemic through frequent communications, multiple webinars where senior leaders addressed employee concerns, virtual employee events, manager check-ins, periodic calls and other targeted interactions with the workforce.

The report also discussed how UAE and KSA governments have reexamined work policies and practices, amended regulations and introduced COVID-19 initiatives to support companies and the workforce in the public and private sectors. Flexible and remote working, team-building and engagement activities, well-ness programs, recognition awards and modern workspaces are among the many things that are now adding to the employee experience.

Key findings from the Deloitte global report include:

  • Only 17% of respondents are making significant investments in reskilling to support their AI strategy with only 12% using AI primarily to replace workers;
  • 27% of respondents have clear policies and practices to manage the ethical challenges resulting from the future of work despite 85% of respondents saying the future of work raises ethical challenges;
  • Three-quarters of leaders are expecting to source new skills and capabilities through reskilling, but only 45% are rewarding workers for the development of new skills; and
  • Only 45% of respondents are prepared or very prepared to take advantage of the alternative workforce to access key capabilities despite gig workers being likely to comprise 43% of the U.S. workforce this year according to the Bureau of Labor Statistics.

“Worker well-being is a top priority today, and similarly to the rest of the world, companies in the Middle East are focusing their efforts to redesign work around well-being by understanding workforce well-being needs,” said Rania Abu Shukur, Director, Human Capital, Consulting, Deloitte Middle East.

Continue Reading

Top Stories

One in five insurance customers saw an improvement in customer service over lockdown, research shows

Published

on

One in five insurance customers saw an improvement in customer service over lockdown, research shows 2

SAS research reveals that insurers improved their customer experience during lockdown

One in five insurance customers noted an improvement in their customer experience over lockdown, according to research conducted by SAS, the leader in analytics. This far outweighed the 11% of customers who felt it had deteriorated over the same period.

This is positive news for insurers during such challenging times, with 59% of customers also saying that they would pay more to buy or use products and services from any company that provided them with a good customer experience over lockdown.

The improvement in customer experience also coincides with a rise in the number of digital customers. Since the pandemic started, the number of insurance customers using a digital service or app has grown by 10%. Three-fifths (60%) of new users plan to continue using these digital services moving forward.

However, while the number of digital users grew over lockdown, half of the insurance customer base has not yet chosen to move to digital insurance apps or services.

Paul Ridge, Head of Insurance at SAS UK & Ireland, said:

“It’s impressive that there was a net improvement in customer experience during lockdown, despite the challenges the industry was facing with a transition to remote working and increased claims for things like cancelled holidays. While many were forced to wait on customer help lines for long periods, part of the improvement may be explained by even a small (10%) increase in the number of digital users.

“However, it’s clear that a huge number of customers are still yet to make the move online. It’s vital that insurers provide the most accurate, timely and relevant offerings to customers, and this is best achieved by having additional insight into online customer journeys so they can understand them better. Using analytics and AI, insurers can seize this opportunity to digitalise their customer experience and offer a more personalised approach.”

Meanwhile, for insurers that fail to offer a consistently satisfactory customer experience, the price could be severe. A third (33%) of customers claimed that they would ditch a company after just one poor experience. This number jumps to 90% for between one and five poor examples of customer service.

For more insight into how other industries across EMEA performed during lockdown, download the full report: Experience 2030: Has COVID-19 created a new kind of customer? 

Continue Reading

Top Stories

The power of superstar firms amid the pandemic: should regulators intervene?

Published

on

The power of superstar firms amid the pandemic: should regulators intervene? 3

By Professor Anton Korinek, Darden School of Business and Research Associate at the Oxford Future of Humanity Institute. Gosia Glinska, associate director of research impact, Batten Institute for Entrepreneurship and Innovation, Darden School of Business

Recent news that Apple hit a market cap of USD2 trillion highlights an extraordinary success story: A once struggling computer-maker on the verge of bankruptcy innovates its way to becoming the most valuable publicly traded company in the United States.

Apple’s 13-figure valuation is indicative of a larger trend that is not entirely benign — the rise of a handful of superstar firms that dominate the economy. Over the past three decades, advances in information technology, mainly the Internet, have supercharged the superstar phenomenon, allowing a small number of entrepreneurs and firms to serve a large market and reap outsize rewards. And COVID-19 has greatly accelerated the phenomenon by pushing us all into a more virtual world.

Apple — along with Amazon, Facebook, Google, Microsoft and Netflix — is a case in point. The combined market value of those six companies exceeds USD7 trillion, which accounts for more than a quarter of the entire S&P 500 index. Even amid the pandemic’s economic wreckage, these megacompanies continue to prosper. The combined share price for Apple and its five peers was up more than 43 percent this year, while the rest of the companies in the S&P 500 collectively lost about 4 percent.[1]

Superstar firms can be found in almost every sector of the economy, including tech, management, finance, sports and the music industry. They command increasing market power, which has consequences for technological, social and economic progress. It is, therefore, critical to understand how their advantages arose in the first place.

THE FORCES BEHIND THE SUPERSTAR PHENOMENON

The “economics of superstars” was first studied by the late University of Chicago economist Sherwin Rosen. Forty years ago, Rosen argued that certain new technologies would significantly enhance the productivity of talented workers, enabling superstars in any industry to greatly expand the scope of their market, while reducing market opportunities for everyone else.[2] Digital innovations, including advances in the collection, processing and transmission of information, is what Rosen envisioned would lead to the superstar phenomenon.

Digital technologies are information goods, which are different from the traditional, physical goods in the economy. What it means is that fundamentally different economic considerations apply. Unlike physical goods — a loaf of bread or a car — information goods have two key properties: They are non-rival and excludable. Non-rival means that something can be used without being used up. Excludability means that an owner of digital innovation can prevent others from using it, by protecting it with patents, for example. These two fundamental properties of information goods are what give rise to the superstar phenomenon.

In a working paper I co-authored with Professor Ding Xuan Ng at Johns Hopkins University[3], we described superstars as arising from digital innovations that require upfront fixed costs that allow firms to reduce the marginal costs of serving additional customers.[4] For example, once an online travel agency has programmed its website at a fixed cost, it can easily displace thousands of traditional travel agents without much additional effort, scaling at near-zero cost.

Because a firm can exclude others from using its digital innovation, it automatically gains market power. The innovator then uses that power to charge a mark-up and earn a monopoly rent — basically, a price superstars charge in excess of what it costs them to provide the good — which we call the ‘superstar profit share’.

THE POLICYMAKER’S DILEMMA

In a vibrant free market economy, businesses compete for customers by innovating and improving their offerings while keeping prices low; otherwise, they are displaced by more innovative rivals entering the market. Unfortunately, the increasing monopolization of the economy by technology superstars is weakening the competitive environment around the world.

Monopoly power is the main inefficiency from the emergence of superstar firms, because superstars can exclude others from using the innovation that they have developed.

So, what policy measures can be employed to mitigate the inefficiencies arising from the superstar phenomenon?

We do have antitrust policies designed to promote competition and hence economic efficiency. Authorities could take a drastic measure and break up monopolies. Or they could tax all those excess profits megacompanies make.

Another policy to consider involves giving consumers control rights over their data. Right now, only companies have that data, and they are selling it. If you free it up and don’t allow them to sell it anymore, it reduces their monopoly profits. And if you give consumers more freedom over their data, they could, for example, share it with the latest start-up and create a more competitive landscape.

However, such policy remedies can be a double-edged sword. On the one hand, they reduce monopoly rents. On the other hand, they can also reduce innovation.

Innovation requires investments in R&D, which represent a significant sunk cost that only large firms can afford. Government regulations can easily backfire, discouraging large firms from making long-term R&D investments.

What, then, is the best policy intervention? Professor Ding Xuan Ng and I believe that basic research should be public. Digital innovations should be financed by public investments and should be provided as free public goods to all. This would make the superstar phenomenon disappear, and the effects of digital innovation would simply show up as productivity increases.[5]

We live in a brave new world that is increasingly based on information. Because the information economy is different from the traditional economy, antitrust policy should be revamped to reflect that. Instead of worrying about the economy being eaten up by these gigantic monopolies, policymakers need to focus on the question ‘What specific actions can we pursue to make the economy more competitive and efficient?’

Continue Reading
Editorial & Advertiser disclosureOur website provides you with information, news, press releases, Opinion and advertorials on various financial products and services. This is not to be considered as financial advice and should be considered only for information purposes. We cannot guarantee the accuracy or applicability of any information provided with respect to your individual or personal circumstances. Please seek Professional advice from a qualified professional before making any financial decisions. We link to various third party websites, affiliate sales networks, and may link to our advertising partners websites. Though we are tied up with various advertising and affiliate networks, this does not affect our analysis or opinion. When you view or click on certain links available on our articles, our partners may compensate us for displaying the content to you, or make a purchase or fill a form. This will not incur any additional charges to you. To make things simpler for you to identity or distinguish sponsored articles or links, you may consider all articles or links hosted on our site as a partner endorsed link.

Call For Entries

Global Banking and Finance Review Awards Nominations 2020
2020 Global Banking & Finance Awards now open. Click Here

Latest Articles

Data Unions, fisherfolk and DeFi 4 Data Unions, fisherfolk and DeFi 5
Finance4 hours ago

Data Unions, fisherfolk and DeFi

By Ruby Short, Streamr In the fintech world it seems every month there’s a new trend or terminology to get...

Deloitte: Middle East organizations need to rethink their workforce in the wake of COVID-19 6 Deloitte: Middle East organizations need to rethink their workforce in the wake of COVID-19 7
Top Stories4 hours ago

Deloitte: Middle East organizations need to rethink their workforce in the wake of COVID-19

Organizations in the Middle East have had to take immediate actions in reaction to the COVID-19 pandemic, such as shifting...

One in five insurance customers saw an improvement in customer service over lockdown, research shows 8 One in five insurance customers saw an improvement in customer service over lockdown, research shows 9
Top Stories4 hours ago

One in five insurance customers saw an improvement in customer service over lockdown, research shows

SAS research reveals that insurers improved their customer experience during lockdown One in five insurance customers noted an improvement in...

ECOMMPAY expands Open Banking payments solution to Europe 10 ECOMMPAY expands Open Banking payments solution to Europe 11
Finance5 hours ago

ECOMMPAY expands Open Banking payments solution to Europe

Open Banking by ECOMMPAY facilitates fast, secure and simple payments  International payment service provider and direct bank card acquirer, ECOMMPAY, has...

Bots Are People Too: Robotic Process Automation in Finance 12 Bots Are People Too: Robotic Process Automation in Finance 13
Technology5 hours ago

Bots Are People Too: Robotic Process Automation in Finance

By Tom Venables, Practice Director – Application & Cyber Security at Turnkey Consulting As technology has advanced, Robotic Process Automation...

The power of superstar firms amid the pandemic: should regulators intervene? 14 The power of superstar firms amid the pandemic: should regulators intervene? 15
Top Stories5 hours ago

The power of superstar firms amid the pandemic: should regulators intervene?

By Professor Anton Korinek, Darden School of Business and Research Associate at the Oxford Future of Humanity Institute. Gosia Glinska, associate...

How to drive effective AI adoption in investment management firms 16 How to drive effective AI adoption in investment management firms 17
Technology5 hours ago

How to drive effective AI adoption in investment management firms

By Chandini Jain, CEO of Auquan Artificial intelligence (AI) has the potential to augment the work of investment management firms...

Democratising today’s business software with integrated cloud suites 18 Democratising today’s business software with integrated cloud suites 19
Technology6 hours ago

Democratising today’s business software with integrated cloud suites

By Gibu Mathew, VP & GM, APAC, Zoho Corporation Advances in the cloud have changed the way we interact with...

Why the UK is standing tall at the forefront of fintech 20 Why the UK is standing tall at the forefront of fintech 21
Top Stories6 hours ago

Why the UK is standing tall at the forefront of fintech

By Michael Magrath, Director of Global Standards and Regulations, OneSpan In recent years, the UK has established itself as one...

How CFO’s can Help Their Businesses Successfully Navigate The Financial Fallout From COVID-19 22 How CFO’s can Help Their Businesses Successfully Navigate The Financial Fallout From COVID-19 23
Top Stories1 day ago

How CFO’s can Help Their Businesses Successfully Navigate The Financial Fallout From COVID-19

By Mohamed Chaudry, Group CFO of FoodHub 2020 has been one of the toughest years in recent memory for business....

Newsletters with Secrets & Analysis. Subscribe Now