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business models, strategies and technologies

Fintech and the kill switch

The Car Finance Company simply kills your car if you don’t keep up the payments – what’d happen if this was a widespread payment model?

 The art of linking

One characteristic feature of many new business models capable of rattling the bars of established industries (avoiding using the dreaded  dis****ion word here!) is that they link together technologies and ideas probably already familiar, but not previously seen in a particular context.

Quid pro quo – kill switch on cars

Recent (July 2017) media attention in the UK drew my attention to The Car Finance Company, as just such an example – in this case of fintech meeting GPS-linked capabilities.

The open jaws of The Car Finance Company

In the UK, one of the commercial attractions of The Car Finance Company has been that they’re willing to dish up the dosh so that just about any Tom, Dick and Harry (or Harriet) can take out a hire-purchase agreement on the car they want, need or dream about. The whole web-based operation revolves around an online Car Finance Calculator, where the only information needed is the car’s registration number and the prospective owner’s date of birth. As a customer-centric service, it seems to sound great, well within our standard expectations about modern web-based services making things easier.

To make sure such lenders can recoup the loans they make – not least because they often target potential customers with low credit ratings, cleverly captured in their “we care about your future, not your past” slogan – they install “kill switch” devices, often for up to five years. These are small GPS units, usually installed behind a car’s dashboard. The ignition is rewired through the box so it can break the circuit and prevent the car starting should the customer fail to pay. (Apparently the box beeps if payments are due, with a ‘siren’ giving a 24-hour warning that the car will be immobilised. When a payment is made, customers are sent a code to enter by remote control.)

Forget the dirty details

On closer inspection, however, The Car Finance Company starts to look tackily doubtful as a business model. The company targets the financially weakest part of the market and charges gobsmackingly usurious interest rates of up to 49.6% APR. And there are (apparently) legislative data-protection issues with the box recording customers’ movements and safety issues.

But the details of The Car Finance Company and its controversial business practices are actually much less interesting than the link between fintech services and GPS-linked activation/de-activation capabilities, and the “big picture” opportunities this seems to present.

Two-way street for payment models

Imagine if there were a similar kind of “kill switch” that could be remotely activated on just about anything (mechanical, electronic, medical …) that you’d paid for. It’s almost the ultimate leasing model for the “use, not own” snowflake generation and their consumer siblings, with payment and availability zeroing in on the same moment in time. Pay and use – don’t pay and you have a dead lump of metal/plastic that won’t move, work or keep you alive.

Imagine what’d happen if you couldn’t get back into your house if you haven’t kept up the mortgage payments – or if you can’t pick up your children from daycare because you haven’t paid the taxes your local authority says you owe… It’d only take an ID scanner linked to an electronic lock on the front door of your child’s day care centre.

It’s certainly an interesting payment model for a huge range of mechanical and electronic devices/services.


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