EXCLUSIVE: “Moving On” – Alex King in “The Fintech Magazine”
Alex King explores how mobility as a service can be transformed into a broader embedded concept
Back in 2007, the revamped Eurostar line between London and Paris was unveiled. The £6 billion project, which included the revival of London’s St Pancreas terminus, would shave 40 minutes off journey times between the European capitals. This was money well spent, according to the organizing stakeholders, who expected a 25 percent increase in the number of travelers before the end of the decade. But when that promise failed, the project’s value for money was called into question.
As behavioral economist Rory Sutherland has noted, for a tenth of the project’s budget, Eurostar could have hired all the world’s best male and female supermodels to patrol the train handing out free Château Pétrus, and people would have demanded that the trains slow down. Here, Sutherland hits on the key question that has always plagued the mobility sector. People do not choose their mode of transportation based solely on each trip’s cost and duration, but on a variety of factors that in today’s world include COVID safety, relative emissions, and even how the trip makes them feel.
It’s a truth well understood by MaaS Global, a mobility software developer that launched its app, Whim, in 2016. The Whim app connects users to all options in an urban transportation network—including trains, trams, buses, taxis, bicycles, and e -scooters – via a pay-as-you-go model or a monthly subscription. The stated goal of the app is to “create a world where you don’t need to own a car to live a fulfilling life”, recognizing that easy access across all platforms to the full range of a city’s mobility options is enough to push users away from their private vehicles.
It is no wonder that the concept of “mobility-as-a-service” (MaaS) was forged in Finland, where there are an estimated nine cars in use for every 10 people. The average in the EU is closer to five cars per 10 people. Whether informed of Helsinki’s traffic hell or not, Whim has ambitions to take a million cars off the roads by 2030, and found in a 2021 poll that 12.5 percent of Finnish users had already gotten rid of their car, or avoided buying one, please. to the app.
Whim was launched in Birmingham in 2018, and has since expanded to several other European cities. It is also present in Japan and Singapore, and was hailed as the “Netflix of public transport” by Singapore’s press shortly before its launch in the city-state. Like Netflix, Whim’s service is about offering choice, on demand. And like streaming services, Whim relies on tech partners to make its offering as attractive and convenient as possible, including when it comes to easy payments. In 2020, Whim bet on issuing a card that can be used together with the app.
“81 percent of respondents believe they would prefer to use a single app or platform for ordering and invoicing all mobility-related services. By 2030, every journey will be a personal experience”
The MaaS pioneer found a natural partner in Enfuce, the Helsinki-based card-as-a-service (CaaS) fintech, also founded in 2016. Both firms are confident that frictionless services, offered with frictionless payments, can be the incentive that consumers need to finally ditch their private vehicles. Underpinning the entire MaaS movement is the understanding that a real change in our mobility habits will only take place when public transport becomes a genuine alternative to cars – not just in terms of price and journey time, but in terms of simplicity, ease of use and reliability. No one understands this better than David Hensher, founding director of the Institute of Transport and Logistics Studies at the University of Sydney and a pioneering MaaS scholar.
“MaaS will only have a future if it changes the travel behavior of a sufficient number of people,” he told Mobility Payments. Having worked closely with MaaS Global and overseeing the use of the Whim app in various jurisdictions, he believes that MaaS approaches should now move onto a new track to appeal to more people.
At the moment we don’t see it anywhere in the world [MaaS] products get people out of their cars in some significant way, he said.
Sampo Hietanen, founder and CEO of MaaS Global, recently charted the evolution of his thinking in a LinkedIn post.
“We tend to be a bit arrogant in this industry, thinking that things will integrate with us. It just might work better if mobility is built into every other service. “If you think about mobility from the user’s perspective, is it there to support the real things of value. These things are at the destinations. So it’s obvious to make mobility a part of every offer out there.”
What he gets at is the need for services like Whim to not just be a Pandora’s box of travel options, but to wrap themselves around experiences – like going on a city break or traveling to a wedding – in such a way as to make those experiences more satisfying. This “second-generation” MaaS approach was recently explored in a report by consulting firm BearingPoint. Encouragingly for Hietanen and Whim, their Destination 2030 study found that 81 percent of respondents believe they would prefer to use a single app or platform to order and bill for all mobility-related services by 2030. Echoing Hietanen’s thoughts, the report’s headline prediction is that by 2030 every trip will be a personal experience.
“The time people spend traveling will increasingly be used as productive time for other activities that can be accessed online – shopping, entertainment, household management – enabling more service providers from different sectors to earn revenue.”
Note that these are activities that cannot be performed while behind the wheel of a car. So the MaaS market is in a state of flux about the future. On the one hand, two “black swan” events have arrived like London buses this decade: the COVID pandemic and the ongoing energy crisis created by the war in Ukraine. They have upgraded the market. On the other hand, MaaS is a newly started, active research area. Despite early successes, it is still finding its feet, its business model and its customers. As recently as July 2022, a study by BIS Research estimated that the MaaS market would generate $379.66 billion in revenue by 2031, with a CAGR of 25.7 percent. That’s almost a tenfold increase from the $39.23 billion in revenue the market generated in 2021.
These projections take into account increased urbanisation, sky-high costs, environmental concerns and planned infrastructure projects. The Destination 2030 report provides a glimpse of the facilitators that will take us from these global megatrends to global habit changes. It recognizes that policy and legislation will play a role, for example in the phasing out of domestic flights. It suggests new insurance models and new integrated payment services, and suggests a role for energy companies and the automotive industry as well. All of this is to say that there are a lot of moving pieces, but they seem to be coming together. MaaS Global, meanwhile, isn’t waiting for the platform and staring longingly down the tracks.
Whim and its founder are busy building the platform, scaling the box office and exploring partnerships that tap into the sentiment of Rory Sutherland: that we are irrational creatures and that we make decisions based as much on our feelings as on facts. Eurostar will eventually meet its passenger volume ambitions in 2019, welcoming 11 million passengers between London and Paris. In a cruel blow, the following year would see a 95 percent reduction in traffic due to pandemic travel restrictions.
The service is still far from a full recovery, with its future hanging in the balance. Nevertheless, Eurostar, together with Europe’s Interrail ticket, is a symbol of successful cooperation across borders, systems and services, making mobility easier for European travellers. A huge undertaking with lofty ambitions, it also shrugged off naysayers to prove that what really counts in mobility is the connection. What Eurostar achieved on a continental scale is now taking place in the big city, with trailblazers such as Whim positioned to drive this growth market.
All trends point to a future where MaaS conquers global transport, spreading between cities, then countries and then continents. It is a future where every door-to-door journey can be planned and purchased through a single app. In this future, you expect, Eurostar will cement its role as a simple, seamless and sustainable way to travel between the British Isles and the European continent on.
This article was published in The Fintech Magazine issue 26, pages 13-14
