Are you ready for FriendsEconomy?

This blog post is triggered by an article in the Norwegian business newspaper DN last week. Not so much because the technology or business model is unique, but because the name “tribe” is brilliant. We are about to get used to sharing economy and companies like Airbnb, Uber and some thousands other where you share all kind of assets and things with people you do not know, most often for a payment.

I guess you have heard about the German bank Fidor Bank. If you have your loan with them and you “like” what they post on Facebook, you interest rate on your loan will be lower. If you manage to generate for example 500 likes, your interest will be 0,1% lower for a period, if you manage to generate some thousands “likes” your interest rate will be 0,2 % lower for a period. The more “likes” you generate the lower is the interest rate, down to an agreed upon floor. The same is with total number of “likes” for the bank, if it is high - the interest rate on deposit is high for a period. The logic for the bank is that each person on Facebook have 400 friends in average, and one likes generate 400 potential new customers, and if they also “like”, the number becomes 160 000. That’s why Fidor Bank’s marketing budget is extremely low.

My trigger this time was "tribe". A new insurance company in Norway. If you and your friend sign insurance with the company and NONE of you have any accident or insurance payout for a period, your insurance cost will be reduced year by year. But if you or your friends have insurance pay out, the premium will be higher for all of you.  The insurance company Tribe claims this will generate only “good” customer to the company, a good business model, but also advantages for their customer as long as there is no claims.

This business model is not at all new, only not well known, and it will spread more and more into the financial and banking sector. The trend within insurance more or less started in Germany in 2010 with the Friendsurance operated by Alecto GmbH in Berlin. It spread to companies like German R+V and British Guevara and So-Sure.

Some of these groups of friend gather as group on Facebook pay into a shared bank account. Some of the amount is paid to the insurance company. If claims within the group is less than the amount shared, they payout goes from the shared bank account. But if claim is more than on the bank account, payout goes from the insurance company – a kind of reinsurance service for the group of friends.  If the balance on the shared bank account is not used by end of the year, it is repaid to the group of friends.

The trend here is to utilize on good friends and stay away from bad friends (or unlucky friends), at least when it comes to insurance and finance.

Picture by : Le Moustier Neanderthals by Charles R. Knight (1920)