Mobility As A Service in the US – Who’s the Bank?

Burney Simpson

The time seems right for Mobility as a Service (MAAS). Travelers are looking to cut costs, congestion, and the bother of owning a vehicle. And autonomous technology and driverless vehicles could bring costs down so MAAS would be affordable for the masses.

A successful MAAS program will need a mix of transportation providers like public transit, privately-held firms like Uber and Lyft, shuttle and bus services, bike share programs, traditional taxi firms, car-share outfits like car2go, and others depending on the metro area.

But any MAAS project will also need three behind-the-scenes providers to grease the wheels.

Those are an app creator, a data analyzer, and a bank, said Tim Papandreou, director, Office of Innovation, San Francisco Municipal Transportation Agency.

“You need an entity that can create and maintain the app, (and an entity) to gather and analyze the data so transportation options are continually updated and improved, to meet customer needs and offer incentives,” said Papandreou. “Third, (there’s the entity) that will act as a payment facilitator. It will send money to the transportation provider.”

A single payments firm is essential, said transportation consultant Carol Schweiger.

“You pay one entity for all these services or else the concept won’t work. You can’t have users paying multiple providers,” said Schweiger, president of Schweiger Consulting.

Schweiger refers to a MAAS scheme where the traveler pays a monthly subscription fee to a service, covering her daily commute and a certain number of weekend and evening trips. That service is responsible for divvying up the funds to the transport providers.

LOGICAL PROVIDERS

MAAS is evolving but generally refers to a subscription-based, phone-app accessible mix of transportation options providing door-to-door service.

Schedules and fees of the transportation providers will have to be online, integrated and continuously updated. That goes for weather and road condition information. The service is operated real-time, so a subscriber can preplan a journey, or find, pay for, and jump on the best option on the fly.

For now, there appear to be firms ready to step into the first two roles that Papandreou describes.

One ride search provider is the moovel app launched by Daimler this spring in Portland, Ore. It offers smartphone searching and the ability to make payments to multiple providers. But moovel is pay-as-you-go, there’s no monthly subscription service, says a spokesperson.

Second, data gathering and analysis is becoming core to intelligent transportation systems (ITS) with multinational giants like Siemens, Microsoft, IBM and others exploring the sector.

What’s missing is three, the bank.

Ford and GM are logical providers of this service though neither has expressed interest publicly in becoming a MAAS bank.

A BRIDGE TOO FAR?

Papandreou says the auto OEMs are still getting their heads around the idea of integrated mobility, so throwing in the concept of banking may be a bridge too far.

But it isn’t far-fetched.

Each has a financial arm with deep pockets.

The Ford Motor Credit Corp. provides loans through its Lincoln Automotive Service Corp. in the U.S., Canada and China. Net income for Ford Motor Credit tallied $1.4 billion in 2015, with managed receivables of $127 billion. Put simply, receivables measure the amount customers owe on loans.

GM subsidiary General Motors Financial reported net income of $646 million and total assets of $66 billion last year.

And there’s the possibility that fewer consumers will be buying cars if MAAS-style systems take hold.

“GM has to find new ways to make money if they don’t sell as many cars,” said Schweiger.

One way to do that could be to finance the system and earn income from payment processing.

“There are billions of transactions every day, this is a tremendous opportunity,” said Papandreou.

For now, the two big American auto OEMs don’t appear to be interested. GM is focused on expanding Lyft, in part with driverless vehicles it develops with Cruise Automation.

Ford’s new FordPass seeks to connect with customers through their smartphones. Millennials can do cool stuff like reserve a parking space and start their car.

But the payment angle is a work in progress. A customer earns rewards by purchasing Ford services, and the rewards can be redeemed at a Boomer brand like McDonald’s. A Ford spokesperson says FordPass is evolving, and changes will be coming.

Mobility As A Service is evolving too, and there will be different approaches in different cities. MAAS banking is a move away from an auto OEM’s core skill set but financing such a system could be quite rewarding.

Story photo - Piggy by Pictures of Money, 2014.