The Future of Shared Mobility – Built in Only 4 Weeks7. February 2018
KEY TAKEAWAY: Blockchain is will make shared mobility more seamless and convenient in the future. This joint project between INVERS and the Frankfurt School Blockchain Center explored how blockchain can be applied to scooter sharing and found blockchain will grow the possibilities of shared mobility.
A lot has been written about blockchain technology, quickly spreading from the financial industry to other sectors, especially mobility services. For shared mobility services it is seen as one of the enabling technologies of the future. At INVERS, it is our mission to make shared mobility more convenient and accessible for everyone. We think that mobility should no longer be determined by ownership; it should become an ubiquitous service with a seamless user experience that works simply, and simply works.
We have been building technology for exactly that purpose for 25 years. We were, therefore, curious to find out how blockchain technology can be applied to shared mobility services in practice. With help from the Frankfurt School Blockchain Center, we set out to build a prototype of a future shared mobility service which is purely based on blockchain technology.
As we envisioned what the future of shared mobility might be like, we were inclined to take it one step further and not only use a new underlying technology like blockchain, but also highlight two other emerging trends we see in the industry – scooter sharing and chatbots. As we start digging deeper into the blockchain technology, we’ll also take a closer look at scooter sharing and chatbots, and how they can have a strong impact on the way we perceive individual mobility in the near future.
In the past few years, we have witnessed the strong growth of new mobility services in cities with ride-hailing like Uber, Didi and mytaxi, and carsharing like car2go, Maven and DriveNow. Just recently, an emerging new trend topped all growth statistics in Europe. Scooter sharing has been largely embraced by users in major cities all over Europe. Operators almost quadrupled their fleet sizes from 2,000 in 2016 to over 8,000 scooters in 2017[i]. It is expected that the scooter sharing market will soon outgrow the free floating carsharing market in terms of fleet size.
Why is there such strong growth? With scooter sharing, users can be part of the electric revolution as more than 92% of shared scooters are electric[i] today. Finding a parking spot is usually quick and easy. In short, shared scooters are environmentally friendly, convenient and easy to use, create less congestion, are cheap and fun to ride, while at the same time they present an attractive business opportunity for operators.
Early on, we were convinced by this trend and supported the first scooter sharing operators in 2015 with our Shared Mobility OS technology stack to run their operations. Still today, we believe that this is just the beginning.
Consequently, we decided to put a scooter at the heart of our vision for the future of inner city mobility. From our experience with many scooter sharing operators (more than half of Europe’s shared scooters run on INVERS shared mobility OS), we have identified key success factors in this market. We want to highlight a few of them to point out how blockchain technology can create a competitive advantage over existing approaches, with substantial benefits for operators as well as users:
Seamless User Experience
The user experience typically starts with a registration process for the respective mobility service. A lot of progress has been made in this area including an all-digital verification process as opposed to visiting the operator’s office. However, it still takes a few minutes and a reliable data connection, which can be cumbersome for some users. Blockchain technology would make it possible to establish a secure digital identity online, including a driver’s license, and can then be used securely and instantaneously across multiple services, in particular other mobility offerings.
Sharing a vehicle must be easier than owning a vehicle to make way for mass adoption. Therefore, accessing a vehicle should be intuitive with only little action required. While most smartphone apps in our industry have improved significantly in terms of usability as well as their overall user experience in the last years, we decided to go beyond a dedicated user app and use a contextual chatbot instead. Chatbots not only provide a user interface which allows the user to just express his wishes, but also lets the technology take care of the rest. Furthermore, chatbots pose a radically new and promising approach to user interaction, are highly flexible, and can be setup and adopted much quicker than a dedicated app. They can either be combined with a chat interface or with an invisible interface through speech recognition like Alexa, Siri etc.
High Availability of Scooters
For users to flock to such a shared scooter mobility service and to meet their expectations and needs, high availability must be maintained. Therefore, with more users, the fleet must grow accordingly. Blockchain technology can facilitate growth of fleets and reduce costs for operators.
Asset-light growth of vehicle fleet
For operators, the greatest capital expense is the fleet of vehicles. Thus, capital constrained scooter sharing operators often grow slower, sometimes not meeting market demand. Blockchain technology can reduce this bottleneck by allowing operators to easily add scooters owned by third parties to a fleet. They could be provided by small scooter rental operators or even private individuals as part of a Peer2Peer (P2P) sharing model. P2P sharing models are already in existence today, but they are complicated. Many parties are involved and therefore require an intermediary for establishing trust and handling the complex billing and revenue splitting between those parties.
With blockchain technology as a trusted and secure infrastructure, most of these functions can be performed directly, hence faster, without the need for a costly intermediary. Another inefficiency for today’s P2P models is insurance, as the renter has to purchase an insurance policy for the trip at a significant premium from the P2P operator – even though the vehicle and the renter might already have coverage. Blockchain technology can enable the user to bring his own insurance, which can then also be securely verified. Of course, this requires insurance companies to come up with appropriate plans and to make them accessible via blockchain technology. Given the fact that blockchain is seen as a potential disruptor for the entire insurance industry and the current market dynamics with new business models like usage-based insurance policies as well as insuretech startups on the horizon, this is a likely development.
Reduction in payment processing fees
Tariffs for scooter sharing are usually priced in the same range as public transportation. As a result of the low amounts, they are considered as micropayments. Based on the current payment infrastructure and the growing penetration of credit cards, these micropayments can be very costly for operators, especially with the processing latencies of up to a few days. To reduce costs, operators can debit an accumulated number of micropayments per user by lengthening the billing interval while increasing the risk of a shortfall. This is only a viable option for frequent users.
Blockchain transactions are not only significantly cheaper regardless of the debited amount, but also processed within seconds. With our approach, the vehicle collects the appropriate amount before the user is granted access to it. As an operator, this eliminates the risk of not getting paid. While credit card transaction fees on micropayments can be as high as 10% for a single ride, transaction cost for blockchain based payments will likely be close to zero in the future. For a business in which a 10% margin is already best in class, it is needless to say that this is a significant improvement.
Stable and Always-on Service
The highly distributed, decentralized architecture of blockchain technology eliminates single points of failure and contributes to an always-on mobility service. This leads to a shift in focus towards the devices connected to the blockchain and their data connection. Only with a proven and robust technology stack, that scales to many scooters as well as users, can one of the most important success criteria be achieved: reliability! This is key for every shared mobility service. Users rely on mobility services in their everyday lives to go to work, run errands, and visit friends, and they will only adopt these services in the long term if their trust in the service is not disappointed. The service has to simply work.
When thinking of a blockchain project that involves vehicles, whether it be for shared mobility services or anything else, the first question to ask is: How do you get a live copy of a physical object in the digital space? We call this copy “the digital twin”.
To realize the digital twin, a robust, high-performance interface to the vehicle is necessary. With the INVERS Shared Mobility OS, we have already built the right solution. 25 years of experience in this market, highly reliable hardware and software architecture, profound knowledge of vehicle data interfaces, as well as the latest technology developments in the mobile world, make Shared Mobility OS the leading platform for shared mobility services around the globe. So far, over 250 mobility services with more than 60.000 vehicles worldwide have been realized on Shared Mobility OS.
Shared Mobility OS is a suite of tools comprising of end-user apps, backend software, and telematics for operators to run a shared mobility service. The backend helps the operator manage its fleet and telematics with end-user support provided across multiple channels. The entire technology stack is built on an API centric architecture which facilitates adding or replacing of components. The comprehensive toolset, and more importantly the API-centricity of Shared Mobility OS, enabled us to realize our outlook into the future of shared mobility in only 4 weeks. If you have not yet done so, take a look at our video found at the beginning of this article.
By now, it is indisputable that shared mobility services are here to stay. Some segments in shared mobility – like scooter sharing – are growing exponentially. And yet, the absolute size of the shared mobility market is still negligible compared to the ownership mobility market. Shared mobility technology has contributed to making these services more accessible, attractive, and economical for both users and operators. At INVERS, we believe that we are still just at the beginning.
New emerging technologies like blockchain and chatbots will further accelerate growth and provide new opportunities for new and existing shared mobility operators. We believe that blockchain technology will drive growth for P2P sharing models as it makes the transactions between many parties more secure and efficient. By building the prototype, we learned that blockchain technology is still in its infancy. For instance, the processing of transactions requires in average 15 seconds on the Ethereum network (much faster than the 10 minutes it would need with Bitcoin for instance). To make use of its full potential, a larger ecosystem of blockchain-based services will be necessary – such as a blockchain-based driver’s licence or blockchain-based insurance plans.
To take advantage of these opportunities, shared mobility operators need a reliable and flexible technology platform which can adapt to evolving technologies, like Shared Mobility OS.
Today, Shared Mobility OS already enables a broad range of mobility services such as carsharing, ride pooling, automated car rental, scooter sharing, etc. as its technological foundation. With this project, we demonstrated that Shared Mobility OS can also enable a future blockchain-based service and this can be done within only four weeks.
Do you have a mobility project? Are you curious about Shared Mobility OS? We can help to get your mobility project on the road!
Next article: The Rise of Scooter Sharing
[i] Innoz – Global Scootersharing Market Report 2017
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