Subscription economy is happening now
Ville: As we both know industry 4.0 and machines linked via the Internet of Things are creating an abundance of data. This has enabled the subscription economy to really take off and all around us we are seeing equipment-as-a-service business models starting to replace the traditional buy and own ways of doing business. This seems to be one area where banks should be considering how to stay relevant.
Erik: I think the whole subscription kind of economy is very interesting and its happening right now. This is no longer something we have tagged as ‘in the future’. Nordea and also other banks are exploring pilots around machines-as-a-service related to industry 4.0 already but in a wider context there are whole subscription pay per use economies happening across almost all industries on both the B2C and B2B sides. I find that quite interesting.
Ville: Yes, absolutely. We’ve recently been hard at work with selected partners to enter into pilot projects together with our customers that will allow us to explore where we can play a part in the interplay between the production, leasing and servicing of machines. Already we can see that the subscription economy has become a 19 billion Euro market in the Nordics and 220 billion Euro market across the EU. (Source: Mechanical Engineering Industry Association (VDMA) Study 2019; Study Cognizant 2018; Study Bitkom 2018).
Erik: What’s really fascinating to me is the sheer width of the subscription services on offer. It’s not only with machine and equipment manufacturing companies, it’s a phenomenon we are seeing everywhere. Its Spotify, Netflix, etc, it is with so many different service and production companies. Even Banking as a service is here to stay. There is definitely a seismic shift going on.
Ville: Basically anything you can measure can now be consumed on a pay per use basis. That’s because of course now we have so many more sensors and a ubiquitous connectivity with 5G and so forth. With all of this telematics information now it’s easier to sell everything as a service. Just like when traditional data centres moved into the cloud and bandwidth became available on an on-demand basis, that opened up an entire industry. Starting an internet company these days is quite different from what it was 10 years ago.