Are we moving toward a future without car ownership?
By Brian Garr 
As I wandered through this year’s Consumer Electronics Show in Las Vegas, it was obvious the automobile industry was consuming almost the entire hall. Vendors like Ford, GM, and Audi were all present with their autonomous (self-driving) cars. The future is autonomous cars, and insurance companies are claiming they will be able to reduce insurance rates by up to 80 percent once these cars hit the road. Of course, that’s a statement about the future, and I don’t know that they are any more competent in predicting the future than I am in picking the winning numbers for the $1.3 billion lottery (spoiler alert, not very good). The rest of the show was curved TVs, lots of wearables for both humans and dogs (do I really want to know how many steps my dog took today?) and refrigerators that tell you when you’re out of milk. While in Las Vegas for the show, I exclusively used Uber and Lyft for getting around. My first time using them and it was a total delight. You can see the tiny car on your phone moving closer and closer to you until you can see the tiny car on the street, with the driver, whose picture you have memorized, sitting behind the wheel. Great experience, and, except for the hours of noon to 5, when a two-mile ride up the strip costs $65, very reasonable. But it wasn’t until I was on my plane, introducing myself to my seat neighbor, that I truly began to understand just how disruptive the juncture of autonomous cars and the Uber phenomena was going to be for credit unions, which depend upon both direct and indirect car loans for a large portion of their income. I was extolling the virtues of both Uber and Lyft to my neighbor, when he told me that he was a big fan as well, and that on lots of evenings, when he wants to wonder from his West Palm Beach condo and not have to worry about parking and how many drinks he consumes, he simply calls an Uber (yep, it’s a noun), and lets them do the driving. Cheaper than parking, and less worries, he said. But that’s not the real value proposition for the future of Uber and Lyft. You may have noticed that General Motors just invested $500 million in Lyft, and they are collaborating on autonomous cars. So here is the future of local mobility in urban areas: You won’t own a car! Sure, that’s true in places like New York City now, because of the high cost, but this will happen in much smaller urban areas, like West Palm Beach. When you want to go somewhere, you’ll book an Uber, or a Lyft, and the closest autonomous car will be in front of your door in minutes, if not sooner, and already know your destination and the best route to get you there. It will already have charged your credit card, and all you have to do is get in, and get out. Go ahead and have a glass of wine for lunch, or a few drinks with dinner. Answer emails on the way to work. The cost of all these trips will be much less than the cost of acquiring, insuring and maintaining your own autonomous vehicle. It’s also a huge reduction in risk to your well-being. So how does all this affect credit unions? On average, credit unions have 33 percent of their loans in automobiles. Just like Uber has changed forever the business model for cars for hire, so will Uber + autonomous cars forever change the way we think about car ownership. And just like the peer-to-peer lending model adds new competition to CU loan portfolios, and the “direct to anyone” payment tools, like PayPal and Chase QuickPay, are assaults on interchange fees, so will the advances in autonomous Lyfts become an assault on CU auto loan portfolios. It’s time to rethink the credit union business model and plan for the not-too-distant future. Brian Garr is a frequent speaker and author on artificial intelligence. He is chief revenue officer at Cognitive Code. A member of the Center for Credit Union Board Excellence, he also serves on the audit committee of $892 million/70,000-member IBM Southeast Employees’ Credit Union, Delray Beach, Fla. Follow him on Twitter: @garrbrian. Learn more about the current macro-economic environment while building a solid foundation of lending skills at CUES School of Consumer Lending, July 18-19 in Seattle.
