Will Uber be the Uber of banking?

Will Uber be the Uber of banking?

The Uber of banking might well turn out to be....Uber, as the darling of the startup scene ditches banking partner Santander to set up its own car financing arm.

Uber itself has provided an answer to the question most often popped in fintech meetups with the launch of a new pilot programme dubbed Xchange Leasing.

The move was announced by the ride services firm's head of vehicle solutions Andrew Chapin in a blog post: "Unlike most multi-year leases that have high fees for early termination, drivers who participate in Xchange for at least 30 days will be able to return the car with only two weeks notice, and limited additional costs. The program allows for unlimited mileage and the option to lease a used car, with routine maintenance also included."

Uber terminated its partnership with Banco Santander's US lending unit earlier this year. In May, the firm struck a deal with peer-to-peer lender Zopa to offer its London-based drivers financing for new cars.

It's arrival in financial services will send a shiver through the car financing market. The world's fastest-growing sharing-economy company, Uber operates in 57 countries and commands an estimated market value of more than $40 billion.

Comments: (3)

A Finextra member
A Finextra member 30 July, 2015, 17:543 likes 3 likes

Should be an interesting experiment by Uber. They are looking at the needs of their drivers. Getting them into newer reasonablely priced vehicles is the goal, not to make a profit, but break even (see Fortune Magazine daily newsletter, July 29, 2015, 11:50 PM EDT). So far they are funding this effort from their own capital.

Balasubramaniam Gd
Balasubramaniam Gd - DBS - singapore 31 July, 2015, 07:331 like 1 like

A solid opportunity for the Micro SME Space especially in the APAC region. Interesting to see and watch this space.

Ketharaman Swaminathan
Ketharaman Swaminathan - GTM360 Marketing Solutions - Pune 05 August, 2015, 09:33Be the first to give this comment the thumbs up 0 likes

Going by my frequent tête-à-têtes with drivers of Ola, Uber's competitor that I use regularly, these loans are the glue that holds this "asset light" model together. Over the past year, Ola has introduced several measures to curtail the initial "honeymoon" phase of drivers e.g. cancel fixed payout, reduce per km rates, adopt a "zero tolerance" policy towards errant drivers, etc. But, drivers tell me that because they have a loan to repay, they have no choice but to continue to operate on the platform.