When will technology be better embedded into home warranties?
Home warranties are becoming increasingly popular in the US.
14:25 12 November 2017
In fact, based on a survey conducted by ReviewHomeWarranties.com, one of the leading websites in this field, 20% of all homeowners in the USA have a home warranty insurance currency, or had one in the past. There are even publicly traded home warranty companies on the NYSE with sales of hundreds of millions a year. With that being said, the “smart home” revolution has yet to set foot in this industry.
The way the process works is that you leave your details on their website, receive a call from the salespeople, sign up, and then get a toll-free service number which you can call if you require service. Simple and easy? Yes; Technologically advanced? Quite the opposite.
With industries in personal finance being completely disrupted, there is plenty to be done. Here are some recent examples of industries which are completely and utterly redefined by technological innovation:
-In personal home insurance, tech startup Lemonade is making itself a name for being the simplest and most cost effective solution in the market right now. All you need to do is download an app to your phone and finish your sign-up within 90 seconds, receiving a quote tailored to your requirements.
-In online banking, the market is heating up to take things up a notch. Online banking has been accessible with most banks since the mid 2000’s but the current landscape is composed of online-only banks. Again what plays a major role is the simplicity of online banks versus traditional banks, and the fact there are less fees involved with online banks. An example of such banks is the Canadian Simplii Financial.
-Another advancement is in the financial advice space. There are less and less people paying specialist Financial Advisors for strategizing their investments, and the Robo Advisor industry is flying high. If you haven’t heard about it yet, you might have been living under a rock for the past 3 years! Companies like Wealthfront are already serving more than 50,000 clients and offering them a flat 0.25% fee on all investments, possibly 70% less of what they would pay with financial advisors and an investment account at their local bank.
-The international money transfers industry is also progressing forward towards a new era. With Western Union and Moneygram growing to be two of the most profitable companies in the world over the past decades, there is now a serious competition out there. Transferwise is making itself a name as the biggest British startup right now, with the potential of being offered publicly with a market capitalization of more than 10 billion dollars. What Transferwise essentially does is allowing people to transfer money to their relatives online (in the same fashion as PayPal’s Xoom), for a fixed transparent rate which was traditionally reserved to wholesalers (between 0.5% and 0.7% from the real mid market rate).
In short, financial disruption is on its way to change the world. From the client perspective, it’s all good news - getting better, simplified, streamlined solution to anything their require. The above list is only a small subset of what’s really out there. Nowadays, you could manage all your finances 100% online without ever having to set foot in a bank. You could run your business from your mom’s basement and even get a business financing without ever going out or paying a professional to assist you with it.
For the banks and other traditional financial institutions, it’s all bad. It the same fashion that insurance companies are delaying self-driving vehicles from finally commercial available, so do banks try to pile up regulatory hurdles in the face of innovation. Either that or that they simply buy out their competition.
This is why it is so unbelievable that the home warranty is conducting itself in the same manner it used to for the past. Why doesn’t one of the industry like American Home Shield sets its sight on getting an online system which would make the whole process automated from top to bottom? Why do they even need to hire a support center if everything is readily available online? It could be that they don’t want to be transparent to this extent and/or they just don’t want to innovate because they’re do so well currently. Necessity is the mother of invention, and they don’t have none of that.
How about smaller brand names in the home warranty industry? Total Home Protection has a bit fresher look and feel than most other providers, but they operate in the same old-fashioned way. They could be providing excellent service but it can’t be bad if they reinvent themselves, wouldn’t it?
If none of the existing home warranty companies in the field will make a serious effort in moving forward, someone else will step in and take away a big chunk of the market share. Home warranties aren’t exactly getting the best PR and it’s a shady industry to begin with.