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Will Passion Economy Surge in the Post-pandemic World?

8 minutes, 18 seconds read

From uploading the first video on YouTube in 2005 by the founder (Jawed Karim) to the new age of YouTubers, the dynamics of the traditional economy have changed a lot. People feel that earning a living by creating content for their followers is worth more than their 9 to 5 desk job.

The rising number of social media influencers in domains like travel, culinary, art, design, etc. are inspiring many to choose off-beat careers. Moreover, celebrities endorsing these aspirations motivate people to pursue their passion. Millennials have been through many disruptions, which has made them anxious about their livelihoods in the future. Their priorities and aspirations have evolved through these disruptions. Uncertain of the future, this generation has turned towards creating careers driven by their core interests and beliefs. A generation with a ‘risk-taking’ attitude has taken the world head-on and dived into a new economy — Passion Economy. Millennials, in particular, have played an important role in taking this economy forward. 

The Covid-19 Crisis 

The 2008 economic recession took a huge toll on the job market. With massive lay-offs across various industries, people found themselves at difficult crossroads of their careers. Something similar and maybe on a larger scale might happen in the next couple of months. The COVID-19 crisis brought upon an unprecedented change in the way we think, eat, drink, behave, buy, and work. The disruption in supply-chains and trade has hurt many small and medium businesses. Lockdowns led to reduced demands in consumer products & services, which put many start-ups under pressure to stay functional. With depleting cash reserves, many companies have already laid-off or furloughed some part of their workforce. 

According to the latest report by the Centre for Monitoring Indian Economy (CMIE), the unemployment rate touched 27.11% in India for the week ended on 3rd May. We’re heading towards an economic slowdown. In a situation like this, many are under stress and not sure of how long they will have a paid job. 

On a positive note, the home quarantine gave many people time and opportunity to learn new skill-sets or pursue their hobbies. The realization that it is now a survival issue, people are adding more effort into their work. The world will not be the same as it was before. We are heading towards a ‘New Normal’ where the rules of traditional 9 to 5 jobs and businesses will change drastically. This will make way for budding entrepreneurs to create new career paths for themselves.

The Key Elements of Passion Economy

Passion economy can be misunderstood with the Gig economy at times. The major difference is that a gig is limited to a particular number of times and people but in a passion economy, one can reach a much wider audience. This helps ensure stability over a period of time. 

Here are the features which direct the functioning of Passion Economy-

The key elements of the passion economy

Accessibility

The beauty of this economy is that it is accessible to the population at large. With minimum to no investment, one can pursue their passions. Social Media platforms have made it easy for people to showcase their talents. Today, anyone with a smartphone and good content can become an influencer on Instagram or YouTube. Gone are the days when you had to work in agencies to be able to make a living out of creative skills. Now, you don’t necessarily have to be cast on a TV show or sign an album with a record company to kick-start your careers. Anyone with good content and the right strategy can build a follower base and create a place for oneself. 

Individuality

Uniqueness is a quality that is always appreciated. As compared to earlier marketplaces built for standardized jobs, the new platforms in the passion economy give a chance for individuals to share their expertise. Individuality is no longer an outcast but rather an opportunity to monetize. Many people know a particular domain or product or service which they have learned through their personal experiences and deep study. The subject matter experts can procure capital by sharing their knowledge.

The edtech industry has evolved here where former teachers and professionals can create their courses that they teach to their students. Fashion is no longer just a space for slim models. Many plus-sized men and women are popular bloggers with a huge fan base who are making money by sharing their experiences and tips on fashion.

[Also read: A paradigm shift in Indian Edtech due to Covid]

Digital products and virtual services

The previous concept of entrepreneurship involved selling physical goods on online platforms. The passion economy changed this focus to creating digital products such as video courses and digital memberships for premium content. The service industry has transformed from an in-person exchange of services to virtual ones. Services such as teaching and consultations can be provided through digital platforms. The digital products are, in general, scalable which brings an advantage of maximizing earnings.

New career opportunities

The Passion economy is built on off-beat careers such as podcaster, content creator, Newsletter writer, Youtuber, blogger, online consultants, virtual tutors, and professional coaches. Previously, the education system focused on traditional career paths as there were not many opportunities in other fields. However, the advancement in technology, changes in environment and behaviors, rising competition have redefined the definition of earning a livelihood. 

Today, one need not carry a degree or professional qualification to become a podcaster or a fashion blogger. The new career paths are defined by the quantum of influence one can create and the consistency of the follower base. This goes along the line of 1000 true fans concept by Kevin Kelly which says that all it takes for a business to be successful is 1000 true fans who support you financially. 

[Podcast: Industry Insights on “The New Normal” in Insurance]

Role of Technology in Driving Passion Economy

Technology is the base on which the passion economy runs. Technology has provided new digital platforms to help increase the reach. The widespread internet connectivity has enabled many to learn and create new content. There was a time when a person with technical expertise was at the core to create even a website for your business. Today, no-code websites and app builders have reduced the dependency on software engineers. With free tools available in designing, video editing, etc. creating engaging content has become relatively easy. It doesn’t stop here. People monetize their expertise in operating various tools and software by creating online tutorials. 

There are two mediums in passion economy, SAAS platforms and Marketplace. SAAS platforms are disrupting the way businesses run in a passion economy. Today, there are multiple SAAS platforms available in the market which enable entrepreneurs to conduct business smoothly. They offer many features and services such as customer support, websites, marketing, payment portals, etc. This proves to be a win-win situation for both entrepreneurs and SAAS platform owners where the former can grow its business without worrying about technicalities and latter earns a consistent revenue through monthly subscriptions. However, this model works well for people who have a strong client base. 

On the other hand, a marketplace is a ready-to-go medium where providers can enter easily and earn revenue with minimum cost. The revenue generated in the model is proportional to the amount of engagement received. More the content consumed, the more the revenue. Though it takes time to create a follower base, this is a value-driven model for creators who are looking to establish themselves in the long term. 

Benefits of Passion Economy in Post-COVID crisis

The after-effects of COVID-19 will be felt throughout the world for quite some time until a cure is in place. Practises such as social distancing, remote working, contact-free processes are not going away anytime soon. This will have long-term effects on many sectors such as retail, hospitality, QSR, travel etc. Currently, the economy is hit due to less demand in these industries. However, this will prove to be an opportunity for a rise in the passion economy. 

Post this crisis, we will see a rise in the quality workforce. There’ll be a boost in creativity amongst creators. The quality of the content provided by creators will see a huge improvement. As more people put their heart and soul into their passions, small businesses will pick-up pace. This is indeed an unfortunate event, but it will possibly lead to more innovation in various fields. Newer ways of carrying out processes can bring about a reduction in costs and optimization of resources. 

In a nutshell

In these unprecedented times, survival is the key. The current situation has closed one door taking the world economy into a recession, but it has opened another door making way for new career and business opportunities that will take the economy forward. Maybe, the passion economy might not give fixed income as compared to a traditional job but the sense of satisfaction pursuing their passion will be the driving force behind this economy. Government and private sector are taking initiatives to provide training to people, helping them enhance their skills. Furthermore, advancement in technology will accelerate the economy making way for off-beat careers and new business opportunities.

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[Interview] Mr. Alex Jimenez | Digital Customer Experience in Covid-19 Times

7 minutes read

The COVID-19 pandemic has brought upon an unprecedented change in our daily lives and routines. Consumer behavior is changing constantly. Lockdowns and social distancing have led to huge losses for businesses across industries. The world is heading towards an economic slowdown. Under these circumstances, organizations are facing many challenges to keep their businesses going. Insurers too are facing similar issues. Some insurance lines such as motor, travel, home have suffered a business loss due to low demand.

To understand the impact of this crisis, especially in the USA, we interviewed Mr. Alex Jiminez, Strategy Officer at Extractable from California, and learned more about creating better digital customer experiences in these testing times. 

Extractable is a strategic consulting, design, and data analytics agency focused on the future of financial services. His other recent experience includes leading technology strategic planning for the office of the CIO, at Zions Bancorporation, and managing Digital Banking and Payments Strategy and Innovation at Rockland Trust. Alex has been named to several industry influencer lists in the areas of FinTech, RegTech, Blockchain, InsurTech, Innovation, and Digital Marketing. He has been featured in the Irish Tech News and the Independent Community Bankers of America’s (ICBA) Independent Banker.

Connect with Mr. Alex Jimenez – LinkedIn

The excerpt from the interview:

The impact of COVID-19 pandemic in the financial services industry

What is the impact of COVID-19 pandemic in the financial services industry, and how is the industry responding to the ongoing crisis in the US?

In the wake of the current crisis, organizations are more focused on keeping the operation going, trying to set-up work stations for remote working, dealing with customers and working with them over digital platforms. But very few are focusing on the future which is preparing for the after-effects of this pandemic on the economy. 

In-person communication is still an important mode of interaction with customers in the US banking sector. But now the issue is how to provide good services to clients? Some of our customers are going to experience digital models for the first time. 

Organizations that have well-defined Digital Strategies and Customer-First approach will be able to provide good support to their customers. Organizations that are late into this space are more likely to face problems in the future.

[Related: The Impact of Covid-19 on the Global Economy and Insurance]

Changing customer preferences

How can companies reach out to their customers in this New Normal world?

We have already started to move towards a digital-centric world which is just going to accelerate. We will see businesses who have earlier ignored their digital capabilities will now build more on them. 

The first video call was invented in the 60s and was not so appreciated as everybody thought it was expensive and complicated. Today we have FaceTime, Zoom but adoption has not happened on a larger scale. But this will soon accelerate. Customers will be comfortable dialing into a video chat with their Insurance agent. 

I don’t believe there’ll be a New Normal. For example, in the US after 9/11 people thought that life will never get back to normal but except for rigorous security screening at the airports, there hasn’t been much change in the behavior. 

In Israel, amidst all the constant disturbance, people in Tel Aviv and Jerusalem are living normal lives. There’ll certainly be some specific changes post the pandemic such as more adoption of digital technologies, more focus on customer needs but I believe there won’t be an entirely new world with a drastic change in consumer behavior.  

The need for personalization

What are some Attention hacking lessons for Insurers operating in ‘the New Normal’?

We are moving towards the personalization of products in general. Generally in Life Insurance, we insure people based on their date of birth or medical history. But what if we insure people based on their behavior? If we did that, would people change their more risky behavior to get a better rate? A non-smoker can be given a better rate as opposed to a smoker. If we get down to individuality, saying that this is your individual (your own) rate; it makes a difference. 

There is a lot of data available and AI is needed to mine that data and derive analytics. Just by building a relationship with customers, we are not doing a great job with personalization. It’s important to apply a human touch to the communication which makes customers feel like you know them. Thus, retaining their attention.

Digital customer experience in Insurance

For the insurance industry, what steps can help in delivering the right digital customer experience in terms of UX and visual design?

A lot of organizations practice Design Thinking but Financial Services don’t. They are of the opinion that they know what is needed as they themselves are customers and they have data from the surveys. But that’s a wrong approach. Design Thinking is about empathy. It is important to get into the shoes of your clients to design better solutions.

To enhance digital customer experience, Insurers need a thorough understanding of users — who are the ultimate clients, their needs, what they expect from this experience, etc. After comprehending how they engage with technology and financial services, start venturing into the solution and test the solutions with actual users.

Innovations in the financial services industry

What technology-based innovations are being explored within the financial services industry? And, do you see AI playing a role in the short term? 

AI has already affected Financial Services in a positive way and will make it better. In insurance, IoT has been very impactful and will continue to be. Some applications have already been applied in reality like sensors in cars to detect speed and ensure that you are under the speed limit. This helps in getting reduced premiums. 

However, some basic processes are still done in the old school way of shuffling papers. Straight though-out processes have not yet happened. Now RPA is being applied to this but it is more like a band-aid. What is more important is how we can build processes through true automation with AI.

[Related: 5 Insurance Front Office Operations AI Can Improve]

Adoption of AI in Insurance

Speaking about more adoption of technologies, do you think there’ll be more investment in AI now?

Absolutely! We have already seen that investment in technologies like AI, cloud computing, quantum computing has been ramping up. Businesses will invest much more in AI than before. It might be for better decision making, underwriting, understanding the behavior of clients, etc. Also, from a marketing standpoint, financial services have never focused much before but will now invest in AI for this area too.

[Related: How is AI extending customer support during COVID-19 pandemic]

In your recent article in Extractable – “Deploying third-party financial service technology to mitigate crisis” you talk about what tech vendors are doing wrong. Please expand on how to encourage resources to be innovative change agents?

There were two points that I made in the article-

First is about what companies are doing incorrectly when it comes to innovation. Risk management is consulted only after developing the product. The product release is stalled until the legal compliances are adhered to. Instead, companies should involve the risk management at the beginning of the process (while defining the problem and solution). Involving risk management at every step of the innovation process will make it much easier to push out innovation.

The second was about vendor management. Many small vendors such as tech vendors, InsurTechs want to sell solutions to financial service companies but are often surprised by the tedious vendor management process. There’s a lot of documentation. Once the first process of selling is done, vendors should package the documentation in a way that when the next prospect asks for it, the due diligence package is ready to offer. 

Read article – Deploying third-party financial service technology to mitigate crisis 

Wrapping up

Alex shared interesting insights on how Design Thinking and Visual Design can create better digital customer experience. The design vertical at Mantra Labs too believes in the same and has designed UX for various applications for its customers. Here’s an article to understand the role of Customer Experience (CX) and User Experience (UX): Creating Amazing Digital Customer Experiences

[Also read: [Interview] Mr. Andrew Warburton | The New Normal in Insurance]

AI is going to be essential for Insurers to gain that competitive edge in the post-pandemic world. Check out Hitee — an Insurance specific chatbot for driving customer engagement. For your specific requirements, please feel free to write to us at hello@mantralabsglobal.com. 

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