Designed to respond to the consumer's every wish, the on-demand economy is transforming companies and the labour market, and its rise is undermining the strength of the traditional players.

The term "on-demand economy" was made popular by the rapid success of the new Silicon Valley start-ups led by Uber and Airbnb, and now everyone is talking about it. It refers to business activities where companies use new technologies to bring goods and services to consumers virtually immediately, and is experiencing staggering rates of growth. And so, scarcely seven years after it began, Uber is worth over 60 billion dollars. In the United States, 42% of people have used an on-demand service at some point. This is a trend set to continue.

Aside from the most well-known services that allow customers to order a driver, a meal, a doctor or lawyer, the on-demand economy now seems able to satisfy the consumer's every whim, even the most outlandish. Booster offers a mobile petrol pump service allowing drivers to fill up at any time. Through Techy you can request the services of an IT expert to fix your computer. FriendsTonight finds its users companions for any trip, such as to the cinema, a bar or nightclub. Pamper lets you order a manicure and Soothe brings you a massage. With Trumaker, you can find a tailor to cut you a suit. Washio will do your washing. And finally, Wag! walks your dog for you. There are even start-ups in California that deliver cannabis on demand, plus for Roman Catholics with an urgent need to confess, Scooterino Amen can bring a priest on a scooter to your door. It seems that the economy is more directed towards the immediate gratification of the consumer than ever before.

A new phase of capitalism

The arrival of the on-demand economy marks not only an anthropological development, but also the beginning of a new phase of capitalism. At the start of the 20th century, the introduction of assembly and production lines meant that Henry Ford could mass produce the Ford T at a reasonable price, a development that began to make the automobile more accessible to all. Today, the on-demand economy is allowing ordinary people to access services that were once the preserve of the privileged.

Several factors have converged to allow this revolution to occur. The first is the boom in new technologies. Powerful microcomputers available at low prices mean entrepreneurs can achieve a great deal by working alone from their own home. The spread of smart phones is also enabling autonomous workers to react quickly and move around with ease. And thanks to the internet, complex tasks such as programming or drawing up legal documentation can be outsourced to professionals working remotely.

In short, new technologies are creating relationships that are more fluid: large companies with very strong hierarchies and a stable workforce located in physical premises are giving way to less precisely structured entities composed of a small team of leaders and a constantly fluctuating mass of contractors. They may not even have an office, but those at the top direct the business while their staff work flexibly to meet customer requests.

The swift rise of the on-demand economy has also been facilitated by the financial crisis, which led to an availability on the labour market of young, flexible workers with good access to technology. Today, 34% of US workers are self-employed. Finally, the on-demand economy is the consequence of a shift in the balance of power in society. As The Economist states, whereas Karl Marx once laid out the opposition between the owners of the means of production and their workers, the dichotomy that stands out today contrasts individuals who are cash rich and time poor and those who have less money but much more time. The on-demand economy means transactions can take place between these two kinds of economic agents, and the latter can be paid to provide the former with services that they have no time to carry out themselves.

The winners and losers of the on-demand economy

The on-demand economy has changed the capitalist paradigm, bringing about far-reaching changes within society, the world of work, and even the lives of individuals. There are positives and negatives, as with any radical change. This is why it causes so much passionate debate, as illustrated by the many legal challenges and demonstrations against Uber and the aborted attempt to legislate to limit the expansion of Airbnb in San Francisco. Its opponents regard it as a reversal of social progress and a return to the brutal capitalism of the 19th century, when long queues of workers waited every morning in the hope of picking up a day's work.

But the supporters of this new reality emphasise the flexibility it gives workers, who are free to work wherever and whenever they choose. They also highlight the freedom consumers now have to choose from a wide range of services accessible on demand at prices they can afford. The defenders of the on-demand economy also say that it enables a better allocation of resources in society. For example, many rooms that would otherwise remain empty can be offered to tourists temporarily through Airbnb, and Uber allows several passengers to share the same vehicle.

Consumers certainly appear to be holding all the cards; for workers, however, the picture is more mixed. Those who value flexibility over security benefit from the new reality. This is the case for students wanting to earn a bit of cash, those who loathe office hours, young parents who would like to work part-time while raising their children, or older people nearing retirement who want to reduce their working hours. On the other hand, workers who favour security over flexibility, such as families with mortgages and tuition fees to pay for, stand to lose out in the new economic environment. It is therefore up to governments to adapt their welfare systems to better reflect society's needs in the light of the rapid rise of the on-demand economy. The American model, where health insurance is provided by the employer, is not at all appropriate for these circumstances and ought to be reformed so that every worker is covered.

Traditional actors forced to catch up

The on-demand economy also implies a significant shake-up on the majority of markets. This is firstly because companies offering on-demand services naturally launch on existing markets, where they proceed to impose very stiff competition on the traditional players. The most striking example of this is of course the arrival of Uber on the taxi market. But secondly, the heavyweights of the on-demand economy, which have the benefit of their brand names, capital and the latest technology, can swallow up sectors other than that of their principal and initial line of business.

If we remain with the example of Uber, the company quickly realised that drivers were extremely busy in the mornings and evenings, but had far fewer jobs in the middle of the day. And so to fill the off-peak hours, it began to offer additional services. First came the food delivery service, UberEATS, then the company delivering anything, UberRUSH. From a taxi company at the forefront of technology, Uber has gradually transformed itself into a service platform devoted to nothing in particular, able to turn its hand (or its vehicles) to various types of requirements.

Besides taxis, start-ups delivering food such as Caviar or Munchery are the ones facing competition, as well as longstanding firms on the delivery market such as FedEx and UPS. The name that Uber quickly built for itself, combined with its solid IT infrastructure, has allowed it to rival institutional players in a field where it was initially an outsider. And so these firms are obliged to respond to demand and follow the lead of Uber, or to at least adapt what they offer to meet the new rules of the on-demand economy. This is why UPS has just invested 28 million dollars in the start-up Deliv, which provides a same-day delivery service. The fast food brand Taco Bell has also established its own system for delivering food. And taxis are using smart phone applications modelled on Uber ... Little by little, with missionary zeal, the on-demand economy is converting its competition rather than taking them out.

(Source: www.atelier.net)

A recently commissioned survey by BNP Paribas Fortis on mobility found that this remains a major challenge for the coming years. The bank is determined to play its part.

A survey among 2,000 people, and representative of the Belgian population, on mobility shows that the switch to electric driving is slowing. Almost 80% of those surveyed still drive a diesel or petrol vehicle, and more than a third of them have no intention of trading in their cars for a more environmentally friendly model any time soon. And yet almost 50% want to be driving electric by 2029. But before that switch, some hurdles first need to be cleared. According to two-thirds of respondents, the bank needs to take a proactive role in the transition to sustainable mobility.

• Only 10% of cars on the streets today are electric, hybrid or run on hydrogen. Users of these vehicles confirm they are very satisfied. Though most have their own charging station, public charging stations are a bottleneck.
• While fighting climate change remains the main argument for switching, changing mobility habits isn’t so easy. The switch to electric is slow, and more incentives are needed, such as new tax measures, and above all, a commitment from the government. Prices also need to come down. It is clear that the practical issues of driving and charging times mean people hesitate to make the switch.
• As a result, enthusiasm about new mobility initiatives is rather muted. Although, especially in big cities, an app that combines mobility options has good chances of success.
• Mobility and work are strongly linked. One in three people spend at least an hour a day travelling to/from work. It turns out that teleworking is a solution for only 50% of the people, and that the other half of the population don’t have the opportunity to work from home.
• More awareness needs to be created around new mobility. Not everyone is familiar with shared cars, bikes and charging stations yet.

Mobility partner

BNP Paribas Fortis is determined to contribute to more sustainable mobility and be a mobility partner for both professional and private customers. We are doing this by informing audiences of all the advantages of an environmentally friendly switch. And also by offering support through financing, insurance and leasing. Our goal is to provide a global response to tomorrow's mobility needs through innovative services.

More and more people are cycling to work. Mobility solutions expert Philippe Kahn explains how and why.

People are changing the way they travel to limit their environmental impact: behaviours are starting to shift, and the use of bicycles is rising, including and especially for travelling to and from work. We spoke to Philippe Kahn, Mobility Solutions Expert at Arval BNP Paribas Group, about these developments. 

Two out of three Belgians use soft mobility, mainly bicycles

According to Profacts’ “Mobility Tomorrow & Beyond” survey, two out of three Belgians have adopted soft mobility. "But the biggest change is the increasing use of bicycles for business travel and commuting. People are also using bicycles more on the school or nursery run, facilitated by the arrival of electric cargo bikes on the market," says Kahn.

A favourable regulatory framework

But what are the reasons for the increased use of bicycles for business travel?  “Let’s first take a look at how the regulatory framework has changed," says Kahn. "In Belgium, the creation of the federal mobility budget has made alternative ways of travelling attractive for all employees. The budget makes it possible to choose a comfortable company bicycle as part of a tax-friendly salary package. Moreover, this mobility budget can even be used to cover housing costs if you work from home more than half the time or if you live within 10 km of your place of work. So instead of having a company car, people can choose to have a combination of an electric bicycle and a contribution to their housing costs. Furthermore, two measures effective from 1 May 2023 should reinforce this trend: the bicycle allowance for commuting is increasing to €0.27 net per km travelled, and all Belgian employees will be entitled to this allowance. In practical terms, this means that those who choose to cycle for these journeys will be substantially rewarded.”

Investment in public infrastructure is paying off

Another important factor in the increased use of bicycles is the development of road infrastructure.

Philippe Kahn: "One factor that can convince people to cycle to work is the certainty of a safe journey. A few years ago, cycling to work in Brussels, for example, could be dangerous. But today, cycling infrastructure is making these journeys increasingly safe, in particular thanks to the cycle motorways on which only bicycles can travel. Infrastructure investments are now also happening in the rest of Belgium, not just Flanders and its major cities. In recent years, Brussels has undergone significant changes, and things are also starting to move in Wallonia.”

Half of all Belgians live within 15 km of their place of work

Distance from the workplace is also crucial in determining how attractive cycling is. "One in two Belgians lives within 15 km of their workplace, a distance that you can easily cycle," adds Kahn. "Along with the Improved infrastructure, this means that cycling to work is a realistic option for many Belgians. And the €0.27 per kilometre allowance will be an added incentive for them to make the change.”

78% of leased company bicycles are electric

To meet the needs of companies and their staff, Arval is now offering bicycle leasing. This full-service lease covers maintenance, breakdown assistance, insurance and repairs, as is traditionally the case for a car. Philippe Kahn points out some very significant trends in this area: "60% e-bikes and 18% speed pedelecs: in total, 78% of our leased company bikes are electric.

High-end bicycles costing several thousand euros, such as electric cargo bikes, are also highly successful, which is probably due to opportunity: the mobility budget or employer “cafeteria plan” benefits packages are making it possible for people to acquire these bikes. But it may also be a consequence of Belgium’s specific tax regulations: the more expensive the bicycle, the more significant the tax incentive. Another interesting observation is that when a  bicycle replaces a car, it’s usually the family’s second car. So we’re not yet seeing any radical replacement of cars by bicycles, but the emergence of the company bicycle is definitely reducing the total number of kilometres travelled by car.”

Digital applications: shifting up a gear

Lastly, Kahn points to another factor that could encourage more people to take up cycling to work. "I think that technology, and in particular digital applications, can make a big difference. We can expect strong growth in the market for apps dedicated to commuting by bike. The business model for on-the-go electric bike rental is already based on a smartphone app. So imagine the success of an application that gives you a safe and bicycle-friendly route for travelling to and from work, and the boost that this could give to this type of travel," concludes Kahn.

Producing biogas through fermentation of agricultural waste? That is exactly what they do at Biomethane du Bois d'Arnelle, Belgium's largest production facility in Hainaut.

You can spot the three large grey domes and a cone-shaped roof from a distance in the countryside around Frasnes-lez-Gosselies. This is a biogas production unit. It took its creator and CEO, Jérôme Breton, 12 years to complete this project due to the lack of a legal and administrative framework. But today, the unit is operational, producing 70,000 MWh of energy.

Turning food waste into biomethane

"We recycle food waste and agricultural materials, livestock manure, straw, beet leaves, peelings, etc. from farmers in a 15-km radius around the site", says Jérôme Breton. "We work with 100 farmers for whom this represents additional income. In digesters, i.e., concrete tanks that are heated to 40°C, bacteria digest the material and produce biogas, consisting of 45% CO₂ and 55% CH₄ methane. We recover this biomethane through filtration, before injecting it into the natural gas distribution network. Fermented matter or digestate, a black liquid that is rich in organic matter, which is very nutritious for crops, is spread as a fertiliser in the surrounding region, where it is used to permanently store CO₂ in the soil and completely replaces chemical fertilisers."

Unrivalled performance

About 15% of the biogas is converted into electricity and heat, half of which is used for the unit’s own needs. The remaining 85% is purified and transformed into biomethane. Once it has been injected into the grid, this biomethane can be used as fuel or as a raw material for petrochemicals. It can also be used to power turbines, and the heat generated can be recovered, just like in a car engine. “While a cogeneration engine, which produces electricity and heat simultaneously, has a total efficiency of between 40 and 80%, our system allows 99.5% of the biogas produced to be injected into the grid”, the young entrepreneur explains. "The pressure varies in a distribution network. That way, the infrastructure can absorb injections without the need for additional investments to store them."

Growing to valorise

The company also grows maize, beets and cereals to valorise them as biogas: "We made a deliberate choice to grow 600 hectares of energy crops to offer farmers a complementary diversification pathway. This accounts for 30% of our raw materials. These crops are stored to allow us to 'smooth' the inflows into our digesters, which depend on agricultural and food activity, on a seasonal basis."

BNP Paribas Fortis, the only bank with such advanced skills

Jérôme Breton says the project would not have been possible without the support of BNP Paribas Fortis. "We would not have gotten funding if it wasn't for the work of their expert. It is the only bank to have such high-level skills in-house. All the other partners also benefited from the analyses and information that he provided to us! A strong, lasting relationship of trust has developed as a result. In my model, I didn't want to rely on public financing for what I do. At the same time, I wanted to produce at the right prices. We produce and sell our biomethane at 100 euros per megawatt hour, while market prices were close to 350 euros last August."

Entrepreneurial success

At BNP Paribas Fortis, we are particularly proud to be supporting passionate, inspiring entrepreneurs. Because building the entrepreneurship of the future together is also an example of Positive Banking!

Elessent EMEIA is on a mission to make the chemical industry more environmentally friendly and sustainable through innovative methods and cleaner production processes.

"We strive to create cleaner, carbon-free production processes for our customers. Innovation is at the heart of what we do", says Sara Alvarez, Finance Manager at Elessent EMEAI. "We suggest less polluting alternatives to traditional industrial methods, allowing our customers to continue to develop products that are essential to our daily lives while significantly minimising their impact on the environment, particularly in terms of pollutants and CO₂ emissions."

4 key technologies

The metals, fertiliser, chemical and refinery industries make up the majority of the company’s customers, with Elessent EMEAI able to deliver complete turnkey production sites. Tjaart Van Der Walt, Director of Elessent EMEAI: "We have four flagship technologies. The first concerns the manufacture of a compound that is widely used in industry, from fertiliser manufacturers to pigment plants, namely sulphuric acid. This is obtained by burning sulphur. We have 90 years of expertise in site design – we have delivered more than a thousand sites – and process and energy recovery. These processes will be key to producing cleaner batteries."

Increased quality and yield

The company also has alkylation technologies (a reaction that is commonly used in organic chemistry) which is used to produce high octane fuels, for more efficient engines. These compounds are valuable for the petrochemical and refinery industries. "We operate at more than 100 alkylation sites around the world", continues Van Der Walt. "And 25 hydrocarbon hydrotreating sites. This is a crucial step in the refining process, during which some elements are removed from the oil. This includes reducing sulphur and nitrogen content to improve stability. Our proprietary soft hydrocracking technology allows us to recover more value from crude oil."

In addition to these processes, which optimise the quality and yield of hydrocarbons, the company also has “wet scrubbing” technologies, which are very effective in fume treatment.

Financial support and real industry expertise

"Our business is growing on a global scale. For our international expansion, we need the constant support of our bank, BNP Paribas Fortis, which, in addition to assisting us with the financial aspects, contributes its in-depth expertise in our industry", Sara Alvarez explains. "This cooperation is crucial in Morocco, Tunisia, India and South Africa, for example. For our long-term investments in these countries, we benefit from our bank’s advice, particularly in terms of resources and guarantees of payment: secured transactions, letters of credit, etc. The same goes for hedging currency risk, which is essential in the context of volatility. This partnership allows us to continue our international expansion."

Entrepreneurial success

At BNP Paribas Fortis, we are particularly proud to be supporting passionate, inspiring entrepreneurs. Because building the entrepreneurship of the future together is also an example of Positive Banking!