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Getting to the Future First

Scenarios for the "New Normal"

Operators in fuel, fleet and mobility markets are unanimous in one belief: that we are set for dramatic change. Not only change in the competitive landscape (though new entrants and substitute technologies will reform much): but root-and-branch upheaval of traditional ecosystems.

This upheaval may appear threatening: but it holds great promise for those organisations willing to transform themselves, their portfolio/positioning and their channel structures.

COVID-19: catalyst or accelerant?

It is too straightforward to attribute the urgency for strategic change just to the global pandemic. For sure, fuel, fleet and mobility sectors have been hit by crippling downturns in commercial and corporate activity – and these downturns demand bold and imaginative re-thinking. Few sectors will see a return to pre-pandemic traffic or footfall, so a “wait until it goes away” strategy is not in play.

On the other hand, the key elements for recovery – greening, m-commerce, platform digitisation, data-led propositions and channel re-design were already flashing lights in a broadly reluctant pre-pandemic industry. What COVID has done is replace reluctance with an imperative.

We’ve looked at a number of areas where we think that imperative will play out.

  • Charging – and charging: two transformational outcomes of the EV revolution.

Finance ministries across the globe will be coming to one conclusion: the excise duty revenue generated from consumer, corporate and commercial fuel sales can only be replaced realistically with new revenue from road charging programmes and infrastructures. As EV-charging becomes the new refuelling, the question is not only how EV charging infrastructure is built up, and by whom. It is also how road charging revenues will be collected, which payments instruments and processors will be involved, and their integration into broader mobility propositions. All these factors will play a big part in determining the future functional roadmaps and shareholder value of players across the sectors.

  • EDI and API – signalling the end of data protectionism.

The most compelling next-generation customer value propositions are built on the combination of data from disparate sources: connected vehicles; telematics units; fuel cards; forecourt software; mobile phones and employee corporate cards. Yet progress in engineering these enhanced offers has been slow – despite market demand and blatant logic.

With businesses looking for new, low cost-to-serve ways to generate customer value, the sharing and integration of data through new platforms and emerging alliances will radically transform both offers and channels. Data belongs to customers first, and merchants second: demand for convenient, integrated solutions will overcome narrow protectionism.

  • The fuel, fleet and mobility “Superstore”: the most fertile investment environment in decades

Organisations will have been more or less adversely affected by the COVID-19 outbreak. Some will lack the capital, others the commercial will and others still the vision needed for recovery and growth. Consequently, focus on core business streams, outsourcing or divestment of non-core assets, full buyouts and synergistic mergers and alliances are set to be higher on the agenda than ever.

We expect 2021 to be uniquely fertile in M&A and Corporate Development terms, with unparalleled opportunities emerging and aggregate sector transaction values possibly hitting record levels.

  • Mobile payments and the blurring of closed- and open-loop: the end for fuel cards?

Closed loop fuel cards have dominated b2b mobility markets for almost four decades. The classic barriers to open-loop penetration, whether technical or commercial, have been overcome only slowly and in part.

The arrival of hybrid cards (which combine fuel card and scheme card functionality, offer Level 3 data, combine multi-source transactions on a single VAT invoice and allow for merchant/category selection) threatens fuel card hegemony. Coupled with the COVID-led acceleration in mobile payment app acceptance, fuel cards have a shaky future. Expect upheaval.

Over the course of the next eight weeks, we’ll be publishing more detailed thinking around each of these transformative issues. Watch this space, and follow our thinking on LinkedIn.

In the meantime, if we’ve already struck a chord, why not get in touch with us directly to find out how our team of experts can support your business.