Get out of these 4 sectors. And get in if you want to found a start-up!

Upheavals always have two sides: They are seen as threats and challenges by existing providers in the market, but for entrepreneurs from outside the industry they offer an opportunity to enter with new models and innovations and do good business. Here are 4 sectors that will experience huge changes in the near future and some of which have already undergone them.

(Reading time: 5 minutes)

Banking

Traditional banking has literally slept through the digital transformation so far. Although e-banking has now been introduced across the board, there are hardly any institutions in Europe that are really focused on their customers. Bureaucracy, a culture of charges and fees and, unfortunately, a touch of arrogance prevail everywhere. Who hasn’t experienced this? Employee XY at a large bank is not allowed to send me even trivial information by e-mail. Instead, it comes by post or fax (they offer this, but of course I don’t have one). This is not only very tedious, but also not very secure. If you ask or criticize, it usually doesn’t take long before the bank employee refers you to the strict regulations.

That is, and I am deliberately including the legal regulations here, a very clumsy excuse. Of course you have to comply with laws and meet requirements. But you should do it in such a way that you cause the customer as little effort as possible. And you should fight for it and behave in such a way that market regulation is reduced. That has not happened. On the contrary. In the last 10 years, hardly any other industry has maneuvered itself into the offside as much as the banking industry. In the meantime, this has even affected the image of bank employees.

Number26, for example, shows us that things can be done differently. I can open an account there within 15 minutes without any effort. Even as a Swiss citizen. Number26 explains itself as follows: “NUMBER26 is banking as it should be today. Fast, clear, secure and completely free.” This promise has been kept so far.

We urgently need more banks like this. Banks that use new technologies to make it easier for us customers to handle money. It’s not just a few apps and cool slogans, but a cultural change. This is exactly what we need (ok, and the apps).

Insurance industry

Insurance is good business if as many parameters as possible remain stable. A risk becomes calculable. This is essentially what an insurer lives on. However, technological advances are adding more and more new, previously unknown parameters. It is no longer enough to statistically evaluate a set of indicators. In order to be able to offer innovative and lucrative insurance products, independent research is required. What is now known as big data should actually be the starting point for every insurance company. In reality, however, various companies, especially large ones, have a lot of catching up to do.

In addition, and this is a major problem, many insurance policies have far too long a term. Technological innovations will fundamentally transform our society in the coming years. Costs will change, demographics will change anyway and so will the risks. I wouldn’t want to be tied to long-term contracts. But that is exactly the case. Just think about pension contracts. On the one hand, it is becoming increasingly difficult to generate an agreed return. On the other hand, life expectancy is increasing rapidly. Unfortunately, this cannot and will not end well.

Energy industry

When I spoke to an executive at an energy provider in Switzerland a few weeks ago, he had no idea about Tesla’s Power Wall. When I explained a bit, he quickly dismissed the whole thing as crazy. There were still so many technical hurdles. Unfortunately, this is a behavior that I often experience in the energy sector. So often that I now think it’s part of their culture. New technologies seem to be non-existent in this sector for the time being.

The situation is paradoxical in that 3 residents in my immediate (sun-drenched) neighborhood are already thinking about ordering the inexpensive Tesla Powerwall. Not primarily to charge them via solar panels. No, these people also want to use the cheap night-time electricity during the day. According to Tesla, the Power Wall will be available in Switzerland at the end of 2015. This means that in the first quarter of 2016, the first users of my interlocutor’s network will draw exclusively night-time energy. Instead of getting to grips with the new technology now and trying to make a business out of it, the energy supplier will be talking about a threat to the business next year and trying to curb its use by political means. They may even succeed in the short term, but in the medium term it will simply catch on. The supplier will then no longer be him, but a start-up.

It is not yet possible to predict what the rapidly improving battery technology in general and Tesla in particular will mean for our society. After all, battery technology is a driver for so many other technologies. It is as important as broadband technology (wired and wireless) was for the internet. Once a certain data throughput was achieved, the possibilities and the market exploded.

I expect the same for battery technology. As soon as batteries are able to deliver twice as much energy at the same size and cost, this will already have a serious impact on the car market, for example. Just think of all the innovations that are already being considered that would then be possible.

You will now say that doubling capacity is a huge achievement and it will take time. But anyone who is aware that technological progress is advancing exponentially must realize that we are not too far away. In 5 years’ time, the situation will look completely different.

Medical sector

The technological advances in the medical sector are enormous. But they are currently still happening behind closed doors. The fundamental paradigm shift is that research is moving from a try and error approach to a calculative and model-driven methodology. The decoding of the genome and the further work based on it is already making it possible to grow and use body parts.

For example, there are already more than 10 people worldwide whose lives have been saved with a trachea grown from stem cells. And in the last 5 years, more promising active substances have been developed than ever before.

It is therefore only a matter of time before medicine comes out of its slumber of guesswork, trial and error, failure and brute force methods, and moves on to a clear and reliable methodology that will make all our lives better. I know this may sound ungrateful and crass, but the fact is that in the majority of serious illness cases, doctors unfortunately only have a very limited idea of what is really going on with the patient. Chemotherapy, for example, is not a sophisticated form of therapy, but more like trying to hit ants walking on a tricky tiled floor with a baseball bat. My personal experience is that good doctors admit this, even if it is hopeless. So we are facing a cultural change here too.

And now?

I think there are enormous opportunities for entrepreneurs in all 4 sectors mentioned. The current market players are stuck in their habits and usually don’t recognize these opportunities. If I were invested in such companies, I would reduce these investments and instead invest in companies that set out to conquer these markets with new technology. Although this is risky at first glance, it is worthwhile in the medium term. This is because the traditional players will soon suffer further share price losses. So back the right horse at the right time.