Who could have predicted that in our consumer-driven world, buying stuff would one day seem passé?

Yet, in the zeitgeist of the sharing economy, that’s where global commerce is headed. Called “the future of business” by its proponents, the sharing economy model is simple: companies use digital platforms to let customers use other people’s available assets or labor, either through one-off rentals or a subscription service. Users get affordable access to temporarily needed goods or services, providers generate revenue with their underused skills or possessions, and the company that provides the platform takes a percentage. The movement’s ethos can be summed up by a well-worn statistic cited by Airbnb founder and sharing economy pioneer Brian Chesky: “There are 80 million power drills in America that are used an average of thirteen minutes… Does everyone really need their own drill?” Enter companies like NeighborGoods, which lets people rent that drill from someone nearby.

There are over 9,000 companies in 130 countries listed on the Mesh directory – a popular sharing economy resource – and the goods and services being shared cover everything under the sun. Some interesting examples include:

  • DogVacay, which connects pet owners to a network of willing dog-sitters.
  • Girl Meets Dress, which lets customers rent eveningwear while Borrowed Bling provides the jewelry to complement it.
  • Cohealo allows hospitals to share expensive medical equipment.
  • Feastly connects foodies with aspiring chefs who prepare elaborate meals in their own homes, and the aptly named LeftoverSwap offers a somewhat less elegant dining experience.

And of course, the major players Uber, Lyft, and the afore-mentioned Airbnb have become household names by helping people turn their cars into independent taxi services and rent out their unused rooms or entire homes. Some estimates say the global revenue generated by the sharing industry is equal to $15 billion and predict that that number will grow to $335 billion by 2025. When you also consider the environmental benefits of sharing existing products rather than manufacturing and distributing new ones, you might think, “What’s not to like?” But the approach has demonstrated some downsides and even sparked a fair amount of controversy.

For starters, empowering untrained and unregulated microbusiness owners has led to some customer service fiascos, with problems ranging from last-minute room cancellations to irate taxi drivers. Likewise, the provider-side of transactions has also been affected as many AirBnB hosts have found their homes damaged, robbed, and used for dubious activities by renters. Furthermore, people who’ve built a livelihood around sharing economy platforms have become increasingly vocal in demanding better pay and work conditions. And while some of the complaints about the industry can be attributed to sour grapes among the businesses it’s disrupting, it has caused some legitimate problems for the public as homeowners find their neighborhoods overrun with the occasional disrespectful short-term tenant and cities deal with the unsanctioned “selling” of public assets like parking spots.

In light of these troubles, many have come to see the strength of the sharing economy as its greatest weakness. The most successful companies in this space often thrive in a regulatory gray area, using unlicensed freelancers to undersell more heavily regulated competitors. Instead of depending on regulators to maintain acceptable service standards, these companies turn to the wisdom of the crowd, allowing buyers and sellers to rate each other, thereby weeding out bad apples on both sides of the sharing transaction – at least in theory. But what happens when that rating system fails, or when sharing activity harms users, bystanders or local markets and governments? With a growing crackdown by global regulators and efforts to bring sharing economy transactions under the umbrella of insurance, the answers to these questions may soon become clearer.

Yet it would be a pity if the struggles of some companies operating within the sharing economy discredited the ideals and innovation behind it. Pooling the resources of a global community is an undeniably powerful proposition, and there are ways to mobilize this power while protecting users on both sides of the transaction.

The fintech space has been a leader in this regard, as companies are adapting the sharing model to address financial exclusion, income inequality, and the high cost of small loans and remittances. For instance, companies like Lending Club, Lendio and Prosper provide platforms that connect lenders or investors with the individuals or small businesses that need their capital. And Meed’s mobile platform connects underserved communities with banks and other members in its network to offer financial products that range from a paperless checking account to a secured line of credit to unlimited domestic and international money transfers between members. Through its unique SocialBoost network, the company has worked with its bank partners to give 50% of the credit interest they earn back to Meed members. When members invite others into the Meed community, they’re given back 25% of the interest generated by those new members, in addition to a 25% return from Meed’s worldwide community.

Each of these financial innovators is facilitating the sharing of money, but rather than undercutting established financial players by skirting regulations and insurance requirements, they’re working within the existing constraints of the financial sector while forcing it to evolve. In essence, by working in tandem with financial institutions, they’re ensuring customers’ transactions are secure while providing banks with valuable access to new markets.

Models like these demonstrate how the sharing economy can provide lasting good to consumers, businesses, and the world at large when executed with care. These fintech businesses could point the way to new approaches in the financial industry and beyond, as traditional players adapt to the disruption and opportunity presented by the sharing economy’s emergence.

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