Uber’s Political Troubles May Hold a Lesson for Financial Services Companies

by Ben Jackson 0

Riding hailing service Uber has found itself facing backlash over its CEOs connections with Donald Trump and its decision to suspend surge pricing to JFK airport over the weekend. What happens to Uber in the coming days may be a bellwether for financial institutions who face any kind of trouble.

It began Saturday, when the New York Taxi Alliance called off pickups at John F. Kennedy Airport for one hour as hundreds of people flocked to the airport to protest Trump’s order, which barred citizens from seven Muslim-majority countries from entering the U.S. for 90 days and Syrian refugees indefinitely.

Hours later, Uber tweeted that surge pricing would be turned off at the airport, which many interpreted as breaking the hour-long taxi strike. Social media users reacted swiftly to condemn the move using the hashtag #DeleteUber, alleging that the rideshare company was profiting off of a refugee ban.

The company’s primary competitor, Lyft, announced that it would donate $1 million to the ACLU, and many celebrities and individuals jumped on the delete Uber bandwagon. Uber has since responded saying that it was not trying to support the executive order and pledge to donate $3 million to the ACLU.

How well Uber weathers this storm may become a lesson for financial services. It is nearly frictionless to delete the Uber app and install the Lyft app on one’s phone. Financial institutions have been working to reduce the friction of switching accounts even before the advent of mobile banking. If Uber ‘s usage dramatically crashes, it may show that reputational risk could cause immediate changes in a company’s fortunes. It will be a test of how quickly consumers respond and whether force of habit is enough to prevent change.

Overview by Ben Jackson, Director, Prepaid Advisory Service at Mercator Advisory Group

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