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Business #Reimagined – From Platforms for Business to the Business of Platforms

March 12, 2018 -  Ethan Wang Product Manager, Infosys Finacle


World’s top 15 public platform businesses account for $2.6 trillion in market capitalization. Some of the most successful modern businesses are platform companies such as Uber, Airbnb, Alibaba, Amazon, or even social media giants and chat services such as Facebook and WeChat. And some of these platform companies don’t operate in a single industry, but compete in several sectors. Alibaba is a retailer, but also a payment service provider. Amazon is an e-commerce giant, but also a company that dabbles in logistics and cloud services. WeChat has also made a move into the payments space with WeChat Pay. Looking at the diverse presence and high valuations of these digital natives, one wonders if platform is the mantra for success in the new (digital) normal.
Banks are no exception to this growing trend. In 2017 we predicted that a truly digital bank will resemble the digital models of highly successful platform businesses. Clearly, banks have refined their ecosystem strategy, and in 2018 we see the shift from a pipeline business to a platform business in banking gain momentum and pace. Following trends mark this shift that will play out faster this year:

  • Banks will expand their portfolio with complementary products from partners in the ecosystem such as insurance companies or fintechs. These products may include non-financial products.
  • Banks will act as aggregators of products selling a host of financial and non-financial offerings in a single marketplace, as opposed to being monolithic institutions selling products designed in-house and distributed through owned channels.
  • Third party channels will become integral to a bank’s distribution strategy. In addition to a bank’s own channels such as branches, mobile app, wearables, voice assistants etc. banks will use APIs to sell products and services through third party apps, fintechs and other partners or even other banks.

Next, banks will look to earn revenue from their platform or distribution business. They will devise ways to monetize their APIs, and will form partnerships to open up new avenues of growth. A case in point is German digital bank Fidor’s arrangement with communication service provider O2, where the latter has built a mobile only bank on the former’s platform. In addition to interest income, Bank Fidor earns shared revenue from transaction fees and from O2’s business growth. 2018 will see more such partnerships, as the platform model in banking evolves.
Read the full report here – #ReimagineBanking – 10 Strategic and Technology Trends to Watch Out for in 2018

 Ethan Wang

Product Manager, Infosys Finacle

Ethan Wang has over 15 years of experience in information technology and banking. He works with the Finacle Product Strategy Team, based in Singapore. His primary focus is thought-leadership collaboration and product innovation – including digitalization, Fintech ecosystem and new technology/business-model trends especially in APAC region. Prior to joining Infosys, Ethan was a Research Director from Gartner’s global banking advisory team. He was also a wealth management banker at HSBC and held a variety of senior consulting roles at IBM.

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