Partnering to accelerate digital innovation isn’t a new concept for most banks, with 80% of the top 100 banks globally reporting that they have at least one fintech partnership. Banks have realised that they don’t have all of the skills and capabilities to remain competitive in today’s digital-first environment, so they’ve been expanding their banking innovation capabilities through their fintech partners. But not all partnerships are created equal and leading banks are starting to realise the additional benefits offered by technology platforms.
Why is the platform approach different?
In a word, it’s all about connectivity. API-enabled platforms provide greater data connectivity and with pre-integrations, banks can plug into the data ecosystem quickly. This provides opportunities to enrich data from internal systems with data from external sources. Banks can use these platforms to connect to third parties, for example to run KYC and identity verification processes.
However, this connectivity doesn’t begin and end with data. With platform-enabled connectivity banks can offer a wider range of products and services to their customers, becoming de facto platforms themselves. This might mean opening up new banking services for customers or pointing them to new products in non-banking adjacencies, with the potential to grow revenues, win market share and become a more deeply embedded part of customers’ lives.
What are the benefits of a platform-based ecosystem?
Technology platforms provide the opportunity to expand their innovation ecosystem and speed up transformation. They give banks the key to reinventing their value proposition and providing a holistic service to their customers, deepening customer relationships and generating new revenue streams.
This can all be done at speed, cost effectively and without the need to dramatically overhaul or replace core legacy infrastructure and systems, which is both time consuming and costly, as well as often being a major stumbling block in broad reaching digital transformation programmes.
A platform partner offers a bank the agility and technical competence normally associated with their less traditional and digitally focussed challenger rivals, without the disruption and large scale change associated with conventional internally driven digital transformation initiatives. It offers flexibility and deployment of new customer journeys and offerings at speed, whilst leaving bank teams free to focus on their core business.
The time is now.
81% of banking CEOs are concerned about the speed of technological change, more than any other industry sector. And the key to alleviating those concerns quickly and cost effectively is through partnerships with platform-based fintechs. The age of open banking and Banking as a Service has arrived and if traditional banks don’t take the steps they need to keep up with this new normal, they risk losing market share to neobanks who are prepared to move at the speed their customers demand.
If you’re looking at how you can transform customer journeys, bring new offerings to market faster than your competition and build a future proof banking organisation, we’d love to hear from you.