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Banking in the Digital Age Part 3: Platform Business Model.

Steve Pemberton, Accenture’s financial services APAC head of banking | June 6, 2016
Accenture’s five-part series explores solutions for the challenges and opportunities for the next generation of banking.

This vendor-written piece has been edited by Executive Networks Media to eliminate product promotion, but readers should note it will likely favour the submitter's approach.

Part 1 Part 2 | Part 4 | Part 5

Banking as we know it is changing. Eighty-five percent of bankers polled in our 2016 Accenture Technology Vision for Banking survey agree that bank industry boundaries are being erased. Yesterday's online retailer is now providing banking services. Entire industries are transforming - from music to travel. What will tomorrow's businesses look like?

Accenture advises that banks that want to stay connected and relevant to their customers' lives should adopt a platform-based business model -one that connects two or more buyers and sellers in highly scalable ways.

Companies embracing a platform business model are succeeding: the top 15 public "platform" companies already represent $2.6 trillion in market capitalisation worldwide. Fourteen of the top 30 global brands by market cap in 2013 were platform-oriented companies. For example, Apple, with its iOS App Store of nearly 380,000 third-party developers, some 1.5 million applications and millions of customers, is extending into wearables, home automation and cars.

Banks could also work with industries looking to leverage the Internet of Things: Consider the connected car ecosystem; it crosses industry boundaries of infotainment, insurance and car share and overlaps into the smart home ecosystem which crosses energy, appliances and online retailing boundaries. Banks' payment services cut across them all in one form or another - the banks that choose to proactively hook into these services with mobile, intuitive payment systems are best poised to win customer loyalty.

How can banks develop platform business models? At the core of a good platform business model is a win-win relationship between partners where everyone collaborates and everyone reaps more rewards than what they could garner alone.

Banks should consider operating across a combination of five key roles that will help them better serve their customers:

 

  • Relationship player, where the bank owns the relationship with customers and leverages its cooperative relationship with customer-to-business players and fintech companies to provide everyday life solutions.
  • Platform provider, where the bank provides an open platform for sellers, buyers, and content providers to interact, create and sell products and services and share value.
  • Core financial services utility/ manufacturer, where banks perfect the traditional role they play today to package and provide compliant financial services for platforms.
  • Innovation playmaker, where the bank participates in fintech incubators, accelerators, and venture funds to provide capital and to enter new businesses.
  • Digital ID enabler, where the bank operates a secure platform that offers consumers easy access to digital commerce.

 

It is up to each bank to determine the right mix, but forward-thinking banks could be the gatekeeper and coordinator of essential partnerships, assembling key players around industries that better help customers in their everyday lives. The banks that successfully achieve this role become the ones that matter to their customers in a positive way.

 

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