The future of banking in the platform economy

Abstract

Purpose To better understand where the banking industry is heading and how it can thrive in the new environment of converged industries and competition, the IBM Institute for Business Value, in collaboration with Oxford Economics, surveyed 850 banking and financial markets executives across all major geographies and a variety of C-suite roles. Design/methodology/approach The survey sought answers to three key questions: What impacts are the changing currents around ecosystems, business models and business economics having on banking and other financial services organizations? What strategies are likely to be most successful for banks to adopt over the next few years? What steps can banking leaders adopt today to accelerate their progress toward obtaining a leading competitive position? Findings Most senior executives surveyed – 72 percent – agree that platform business models – and the ecosystems that underpin them – are disruptive for the banking industry: 70 percent of executives say that platform business models are driving changes in traditional value chains across the industry. 69 percent acknowledge that platforms are disrupting their organization’s own business and operating models. Practical implications As many as 79 percent of banking executives globally say that adoption of platform business models will help them achieve sustainable differentiation and competitive advantage with benefits across multiple dimensions. They identify profitability, innovation and access to markets as the top-three areas where platform models can drive advantage. Originality/value Visionary banks believe engagement with partners across platforms should increase their commitment to innovation, especially relating to the search for new and more valuable product and service combinations. They realize that radical transformation is required across business and operating models and in the way resources, business processes and technologies are assembled to create value.

Transforming the scope of the bank through fintechs: toward a modularized network governance

“…The presented scenario is adopted in such bank models as challenger banks (beta banks and neo-banks) (BCBS, 2018;Schmidt et al, 2018;Sibanda et al, 2020). This scenario also explains the emergence of the bank models described as omnichannel banking or open-banking (distributed bank, relegated bank, disintermediated bank) (Bott and Milkau, 2016;Camerinelli, 2020;Cortet et al, 2016;Diamond et al, 2019;Komulainen and Makkonen, 2018;Llewellyn, 2018;Ramdani et al, 2020;Remolina, 2019;Zalan and Toufaily, 2017). The modular banking ecosystems are increasingly perceived as the ultimate structure for the banking sector (Blackstad and Allen, 2018).…”

The Rise of Platform-based Models and its Impact on Banking and Financial Services

“…Regulatory compliance, cyber-security, and absence of trust in ecosystem partners inhibit banks' adoption of platform business models [14]. With increasing trust between partners, banks can act as conduit of products and services which can lead to increase in customer experience [14].…”

“…Regulatory compliance, cyber-security, and absence of trust in ecosystem partners inhibit banks' adoption of platform business models [14]. With increasing trust between partners, banks can act as conduit of products and services which can lead to increase in customer experience [14]. In a survey conducted by IBM Institute of Business Value covering 800 plus global banking leaders, 80% say Profitability is the biggest benefit of adopting platform model followed by Innovation and access to markets [14].…”

“…Providers develop and provision end-to-end products and services and Specialists focus on specific banking process activities. Orchestrators allow the platform members to interact and create value for members [14].…”

Open banking: A bibliometric analysis-driven definition

“…What is open banking? Since the inception of the “Open Banking Working Group” in the United Kingdom in 2015, open banking has generally been considered as the platformization of the retail banking industry [ 1 , 2 ]. To date, it has spread worldwide from the UK to Continental Europe, America, and Asia, constituting one of the retail banking industry’s shaping forces of the future [ 3 , 4 ].…”