LEF perspectives: Modern digital platforms power up banking

A platform business in financial services is a new and different business model. Unlike a traditional bank, a platform business orchestrates the financial and nonfinancial services ecosystem that serves the customer. It’s a considerable feat, considering that products, services and expertise increasingly come not from the platform, but from the growing ecosystem of service providers.

The new generation of large-scale financial services platform organizations — including Alibaba, Amazon, Google and Tencent — are not banks, and they may never be. But increasingly, they’re serving the many areas that are underbanked. Like platform businesses in other sectors, they must transact efficiently, constantly promote innovation and evolve ecosystem participants.

These companies also transact efficiently across a wide range of channels — not just currencies, but also experiences, reward points, reputation indicators, credits, tokens and resources. They promote innovation constantly, using APIs and licensing to make their process, software and data assets available, sensing where innovation demand is highest, and seeding building blocks to enable ecosystem participants to build on them. They constantly harvest new financial products and service components — such as APIs, interfaces, functionality, data sets and algorithms — then “commoditize” them as new building blocks for the ecosystem. They also support ecosystem participants, helping them improve their service delivery and giving them opportunities.

These large-scale challengers demonstrate how essential modern intelligent, autonomous and increasingly distributed digital platforms have become. This is the financial services platform business of the future.

Continue reading the position paper, Master digital banking to succeed in financial services.

Leading Edge Forum (LEF) is DXC Technology’s independent cross-industry think tank.