Platformification throws up some interesting challenges for banks and collaboration is increasingly being seen as the emerging model to address existing gaps. Working with fintechs means that banks can offer new and attractive innovations to their customers quickly by curating fintech partners in an ecosystem that blends their creativity side by side with core banking functionality.
And this matchmaking between fintech and bank is already accelerating. In a recent Celent white paper, 36% of respondents are using fintechs already and 37% said that access to trusted fintechs is a key benefit of platformification.
The benefits of using fintechs are clear- they are agile and often at the cutting edge of new technology being able to experiment fast with leading innovations. The banks, meanwhile, have the benefit of large and trusted client partnerships. Bringing the two together is an art as well as a science and doing it in a scalable manner is what platformification aims to address.
In the survey, 65% said that the building and testing of solutions in an agile way are a priority with platformification, with 62% requiring new technologies to integrate into their current technology stack. This is exactly where fintechs excel.
Fintechs are uniquely placed to collaborate with banks. They can provide the technology that augments a bank’s existing structure. They are nimble and so able to experiment rapidly with new customer service propositions. Fintechs are all about the mobile-first customer experience and they are now actively seeking the banks’ customers to engage with.
Banks have the customers but struggle to innovate on their own. 37% said that internal constraints were restricting the speed of innovation and 34% also experienced challenges of changing internal technology.
All the while expectations around functionality and access to a wide range of products and services grow. “Banks know they need to innovate, and the more technically savvy and comfortable of these firms see platformification as a gateway to faster, more successful innovation efforts,” says the paper.
But how can banks do this more effectively? To put this into context, banks have evolved with a product centric not customer centric approach. They now urgently need to innovate to give themselves the means to bring their product centric systems to their customers – to give them a better experience.
At the same time, Open Banking and PSD2 force change by mandating banks to share customer data with their approval. This means that customers wanting a wider service provision and experience, and the opportunity to provide that, have converged.
Yet another element is the technology acceleration. The technology to have open and secure APIs that can simply link up with third party services has matured extensively. It is now possible and desirable to create a consumption-based banking platform in much the same model as Amazon. In addition, having a marketplace where banks and customers can simply self-select the products and services they require, from a large range of suppliers makes expansion pain free and quick.
But technology is moving so quickly in today’s world that no single company can be expected to offer everything to everyone. Collaboration solves this problem as it brings together multiple suppliers, platform technology, and advanced analytics to serve and accelerate innovation to the end user, the all -important customer.
To find out more download the full Celent white paper.