The banking and payments industry is undergoing a significant transformation, influenced by evolving customer preferences and digital technologies. To keep surviving, banks must embrace the ecosystem approach and generate greater values. For instance, an Accenture study with 120 global banks revealed that nine out of 10 banks show interest in the concept of customer-oriented ecosystems and think of it as a great driver for value.
Moreover, traditional banks are transitioning towards Open Banking, developing a new relationship model to regain trust from customers, partners, and vendors for sustainable growth. To succeed, banks need to shift from the way they have thought about their customers all these years. Instead of catering customers with the services within the same industry, the ultimate business goal must be to support them through various customer journeys. For instance, Starling Bank’s marketplace has a total of 21 integrations available; from Wealthify, an investing platform, to Sustainably, a platform that gives access to donating onto multiple charitable organisations. Open Banking is doing wonders with several tech giants and over the years, consumers are only going to be more aware of its various possibilities.
Furthermore, fintechs are filling the gaps as they provide traditional banks with the right platform building and solutions via an agile approach. Vendor-vendor collaboration is also improving ROI of various financial institutions. For example, fintech company Lexin has partnered with 19 banks such as Industrial and Commercial Bank of China and Bank of Tianjin for improvised borrowing facilities, while FIs such as DBS Bank and China Merchant Bank are setting up innovation labs to facilitate identification of the right fintech partners.
Additionally, the introduction of 5G has made interconnection of various platforms into one seamless integration a much more possible scenario. Moreover, solutions available on cloud allow banks to enter the ecosystem with a more fast-to-market approach. The banking industry is also accepting the way IoT is changing the way consumers perceive retail banking. Popular wearables like FitPay and Apple Pay have started working with various banks all around the world to bring banking one step closer to consumers.
The digital approach in China
China’s local and overseas contributions in technological advancement have created tech giants such as Alibaba and WeChat. WeChat, for instance, currently hosts one million plus mini apps within one app. Its wide range of services include messaging, e-wallet, ecommerce, delivery, courier services, public transportation, e-tickets, and car sharing. Ant Financial, another Chinese ecosystem, is also running a money-market fund with assets worth of USD 165 billion under management.
China is also leading its way for digital marketplaces and is home to one-third of world’s unicorn giants, which are valued at USD 1 billion. The country’s digital strategies are spread in a way that covers its entire society and economy in various forms. Rapid technological advances that penetrate economic growth along with operational regulatory governance and control are shaping the country’s future.
Ecosystems are going to change everything
Through ecosystems, digital marketplaces will be able to tap newer customers, and gather more data, which in turn will provide a more customised experience for every user. Open Banking is also driving partnerships between banks and fintechs as data is being shared amongst multi-industry players on one single platform, with the customer’s consent.
Furthermore, ecosystems bring an opportunity that creates potential for greater innovation, data-sharing across all platforms, and most importantly, cross-selling – that helps banks to create new business models. Therefore, newer ecosystems can expand into untouched territories as unexplored geographies and client segments make their way to an omnichannel platform. Several players across various sectors such as banks, fintechs, and non-financial institutions are all providing integrated solutions.
Digital ecosystems are improving the quality of banking
The breakthrough of digital ecosystems in banking have given rise to top-quality financial solutions that are both consumer-friendly and secure. The advantage of building an ecosystem is that banks can study the data gained by open APIs and then decide which apps they want on board and which ones to avoid. Financial institutions from all over the world are working simultaneously to change the way consumers think about the traditional hassles of banking.
Moreover, the existing ecosystem players are going to constantly look for newer offerings to keep their customers glued to their platforms. In the meanwhile, the challenge for newer entrants will be to gain trust from their users and constantly abide to policies and regulators all around the globe. As more and more traditional banks enter the ecosystem, they are looking for partners who allow them to reach the market within a minimum time frame. The right partnership can go a long way as the right one will embrace newer innovations with their banks. Overall, building an ecosystem may change the way people perceive banking globally, and banks can no longer ignore its benefits.
About Jay Kie Tan
Jay Kie joined Radar Payments and BPC in 2019 with the mission to boost their business expansion across APAC and drive new business growth in the matured markets in Asia. Based in Singapore, Jay Kie is a globetrotter and a fintech enthusiast who holds strong knowledge of how payments work and well connected with the key industrial players. Her mission has taken her to collaborate with financial institutions, fintechs, and payment schemes from China to Japan, Philippines to Malaysia, and beyond.
About Radar Payments
Radar Payments is a leading innovative payment processing provider dedicated to financial institutions, including payment service providers (PSPs), banks, acquirers, issuers, and fintechs. It offers advisory services and a one-stop platform for end-to-end omnichannel processing, enabling the acceptance of most of the widely adopted payment methods, delivered on a PaaS, SaaS, or fully managed service model. Built using BPC’s SmartVista, the Radar Payments platform delivers scalability, resilience, performance, and unparalleled security.
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