The most significant trend of 2016 will be the ‘Platformification’ of banking, where both existing banks and startups begin a strategic shift towards becoming banking platforms, much like how Amazon is a platform in retail.”

1. {
Platformification
of
Banking
Dr. Vinosh Peter K.V.

2.  The most significant trend of 2016 will be the
‘Platformification’ of banking, where both existing banks
and startups begin a strategic shift towards becoming
banking platforms, much like how Amazon is a platform in
retail.”
 Part of the challenge is arriving at an agreed-upon
definition of what a platform is. Despite it’s relatively
recent use in the world of banking, the concept — as a
business model — has been around for a long time (see
David Evans’ work on the topic of two-sided business
models).

3.  What is a Platform?
A platform is a plug-and-play business model that allows
multiple participants (producers and consumers) to connect to
it, interact with each other and create and exchange value.”
Three important components of the definition:
Business Model. First and foremost, a platform is a type of
business model.
Plug-and-Play. A platform must enable participants to easily
engage — and disengage (which partnerships typically don’t).
Create/Exchange Value. One plus one has to equal more than
two, or there’s no need for the platform.

4.  1. Become a magnet. Without the ability to attract a meaningful
number of the “right” participants, a platform cannot succeed.
Simply having a lot of producers and consumers is no guarantee of
success. The platform must attract the right producers (those with
the most desirable products and services) and the right consumers
(those who the producers in the platform want to do business with).
 2. Act as a matchmaker. A platform requires a mechanism for
matching consumers to the right producers, and for enabling
producers to reach the right consumers who come to the platform.
At its most basic level, a search engine can be matchmaking
mechanism.
 3. Offer a toolkit. The toolkit is what enables producers (and
consumers) to easily plug-and-play. This is why APIs are so critical
to firms pursuing platform strategies.
Three Elements of a Successful Platform Strategy

5.  Today’s banks are consumer magnets, not producer magnets.
Banks do a fairly good job of attracting consumers. But there is
practically no focus on attracting other producers, other than the
one-off partnerships that a bank pursues.
 Today’s banks only match consumers to their own products or
services. The key to successful matchmaking on a platform is
matching a consumer to one (or more) of a number of providers.
Banks only match consumers with the just one provider’s products
— the bank’s. If they even do that.
 Today’s banks don’t have a toolkit. Banks have a mixed track
record of integrating the products and services of the firms with
whom they develop partnerships with, let alone providing the ability
to plug-and-play.
Are Today’s Banks Platforms?

6. Platform Levers Core Platform Partners
1. Scope of Firm
Focused only on core
activities.
Define broad array of
activities to be performed
outside of firm by partners.
2. Product Own core product stack.
Allow for partners to develop
and offer ancillary products.
3. Service Own core service stack.
Allow for partners to develop
and offer ancillary services.
4. IP/Data Sharing of information.
Define what to disclose to
partners.
5. Technology
Modular tech, open source
and open standards use,
API interface openness.
Interoperability between
partner interfaces and firm’s
interfaces is key.
6. Relations w/Partners
Decide where on the
collaborative/competitive
continuum will the company
sit. How will
relations/decisions and
consensus be arrived at?
Collaboration with some
partners, competition with
others. Different types of
consensus mechanisms
between firm and partners.
7. Internal HR
Organization
Articulate HR between
group that focuses on core
and groups that focus on
platform across product,
service, IP/data, technology,
partners and C-suite
executives within firm.
Develop ability to “speak the
same language” as partners.

8. Financial technology, also known as FinTech, is an industry
composed of companies that use new technology and innovation
with available resources in order to compete in the marketplace of
traditional financial institutions and intermediaries in the
delivery of financial services
Fin tech is the future of financial services:
Over the past five years investment in fin tech has grown at three and a half
times the rate of the overall venture capital market (201 per cent versus 63
per cent), hitting the US$13.8 billion mark across 730 deals. Fin tech startups
targeting Millennials have caught the attention of investors attracting 16 per
cent (US$3.7 billion) of this funding.
For financial organizations the challenge is finding ways to apply the
innovation and skills of ‘Millennial-savvy’ fin tech startups to their
operations: how to marry their expertise in mobile app experiences
with traditional banking applications to achieve ‘Platformification’, or
finance-as-a-service.
What is Fin Tech?

9. Application programming interfaces (APIs) will play a key role in
achieving these goals. APIs allow software applications to interact
with each other. Through APIs organizations can flexibly expose
services and data, enabling these to be exploited to create new and
innovative products.