Page 32 - Banking Finance May 2024

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Example, Goldman Sachs provides embedded financing digitally native products that can be sold on platforms and
through its ecosystem relationships with Apple (such as marketplaces. Bank offerings must have easy onboarding
Apple Card) and Amazon (Small Business Loans) as part of features that enable them to acquire customers at scale,
its newly formed Platform Solutions division. as well as automated credit decisioning capabilities that
allow them to make loan offers in real time. In support of
The most successful banks build, test, and refine two or this, banks must invest not only in product development but
three ecosystem archetypes in parallel. also in the underlying ecosystem "engine"-and build
integration layers, authentication layers, APIs, standardized
Execution of Digital Ecosystem data models, and AI algorithms that can support multiple
A successful ecosystem strategy is not just about good ideas, ecosystems plays. Top-performing institutions will also create
but good ideas delivered well. There are several steps to asset libraries stocked with reusable components and
help banks do this. The major step is to be deliberative and features.
take the time upfront to determine what strategy
archetypes best align with the bank's capabilities and market Banks that win the ecosystem game from a cost and market
ambition. Failure to think through the details and business leadership perspective make a point of reusing core
case can result in sub-scale investments and diminished capabilities to launch multiple bets sequentially and
returns. iteratively. This approach helps them gain speed and
efficiency advantages and stay ahead of the market.
The most successful large banks have studied and develop
two or three ecosystem archetypes and build, test, and Business ecosystems can be a game-changer for banks,
refine them in parallel. Some ideas will not work out but giving them the means to grow into new markets, acquire
understand that the knowledge gained from these efforts new customers, and enrich their portfolio of offerings. But
will help refine overall ecosystem strategy. it requires that financial institutions devise a ecosystem
strategy that is aligned to the business's customer and
Banks need to determine the most effective way to execute commercial ambitions, while crafting a roadmap that
an ecosystem. Don't immediately assume the answer is to considers the required capabilities and investments. Those
build own ecosystem. Banks may find that contributing to that approach the ecosystem opportunity in an assertive and
an existing ecosystem can be a much faster route to scale purposeful way can de-risk complexity and returns-and gain
and a smart way to gain needed learning before investing a jump on slower and less disciplined competitors.
in a new ecosystem. Banks that serve as an ecosystem
contributor need to define clear competitive and financial Achieving change depends on multiple factors. It's vital that
objectives to avoid margin erosion and cannibalization. banks become truly digital, embracing technology to
improve customer experience. They can use data analytics
To be commercially viable, the ecosystems must offer to understand their customers fully and design personalized,

real-time products accessible through multiple channels.
Customer service operations themselves are evolving, with
the potential to transform from reactive cost centre to
proactive value generator.

Across the wider organization, banking operations are ripe
for radical and holistic change. Legacy system issues need
no longer hold back new operating models, which can now
take advantage of developments in cloud services and open
banking. Indian banks can also explore new ways to capture
market value by developing an ecosystem offering - bundling
services beyond banking to serve customers better.

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