The provision of financial services is changing fast and becoming increasingly competitive. Different marketplace models, platforms and ecosystems are creating an exciting future ahead for those ready to act, with services such as embedded finance and Banking as a Service increasing in adoption.
For me, five key drivers of success in this fast-changing world include:
Culture
Creating a unified vision and change of mindset across the organisation is fundamental. As I discussed in my previous post on digital transformation, when everyone is clear on the vision and purpose of transforming – and is acting in a lean, agile, collaborative way – it becomes much easier to adapt to industry changes and to spot and exploit opportunities that arise.
Platform
Facilitating innovation and delivering against the vision will be easier to achieve by adopting an open platform and open APIs. In a 2023 article, McKinsey outlines how the platform-based approach has enabled incumbents to go to market in a fraction of the time, ensures digital transformations are aligned with business strategy, and increases product and operational efficiencies. Having the agility to respond quickly to changing customer needs and deliver new products and services at speed is critical going forward.
Talent
Alongside a platform-based approach, it’s essential to invest in people and in developing the skillsets that will help bring the vision to life. Collaborating with partners through an interconnected platform-based ecosystem means it’s no longer just about cultivating and managing talent inside the organization, but also beyond, and having skilled people in place to build and manage those relationships. A recent report from MIT Sloan Management Review on Workforce Ecosystems explores how organizations often lack an integrated approach to managing a workforce in which external workers and partners play a large role. This has led to the idea of creating a workforce ecosystem, where everyone is united around a common purpose, with complementary individual and collective goals.
AI and data analytics
Using machine intelligence to complement the organization’s human workforce is increasingly important. Firms like Amazon, Microsoft and Salesforce are leading the way – employing analytics at every level of the business to become more intelligent, insight-led organizations. Financial institutions must do the same – leveraging the data they hold to deliver meaningful insights that are of real value to customers. 2024 will see the increasing use of AI in industries such as health care, education technology, and cybersecurity. Institutions use data collected on customer behavior to help them personalize and transform the customer experience and make product recommendations.
Great use cases
A key driver of future success will of course be delivering useful services that customers want. Financial institutions must become more customer-centric, focused on delivering services that make life better and easier for the customer at the time of need. The cloud, platforms and open APIs are bringing industries together around new marketplaces designed to serve customer requirements end-to-end. Examples include real-estate agents offering mortgages, retailers offering credit and loans, and car manufacturers offering insurance and payments within the vehicle. Financial services firms need to think creatively about how to reach these customers, including selling their products and services through third-party partners or marketplaces.
Forrester’s 2021 report, How to Succeed With Marketplace Business Models in Financial Services, predicted a more open, participative marketplace approach and we have seen an increase in partnerships between firms and ecosystem-centric strategies in the industry, demonstrating a shift in thinking in order to achieve marketplace success.
Culture, platform, talent and AI are all essential elements in enabling organisations to think differently and in creating and deploying use cases tuned to meeting customer needs. All five ingredients are crucial to future success.
