EVERYTHING IS A PLATFORM
2015
was all about
blockchain
2016
2017
saw an explosion of interest in
machine learning
and artificial intelligence.
will be the year of
open marketplaces and platforms.
Platforms support the rapid cycle deployment
of micro services into a financial marketplace...
As the financial world is rapidly moving to open, loosely coupled marketplaces,
any bank with old legacy technology will start to look like a dinosaur
Thomas Labenbacher
Top 30 Fintech Influencer, an ex-Banker,
a serial Fintech entrepreneur and a business angel.
Partner at Life.SREDA VC
Blockchain Fund & Platform Initiatives
Bank Executive Austria
Retail Board Member
Western Union Bank
Co-Founder of Fidor Bank intl.
and Fidor Pay
Head of Transaction Banking Division
Chairman of the Financial
Services Club CEE
AGENDA
Customers expectations
Regulation
Open banking and API
Platformication
Technology
Ecosystem
Business/Operating model
What we know already…
The world will be faster, more connected,
with a billion more participants in the global economy.
Most commerce will be initiated via mobile devices
and completed on a range of platforms.
Most transactions, when executed, will be multi-party:
between the app and the underlying services.
Social media with effective partitions and channels
will be the dominant mode of communication.
Data will be a unit of value and a mechanism of lock-in.
Does a bank offer….
Customer Managed Pro-active
advocacy journeys advice
Information
consistencySocial
Nuturing
communities
interactions
Connected
Engaging experiencesTouch-based
& voice-based
applications
…for the customer?
Banks have to have…
Processes to be streamlined and cohesive,
with key functions ‘bundled’ for user convenience
A one-stop portal with seamless reconciliation across
their user profiles
Channel convergence and access to services on multiple
devices through a user-friendly and instinctive interface
Advisory services, information and suggestions reflecting
their transaction and activity history and other userspecific data
Instant transactions and many more
Regulation is…
TRANSFORMATION THROUGH REGULATION
not through customer demand or banks evolution
PSD 2
– mandating banks to open up
the customer’s bank account to external
parties in a safe and secure way, encourages new players to enter the payments
market and gives ability to access to
own banking information from multiple
providers in the same place
88%
of consumers have already
used alternative payment methods
Basis for leveraging PSD2
REGULATION IS DRIVING COMPETITION
and is prompting platform models and manufacturing
Banks are insecure about
PSD2-implications
and strategic chances:
banks forsee
changes,
customer centricity,
competition &
collaboration
with 3rd parties
First movers show that
banks may benefit from
open infrastructure and
data leveraging
BANK NEED TO BE DATA VAULTS AND MONETIZING DATA,
WHILE OPENING UP SYSTEMS!
Regulators are (have to)
becoming business agencies
Are competing against
each other in the long run
and need to collaborate
to exchange and accelerate
cross-border business
A new role and new skills
are required
Is RegTech
the pseudonym/accelerator
for regulators to have
a common framework
within Europe and other
countries/continents?
Many companies are faced the question,
whether they should open an API
to become a data service or platform?
Open Banking and APIs – What else …
The hype around banking APIs will increase, even overtaking cryptocurrencies.
Major banks will launch public API platforms.
Shamir Karkal, Head of Open APIs at BBVA
Simon Taylor, Co-Founder of 11:FS
APIs are arguably one of the biggest topics in the industry.
The business model for profiting as a platform is key here, and many are still struggling with it
Global regulators will embrace fintech competition and regulatory concessions …
Africa will embrace APIs … financial inclusion will become a mainstream and actionable topic …
and the US will embrace change in the regulatory and political system
David Brear, CEO and Founder of 11:FS
2017 will be the year of open marketplaces and platforms
Chris Skinner, Author and CEO of The Finanser Ltd
APIs and Open Banking will start to shift the banking landscape with more traction in Europe and
Asia, but we’re likely to start seeing the gap between leaders and laggards widen
William Sullivan, Head of Global Financial Services Intelligence for CapGemini
Open Banking & API
Startups and tech companies
Banks
Born in digital
Desktop OS: Unix, Mac, Windows
Bancorp – industry leading US-based
largest bank-as-a-service platform, hosting
100+ non-banks with processing volume of
$200+ billion USD annually. Different
clients of different size, including google
wallet, PayPal, T-Mobile, yodlee and others
In 2H 2016 BBVA launched its API marketplace, aimed to offer other companies a
way to leverage BBVA’s capabilities to build
their services. Fintech startups has an
access to such APIs as PayStats, Connect,
Accounts and Cards
In 1H 2016 was launched solarisBank,
banking-as-a-platform startup with a full
banking license in Germany. It provides
account and transaction services, compliance and trust solutions, working capital
financing, and online loans for fintech
startups.
In 4Q 2016 Citi launched global API
Developer Portal aimed to open architecture to facilitate collaboration with FinTech
companies. APIs includes account
management, p2p payments, money
transfer, rewards, investment purchases
and account authorization.
PDAs: Palm, Psion, Newton
Game Consoles: Wii, Xbox, PlayStation
Network Switches: Cisco, IBM, HP
Multimedia:
Adobe/Flash, MS/Silverlight, Google-Apple/HTML5
Payment Systems:
PayPal, Google Checkout, Visa, Apple, Mobile Felica
Mobile Devices:
iPhone, Android, Symbian, Blackberry
Enterprise Systems: Salesforce, Oracle, i2, IBM, SAP
Social Networks:
Facebook, MySpace, LinkedIn, Monster, Twitter
Batteries: Sony, Panasonic, Sanyo, A123
Fidor, started in 2009 as fully licensed digital
bank, in 2013 launched its bank-as-a-service
platform FidorOS and provided suite of APIs
to different non-bank clients, mainly fintech
startups. Recently largest mobile operator
Telefonica launched mobile banking O2,
backed by Fidor.
Otkritie, the biggest privately-owned bank
in Russia, through the process of integrating with leading digital bank for SMEs
Tochka, developed its own modern
API-platform, that was later used to
integrate with fintech startups, including
mobile bank for retail clients Rocketbank.
Web Search: Google, Bing+Yahoo!, Baidu
eBooks: Amazon, iPad, Nook, Sony
Smart Grids: IBM etc.
Health Care: Microsoft, WebMD, IBM etc.
g
in
The strategic use of technologies to create platform business models is
driving enormous growth opportunities in the expanding digital economy
But the technology changes are only the beginning
S-
ac
q
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st u le
d n
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O
P
m
Non-tech digital leaders across all industries are unleashing
technology’s power by developing platforms
P
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ca bl em a
sh et s na
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it eta
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C ro
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w dl
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Platform models represent the most radial
disruptive change in the global macroeconomic
environment since the Industrial Revolution
Platform and it’s purpose
40%
ct en
o d
ri in
n g
g
believe adopting a platform based
business model and engaging in
ecosystems of digital partners are
very critical to their business successes
15%
25%
2005
2020
The unparalleled growth of the digital economy
has put it on course to account for 25 percent of
the world’s entire economy by 2020
In fact, many leaders are accelerating their uptake
of digital technologies and cloud foundations as a
crucial first step in breaking into the platform
world
82%
believe platforms will be the ‘glue’ that
brings organizations together in the
digital economy.
In
su
rt
ec
h
The iOS App Store
d
id
M
O
ac nli
q ne
u ir
in
g
le
w
ar
e
380K
developers
100B
downloads
1.5M
applications
* by the end of Apple’s fiscal year 2015
$33B
in sales*
PLATFORM BUSINESSES
ARE BUILT ON NETWORK EFFECTS.
THE MORE NETWORK EFFECTS,
THE STRONGER THE PLATFORM.
Platform – what to do ?
What percentage of investment should go into
ecosystem business models?
What types of ecosystems should be considered?
When should an organization choose a hub vs.
spoke strategy?
What is an appropriate pricing strategy which will
spur growth of the ecosystem or platform? Should an organization hedge its bets by playing
within competing ecosystems?
What sustainable competitive advantage and
differentiation can be gained from an ecosystem
model versus a traditional value-chain oriented
business model?
Incorporate ecosystems into market
and competitive research
Take an ecosystem view of the customer
experience to enable cross-industry thinking
Support and foster intra-ecosystem innovation
to move beyond traditional R&D
Build the capability to dynamically pull in new
partners for co-innovation, beyond your traditional set of business partners
Incorporate ecosystem metrics
into your innovation dashboard
Platformication: The Slack Story
Slack has deliberately aligned incentives with their ecosystem,
focusing on complimentary apps
These Slack apps are featured in a directory after a review is
conducted. This directory helps increase discoverability and
distribution
Slack assembled an $80M fund to directly invest in third-party apps
APIs should drive reciprocal benefits to the provider, third-party
app developers, and users. It’s not enough to just publish the API
and hope things works out
Lastly, when you find those keystone integrations in the ecosystem
that illustrate watermark use cases you’d like to see tackled by the
developer community — bang the drum for these apps!
How we see Tech & building blocks
BANKS
Sovereignity
Circle of Trust
National operations / Region
Cloud Services
New Foundation
API Strategy & Architecture
Digital Glue
Services
PSI
BAAS
Product silos
Open Source & Reusable software
Independance & Portability of software
Real time business model
Fintech
PERMISSION
Digital Partner
Core banking
Insurance
M
Gateway
BAAP
M
M
Legacy
PUBLIC
Foundation
Platform, API, Open Banking -
- Product silos
COST
OPERATIONS
What Tech we can bring to the table …
Layered Distributed Ledger
Payment & clearing immediately.
One financial ecosystem for all
applications – ASaaS
All financial systems, blockchain
protocols and all applications on the
market can be integrated.
Orchestration API for collaboration and
communication with Fintech & Digital
Partners
Compliance, Legislation and
Regulation
Optimise industry’s compliance and
regulation while minimising risk and
transaction time. Cut TCO for compliance down to almost zero!
Required audit logging, user tracking,
statistics and appropriate administration tool functionalities.
Settlement only when required and for
cash withdrawals.
Fees, commissions etc. can be delivered
through split transactions,
Smart contracts enable further applications
Universal Blockchain Protocol
& Regional Ledger
This allows minting of an identity, asset
registration and just in time minting of
any financial a./o. non-financial
transaction.
Secure and unique digital identities
Asset owner’s identity verified by layered ledger
technology which also embeds smart contracts.
Business/Operating Model: The BBVA Story
BBVA’s leadership has reiterated its commitment to digital since 2015
But BBVA cannot simply embark on a complete redesign of its business — especially when the ideal
target operating model is not clear
A good way forward in this type of scenario is to run experiments — they have invested in “beta banks”
across the globe in markets not primary to them
Aimed to find the optimal operating model that could potentially be at the core of the new BBVA
Following the investment in Simple in 2014 they have invested in Atom in the UK and Holvi in Finland
They are all very innovative approach — superb CX focus, based in markets where they
do not compete with an established BBVA entity
For BBVA this is a well-hedged gamble: invest a few hundred million dollars to get a well-tested,
blueprint of the bank of the future
How do we earn money
Past:
Traditional business models have been optimizing the supply chain and creating barriers
to entry by controlling or owning resources and assets.
Future:
The network effects of platforms, with more connected users and transactions, drive value creation and
scale (Demand-side economies of scale).
Platform sponsor gives away platform value
Retailer sales finance as loss leader
Partners build apps for installed base,
adding new layers of value
Lower capital requirements
Platform sponsor benefits from increased sales
& royalties
Less reporting costs
Full cost transparency
Partners benefit from cost savings and
installed base
Moving from fixed costs to variable
Broker commission
Structural costs savings
Own ancillary service to financial services
End-to-end process scope
Simplified architecture
Change the technical architecture and the organisation
to become a customer centric digital platform or launch
a new bank with digital as core.
While the majority of banking executives may feel comfort today,
very tough structural decision will be required around investment
in systems, distribution and new innovative products.
Being big and strong may not be enough to win the battle
for the customer in the future. Speed and agility count just as much…
if not more.
Every company has to become a software company !
Thank you