An ecosystem approach involves bundling services beyond banking to offer customers a friction-free and far-reaching service. These service bundles could focus on different aspects of individuals’ lives, such as housing, retail, mobility, retail and wellbeing, as well as financial health.
In an ecosystem offering, a multitude of actors provide their products and services, and are integrated on a single digital platform destined for the customer. Adopting an ecosystem play allows banks to address a bigger share of total wallet by expanding the points of access to their financial products. They can also strengthen their strategic positioning by providing non-financial services that customers would be willing to buy.
In a housing-focused ecosystem, for example, a customer could use a single platform to fulfil their journey from searching for a new property to its ultimate sale. Interim actions supported by the digital platform could include financing the property purchase, obtaining insurance, completing renovation works, moving in and property management. Services provided could include a mix of banking services, such as mortgage pre-approval, mortgage loans, house insurance, credit cards, investment advice and renovation loans, as well as numerous non-banking services, including estate agency, legal advice, architecture and design services, utilities, contractors, moving services and furniture retail.
Many different customer needs can be addressed through ecosystems. For example, we have supported a client in developing a platform to create and support an ecosystem of players focused on business customers in the agriculture and food sector. The platform allows bank customers to access numerous services for the development of their business and take part in a supportive network.
Services may be offered through a differentiated services model, reflecting different customer preferences and differing service provision costs. Some services might be provided for free, others through paid subscription packages and some made available on-demand on a pay-per-use basis, or along the lines of current banking services.
Three core approaches are open to European banks when launching an ecosystem offering. As a builder, the bank owns the platform as well as all the products on the platform – an approach that requires heavy investment in order to provide all the products and services across an end-to-end customer journey for a specific need. Alternatively, a bank could strategically position itself as an integrator, owning the ecosystem platform and orchestrating a mix of in-house and third-party products – an approach requiring strong partnership capabilities and organizational agility. Thirdly, a bank could opt to be a provider, offering its products and services to digital platforms owned by third parties – requiring less investment but still based upon digitized banking products and a compelling go-to-market proposition.