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How banks are using ecosystems to drive growth and profits

Ecosystem partnerships are making banks more relevant to customers today and may be crucial to bank profitability in the future.

In brief

  • The banking landscape is undergoing a profound transformation, powered by emerging digital technologies, rapidly evolving customer preferences and new competitive threats from FinTech and big technology firms.
  • The pace of change is so great that banks no longer can develop and manage all the best-in-breed products, services, capabilities and personalized experiences that customers and other stakeholders demand — one may argue nor should they even try.
  • To compete and survive, banks can embrace ecosystem business models to drive growth and generate value.

In a digitally interconnected world, effectively leveraging partnerships with FinTechs and other third parties to meet the needs of customers and shift non-core capabilities outside the bank has become a strategic imperative.

Banks come to ecosystems with some powerful built-in advantages, including strong customer relationships and trusted brands. When those strengths are combined with third party supplied artificial intelligence (AI) and cloud-based solutions, banks, their customers and other stakeholders can all benefit. The challenge is determining the most effective ways to leverage these collaborative attributes.

In one common approach, the bank sits at the center of its own disaggregated financial marketplace, meeting customer needs and controlling costs with AI-enabled products, digital services, new back-office technologies and redesigned channels that can be complementary to its core offerings and often are created and managed by its third party partners. In another approach, banks participate in ecosystems run by another institution: witness the growing number of institutions providing point-of-sale financing to customers in retailer ecosystems.

Ecosystem-based strategies represent a significant change in how banks meet the demands of various stakeholders and create value. Banks can assess their own value chains to determine where partnering makes more sense rather than building or buying, and can then prioritize the solutions that provide the greatest potential returns.

How banks are benefiting from ecosystems today

Already, ecosystem strategies are making banks more relevant to customers, helping them to forge deeper relationships and capture larger wallet shares by providing the speed, scale and differentiated products to compete in a digital world. They also are making banks more efficient by allowing them to tap into innovative capabilities that are too costly to develop or run on their own. Notable examples include:

Enhancing digital products and reach

Working with technology partners can expand a bank’s digital distribution, improve product quality and lower customer acquisition costs.

Citibank is among at least eight banks that have partnered with Google to offer digital checking and savings accounts to Google Pay users. The relationship, slated to begin in 2021, allows Citibank and others to deliver branded products and advice via Google’s platform, expanding their reach with digital-only customers.

Outsourcing product capabilities

Banks may not need to develop and support best-in-breed digital solutions and products when third parties have the technology and scale to do it better.

M&T Bank has partnered with LPL Financial, a investment advisor and independent broker-dealer, to provide its brokerage and insurance advisors with access to LPL’s scalable platform, integrated workflows and differentiated product offerings. The arrangement allows M&T advisors to focus on client relationships while the bank improves efficiency and redirects investments to core operations.

Enabling access to banking services in other ecosystems

Customers increasingly expect frictionless access to bank-held data, as well as banking products and services, when they transact in other ecosystems. Providing partners with secure access to their systems can allow banks to bridge those ecosystem gaps and stay relevant to customers.

Intuit’s QuickBooks employs a secure API that allows it to access permissioned account information and banking capabilities. The technology makes it easier for bank customers to manage their financial lives in an integrated fashion, enhancing the value of the relationship.

Outsourcing critical processes

FinTechs often boast digital processes and capabilities that can help banks provide positive, seamless and efficient client experiences while eliminating the need for costly updates. 

PNC Financial leverages OnDeck Capital’s digital onboarding process and use of external data sources to accelerate and simplify its small business lending process. The partnership reduces loan approval times from days to minutes while allowing PNC to maintain control over its risk appetite.

Focusing on core capabilities

Shifting management of non-core products and capabilities to a partner can allow banks to retain and strengthen customer relationships while focusing resources on core strategic priorities.

State Farm recently sold its banking, mortgage and credit card businesses to focus on its core insurance business. But agents continue to offer bank products to customers through partnerships with those buyers, making State Farm a customer destination for meeting financial needs.

Opening new markets for products and services


Ecosystems can allow a bank to disaggregate and securely market products and services to other institutions, which can generate additional revenue for the institution and create value for the partner.

HSBC has partnered with NepFin, which runs an online commercial lending platform, to provide growth capital and global services to the FinTech’s midsized business clients in the US. The arrangement allows HSBC to expand its product reach to digital customers it was previously unable to serve.


Monetizing internal capabilities

Ecosystems are an efficient way for banks to market their own internally developed capabilities to other banks, FinTechs and even nonbank companies.

BBVA provides banking-as-a-service (BaaS) capabilities through its secure open banking platform, allowing banks and businesses to offer white-label versions of its products and capabilities. The arrangement enables BBVA to monetize its core banking capabilities, such as payments, financing, identity verification and account origination, providing new revenue opportunities.

Four actions banks can take now to begin pursuing ecosystem strategies

Assess the business

Banks can identify clear strategic objectives for an ecosystem business model, and then establish a framework based on those objectives to assess existing capabilities and value chains.

Key questions in the assessment may include:

  • How would ecosystems fit into the broader business strategy?
  • Which customer segments should be targeted through the ecosystem, and what value propositions will drive ecosystem participation for each of those segments?
  • What areas provide the greatest opportunities to free up capital by outsourcing to an ecosystem partner?
  • What product deficiencies and operational inefficiencies need to be addressed, and is that best accomplished through building, buying or partnering with a third party?
  • What products and/or capabilities do you believe are core or create enough distinctive value that they should not be considered as part of an ecosystem?
  • What products, services and capabilities could you offer to others through a BaaS model?
Evaluate and prioritize focus areas

Analyze potential partnership opportunities for strategic and cultural fit, commercial value, customer alignment and other relevant factors. Prioritize those opportunities that provide the greatest benefits using a well-defined, measurable framework and target areas for short-, medium- and long-term investments.

Develop a road map

Define a plan for top ecosystem priorities, bearing in mind organizational limitations, and ensure that the plan aligns with the bank’s overall strategy. Ensure that the bank has the talent, tools and IT capabilities to accommodate a platform-based business model.

Define key resources and investments required to implement the plan and prepare to manage the experiences of affected stakeholders. Finally, establish a program management office or control tower function to oversee execution of the activities.

Execute the transition

Identify specific partners and business models for each opportunity, conduct due diligence on potential partners and work out the details of partnership agreements, including ownership, management, branding and communications rights, and exit provisions.

Form teams with clear goals and accountability to work with the partner on integrating the new capability. Create well-defined execution plans and ensure that partner incentives are aligned with those of the bank. As ecosystem capabilities mature, consider developing a center of excellence to manage ongoing ecosystem relationships.

Embracing ecosystems is a strategic imperative for banks

The accelerating digital transformation gives banks an opportunity to be more relevant to customers and drive profitability. But things are moving so quickly, it’s no longer possible for institutions to internally develop and manage all of the products, capabilities and services needed to compete.

Collaborating with partners through platform-based ecosystems has emerged as an effective way for banks to leverage customer trust and bolster product and service offerings to improve customer experiences, deepen relationships and drive revenue growth. At the same time, shifting non-core functions to third-party specialists can enhance efficiency. 

The views expressed in this article are those of the author and do not necessarily reflect the views of the global EY organization or its member firms.


Banks can first identify the products, services, capabilities and user experiences required to meet the needs of various customer segments, and then determine which ones they have the internal capabilities to offer and which would be best sourced through a partnership. In a connected platform world, banks may not be able to do everything themselves. They may need an ecosystem strategy to survive.