Just three years ago, it was considered clear in banking conferences that the future of banks lies in a transformation to platforms. Or even more drastically: that without such a change, banks would have nothing to oppose the big platform companies.
“Today we see that banks can still score with their unique selling propositions”
says Hartmut Giesen, fintech expert at Hamburg-based Sutor Bank.
“The platform economy has been significantly overestimated, it is crucial to understand the digital world with its diverse business models.“
The common assumption was that the banks would have to be prepared for the fact that a platform would revolutionize the industry in a similar way as Uber individual passenger transport or AirbnB would revolutionize the overnight accommodation market. Especially the big techs with their platforms run the risk of penetrating the financial sector. Banks would only have the chance to become platforms or suppliers for platforms themselves.
“In retrospect, the platformization of the economy in general and with a view to the banking sector in particular was overestimated”
says Giesen.
No platform has stirred up the financial sector – no bank has become a platform
“To date, we do not see any platform that would have stirred up the financial sector, except for some areas, such as Check24 in the credit sector or the large construction financing platforms.”
so Giesen. Nor is it to be seen that banks have changed beyond some rather prototypical approaches to platforms.
“Apart from the possibility of integrating accounts of other banks into your own online banking via PSD2 interfaces, for example”
says Giesen.
Even the big tech companies, which were considered “platform role models” alongside industry platforms such as Airbnb and Uber, are not platform companies – and are becoming less and less so.
“On the contrary, they pursue very diverse business models, which is what makes their success”
says Giesen.
“And the past few years have also shown on the stock exchange: neither the most valuable companies in general nor the most valuable fintechs in particular are platform companies.“
But what you can actually see is that BigTech companies, and especially the two players that dominate the mobile customer interface – Apple with iOS and Alphabet with Android – are expanding their business model mix to include financial services. Starting with Apple and Google Pay, additional services will be offered on the basic payment process. Apple delivers its own credit card in the USA – still contributed by a bank –, now buy-now- pay-later offers are also included, which in this case are also processed completely under its own direction.
Advantage of banks: approvals for many types of financial transactions
“Big techs always start from the end customer interface and integrate their value chains very consistently vertically down to the server level”
says Giesen.
“The next step is to take a look at your integrated value chain and analyze which parts of it you are modularizing and monetizing.“
The big techs are not only the leading smartphone providers (Apple, Alphabet), e-commerce companies (Amazon) or desktop operating system providers (Microsoft), but also the leading cloud computing providers, advertising companies, logistics operators or AI service providers – and now also the leading end customer payment providers, for whom it is completely irrelevant which credit card is deposited by which bank.
“Here, although banks are threatened by the big tech companies, they also have something to oppose,” says Giesen. “Above all, regulation and the balance sheet are its unique selling propositions.“
Unlike newcomers from other industries, banks already have approvals for many types of financial transactions.
“It is not only important to get the license, but also to fill it with life and knowledge”
says Giesen. After all, how regulation had to be applied in practice had often been clarified with the supervisory authorities over the years.
“It’s often the details that make the difference”
so Giesen.
Based on this, banks have to decide which digital business models they can pursue themselves.
“Platform business models are part of this”
says Giesen.
“Others are as-a-service concepts around embedded banking approaches such as regulation-as-a-service, financial products-as-a-service or trading-as-a-service.“
Or innovative business models based on blockchain technology, which the crypto crash does not make obsolete by any means.
“The decisive factor in all of this, however, is that the focus is not on a specific business model, but that the banks open up”
so Giesen.
“For this, it is important to master digital technologies such as API, blockchain or AI.“
This also includes digital thinking, which is characterized, among other things, by its ease of change, rapid adaptation of banking processes and “continuous innovation”.
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