Marketplaces under one roof
The race for quick transfers, useful interfaces and modern design will no longer decide who rules in the world of digital banking. The competition will move to the next level, involving non-bank services, open banking, or the broadly understood Marketplace Banking, or platform approach.
One solution, three winners
The idea is not new and is successfully used in the e-commerce industry. The most striking example is of course Amazon. Everything is based on a simple assumption, I have a large service and good reach to customers in many countries, so you can sell your products on my platform for a small fee. This situation is classic win win win. The customer gets the lowest price, the small shop has practically guaranteed sales, the platform owner earns on brokerage.
In banking, this game has been started by the so-called Neo Banks, which, being unable to afford a full product offer, seek support from third parties. A model in which the client can compare offers, such as loans from various entities, on one platform. Of course, with everything in one coherent interface, giving the customer the feeling that he is dealing with one bank’s offer. And here everyone wins. The customer can pick from competitive offers, the third party makes money on the product, and the bank gains another client through intermediation, because the offer is always combined with the creation of an account in the bank.
Meeting all needs in one place
At the same time, customers are expecting more and more services to be provided through digital channels. These can be successfully implemented by the banks thanks to an open platform, and can be divided into three areas: fast micro services, a new bill payment model and advantageous purchases.
Fast micro services include the purchase of a ticket on public transport, paying a parking fee or even car or scooter rental. Users today are doomed to install multiple applications and connect their bank cards, or remember to make transfers. Immediacy of use for such a service is out of the question, and for those who use such services sporadically it is definitely a big barrier to entry. A solution enabling me to handle everything in my banking application (using immediate payment), while maintaining a consistent interface, benefits not only the end customer. The bank increases returns to its channel (the opportunity to sell a banking product), and the service provider gains access to a large database of customers who would not use its solution on a daily basis.
The competition will move to the next level, involving non-bank services, open banking, or the broadly understood Marketplace Banking, or platform approach.
Love with reciprocity
The subscription model for services is becoming more and more popular. Introduced by new technological players like Spotify, or Netflix, it has started to take over in traditional areas such as telecoms, and soon with some suppliers of electricity, gas, etc. Customers have fallen in love with simple fees, and hence fewer will use traditional online transfers. It is common knowledge that most users use this service to pay bills, not transfers between themselves. On the other hand, clients will find it difficult to manage all subscriptions in all these channels, and the ability to manage them in a bank literally on one page would be a simplification for them, while not giving banks control over client fees. Certainly, this option would benefit many technology companies that cannot afford such levels of marketing as Netflix or Spotify can.
And on to the last area, advantageous purchases. Here the banks have all the aces up their sleeves. They know what customers buy in so-called Real Time. Let’s assume a simple Amazon model, in which as a merchant I have the option of uploading lists of my products along with the price through the bank’s platform. I can, as a bank, recommend a supplier’s product when finalizing the transaction, which is the same or similar, but cheaper. There is benefit for the customer, new sales space for ecommerce, commission for banks plus an opportunity for upselling – if their recommendations are so helpful, why not take insurance from them, or spread the purchase cost over instalments.
The bank as a marketplace is an opportunity for even greater customer loyalty, opening new sales channels for its products, but above all, more reasons to return to my bank.
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