Platformization is changing business models in all industries. Be it retailers with no inventory, taxi companies with no cars or car manufacturers that become mobility providers. Open Banking is the new keyword in the banking industry, pushed forward by regulation like PSD2. It means the creation of not only a platform, but a whole digital ecosystem. Follow this blog series to find out what an open banking ecosystem is and how to get there.

Think Big but Start Small

Before kicking off any large-scale transformation programs, take some time and find out what the core value proposition of your Open Banking Ecosystem should look like. Always keep in mind that simple solutions are the most attractive ones for users. As a first step, you want to overcome the chicken-egg problem to generate positive network effects, so keep it simple and focus on your dedicated target group!
After successfully shaping your core value proposition, it is key to create positive network effects since the goal of an Open Banking Ecosystem is to create a virtual environment where producers and consumers are able to interact with each other and create value. This means that products and services are no longer determined only by internal product strategy, but by the demand of your consumers and their needs. The more producers and consumers engage on the platform, the more value adding products and services can be provided.

MVP – Ready, Set, Go

The idea of a minimum viable product is a solution capable of providing enough features to satisfy the needs of your dedicated MVP user group at go-live. With the MVP of your Open Banking Ecosystem you create the foundation of your final product. Therefore, you need to identify relevant and value adding features for your selected target group. Keep in mind that a simple setup helps to adjust and scale your solution in the long run.
If you look at other industries it becomes obvious that time-to-market is a critical factor. In order to accelerate the development process of your MVP, it is vital to focus on your USP instead of commodity features. You as a platform owner do not benefit from the software used, but rather from the moderation and curation of your platform interactions. Furthermore it is sufficient to buy-in the commodities needed and therefore focus on the platform interactions.

In order to effectively implement the necessary conditions for your MVP and all further steps, you need to be aware of the conservative reflexes which might arise within your organization. Core functions and commitments will be disrupted to ensure the openness of your future ecosystem. It is not easy to determine which variables need to be adopted and what can stay the same within your organization.
It is imperative to ascertain the baseline of your organization as well as its strengths and weaknesses. In order to find out about potential obstacles in your IT architecture or the regulatory impact you are facing, it is mandatory to work in an agile environment. Developing your MVP iteratively will shed light on stumbling blocks that may come on your way while ensuring responsive measures to overcome them. Without trying to diminish the benefits of agile development, be aware of its limits as not every problem can be resolved with agility.

Operation Means Preparation

By developing an Open Banking Ecosystem you are initiating a disruption from the inside of your organisation, which means that unlike to sectorial disruption, you can set the pace. This may sound enticing, but it also means that trade-offs will be required. To provide orientation and develop a common understanding of potential trade-offs when negotiating inherent tensions, you can consider our implementation compass:

Unlike traditional systems’ operations, your platform needs to be more anticipatory. When it comes to the organisation of DevOps teams, it is crucial to integrate them at early stages, so an iterative development strategy takes root.
Scalability is a major success factor for your platform, making it imperative to have all critical processes established end-to-end. APIs are the technical heart of your platform because they provide access to back-end functions, and give third parties and developers the opportunity to create value adding products and services. Due to this shift in value production, all functions within the middle and back office must be enabled so they can perform their new duties.

Do Not Stop, Expand!

You are only half way done following set-up. The Open Banking Ecosystem you have established must now evolve. The platform’s range of services have to be expanded on a horizontal and vertical level. The horizontal level aims at broadening banking and services beyond banking. While the vertical level expansion involves improving and extending core functionalities like payment transactions or accounting tools.

Regardless of whether you begin extending the platform’s features horizontally or vertically, it will not pay off until it achieves critical mass. Sometimes setting up a critical mass can be exhausting and frustrating, but do not be discouraged.
A successful platform strategy also consists of possible ways to monetize value streams, which need to be identified before new features are implemented. Independent of the actions taken to develop your platform and its ecosystem, always keep in mind that it must support the interaction between producers and consumers.

Connect the Dots

The openness of your ecosystem applies not only to your IT system landscape, but also to your mind set when developing products and services. A successful digital ecosystem is far from perfect and does not need to be developed by yourself. There are plenty of professional providers of commodity features, which can be utilized to focus on the most important aspect of your platform: interaction.


Find out more about this topic:

Open Banking Ecosystems (1): The Winner Takes It All!

Open Banking Ecosystems (2): How to elaborate a target picture

Open Banking Ecosystems (3): The Platform’s Network

Open Banking Ecosystems (4): API Devotion

Open Banking Ecosystems (5): Platform Data

Open Banking Ecosystems (6): PSD2 as an opportunity to compete