Fintech

Open Banking: How platform strategies are transforming banking

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Dr. Tim Sievers, Founder and CEO of Deposit Solutions

Five of the ten most valuable companies in the world today pursue a platform strategy. Central to the success of this approach is a focus on becoming the single source for their customers’ needs. To this end, the company’s own range of products and services is expanded to include products and services from other players in the market.

The advent of “Open Banking” has paved the way for this model to flourish in the financial sector and is already encouraging banks to review their business models, making lasting changes to the ways in which banks relate to one another.

Platform strategies separate the product supplier from the customer relationship, helping create competitive advantages for both parties. Very few banks can offer the best products in every segment of the market in the traditional self-contained approach. With the help of a platform strategy, banks can put together an optimal choice of both their own products and those of third-parties to compete across the full spectrum of the market, aiding both customer retention and acquisition. Product suppliers, on the other hand, achieve additional sales and reach new target groups by providing their services via the platform – without having to invest in the necessary marketing or customer acquisition themselves.

Since platforms in the digital economy are no longer limited by distance, the European internal market is also given a new lease of life by this differentiation of roles. The customer experience remains local, even if the product supplier has its origins in another European country. This is in part why the idea of a single European financial market is becoming a mounting reality.

Of course, the underlying principle is not new to the financial industry. Before “Open Banking” was

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