Digitisation is driving the convergence of industries across the globe resulting in traditional financial services groups contending with a range of new competitors, says one of SA’s big four banks – Standard Bank.
According to the findings of a report by world-renowned platform economy expert Sangeet Paul Choudary and Standard Bank’s Wholesale Clients Digital unit, the implications could be dire for financial services organisations that are unwilling to adapt their strategies in these changing times.
Standard Bank’s newly released paper, titled The Power of the Platform Economy for Financial Services, looks at the fast-growing platform economy, in which value-creating interactions are facilitated by digital intermediaries.
It unpacks the new opportunities this presents for financial services institutions to deepen their customer relationships and tap into non-traditional revenue streams.
This follows the paper released last year which analysed the challenges facing the continent’s platform economy, the path it is likely to follow, and the untapped opportunities for long-established organisations.
The platform economy has gained further relevance amid the COVID-19 crisis and is increasingly shaping how financial products are distributed, how customers are served, and how underlying financial infrastructure is scaled.
“The pandemic has also reaffirmed that digital technology has the innate ability to bring us closer together – to be more human and connected, not less,” says Margaret Nienaber, CEO of Client Solutions at Standard Bank Group.
“At Standard Bank, we are aiming to find a balance between being truly human and truly digital. With digital disruption impacting the industry, clients expect personalised experiences at any time on their preferred touchpoints.”
As the financial services industry is unbundled, and as value is directed towards new business models, the vertically integrated value chain of the industry is being transformed into a layered financial services value stack.
“Traditional schools of strategy are changing and the days of chasing sustainable competitive advantage are over,” says Kent Marais, Head of Digital Channels, Wholesale Clients Digital at Standard Bank Group.
“Instead, organisations must strive for temporary positions of competitive advantage and remain agile, combining offensive and defensive strategies.”
Looking to the future, Sangeet Paul Choudary says, “the platform economy in financial services has been shaped by regulation and innovation in other markets across the world. In 2020, the pandemic initially stalled big-tech regulation, but 2021 is the year when regulation takes centre stage, starting with what’s happening in China. Platforms must figure out how to co-exist with regulation and ensure a more equitable way to distribute wealth and ensure incentives for the ecosystem to take risks.”