Creating agility by combining the power of the Fintech Ecosystem

Today’s customers expect their banks to anticipate to their needs and respond immediately. They are used to direct and immediate engagement across a range of channels, products and services. While a growing number of FinTechs are anticipating to this need, they often only solve a small piece of the puzzle. Therefore, you see that bringing true value to customers can often only be achieved by working together with incumbent banks, Big Techs and other FinTechs.

To give a few examples, Revolut, one of the alternatives to the traditional banks, is using currency exchange services from TransferWise, another FinTech. Coinbase, one of the largest cryptocurrency platforms, is using Jumio to verify the identity of the customer in seconds. Rabobank developed SurePay, a FinTech solution that delivers a variety of account-based verification services to every major bank in the Netherlands. This article focusses on the challenges faced when combining forces within this FinTech ecosystem, but also the significant impact that these combined forces can bring, if they overcome those challenges.

Looking at this purely from a technical perspective, what does it take to set up a bank from scratch? It often involves designing and developing apps and/or a website, manage interactions with (potential) customers in a CRM system, and creating workflows and processes with potentially multiple integrations. It may include integrations with KYC/CDD providers, identification services, chat engines, or even using external APIs for bank account aggregation. It requires some sort of core banking system, and the list goes on. This may seem like a lot, but once you have a well-considered proposition, a scalable platform, and utilize the best of breed solutions in the marketplace, it is “just” a matter of gluing the pieces together.

There are a lot of opportunities in combining best of breed solutions. Often there is an orchestrator that brings the FinTech ecosystem together - whether that is another FinTech, incumbent bank, Big Tech, joint venture or even an incubator - it's very important to utilize each other's strengths.
As Deloitte we identified three enablers to become successful as orchestrator in a FinTech ecosystem: (1) utilize the power of the ecosystem to your benefit (2) a streamlined agile way of working across all parties involved (3) create an environment that stimulates innovation.

Power of the Ecosystem

The vast number of SaaS solutions in the FinTech Ecosystem provide an enormous potential as utilizing out-of-the-box solutions - sometimes disruptive by itself - allow you to focus on the value proposition and how this fulfils a need in the market. It allows you to truly differentiate from competitors and spent more time on validation with real customers as opposed to getting stuck with complex customizations. By using the disruptive and innovative solutions of the players in the FinTech Ecosystem, the orchestrator is able to innovate at a much higher pace than competitors. The competitive advantage can be even further increased if you are able to translate their future roadmap into new products. It is imperative that orchestrators have a modular and scalable platform to be able to constantly utilize the power of the FinTech Ecosystem as it enables them to easily upgrade to new versions, and add new products or services. The true differentiators are foremost likely on the proposition side, but there are plenty of technical enablers that can make the difference between a sinking ship and a truly innovative incubator where the ecosystem jointly disrupts the industry.

A Streamlined Agile Way of Working

You may be working with 10 or even 20 different parties to achieve a common goal, which brings a lot of complex interorganizational dynamics. By introducing an Agile way of working you will not only achieve a common way of working, but it forces you to deliver in short iterations incrementally. Fast customer validation and creating proof of concepts is essential, you want to be able to fail fast and win big. A Minimum Viable Product can be broken-down further in smaller pieces of functionalities so that different development teams can jointly move in the same direction. Orchestrators need to think carefully about which solutions require customization and which can be used out-of-the-box. The more dispersed your development is across different parties, the harder it will be to coordinate activities and create an integrated delivery pipeline. Finally, equally important is to create an environment of trust between the different parties, you will have to create long lasting relationships in a short period of time. 

Away from the Mothership, without Legacy

Creating an innovative workspace is considered a critical success factor. Often incumbent banks choose deliberately to work outside the ‘mothership’ to ensure agility and stimulate the speed of innovation. Although this is not a guarantee for success, it goes to show that an innovative workspace and culture are important elements to allow for new ideation, experimentation, failing fast, and recovering with an improved direction. Make sure to invest time to properly design the optimal architecture and eliminate technical debt from day one. See it as an opportunity to shield yourself from traditional orthodoxies and get rid of legacy for the foreseeable time. Leveraging new technologies such as Cloud, microservices and an event-driven architecture allows for faster innovation than ever before. Especially in the earlier phases this is crucial as you are able to show results quickly back to your sponsors and/or investors.

More information

By working together, you will be able to create new disruptive solutions that transform the financial services industry, but to be able to do so you need to find a common way of working, keep utilizing the power of the fintech ecosystem, and be open for experimentation. If you want more information on our experience in the FinTech Ecosystem, please contact us using contact details below.