How to shape and benefit from an ecosystem – the five “dos and don’ts” - Banking blog

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“Ecosystem” has become a buzzword over the recent years and it seems that the term is used for any business relationship. Do we really understand how to successfully be part of a vital ecosystem? While the motives to engage in ecosystems can vary considerably, we observe a number of “dos and don’ts” in the market that apply to all ecosystem players. In this blog post, we provide an overview of the most critical ecosystem success factors, based on project experience with leading financial service providers, market observations and our latest Deloitte study "Ecosystems 2021 – What will the future bring.

Five "dos" – crucial to extract benefits from an ecosystem:

  • Open to co-creation: Combining an open mind-set with the principle of collaboration beyond company boundaries - this usually requires major cultural change management efforts
  • Transparent communication of skills and values: Show transparency when it comes to company skills and values when interacting with ecosystem partners
  • Find your ecosystem sweet spot: Identify a suitable role within the ecosystem. While "keystone" and "value dominator" may be the preferred roles, there are likely only a few companies with the required capabilities to credibly play such challenging roles
  • Gain agility: Constantly challenge the company’s own status quo, business model, governance and behavioral patterns to evolve along a continuously changing and further evolving ecosystem
  • Accept complexity: Proactively face any challenges and shape opportunities for prototyping new business and operating models

Five "don’ts" – to eliminate setbacks and overcome boundaries in an ecosystem:

  • Technology focus: Do not focus on technological specifications only (e.g., APIs); technology is an enabler of an ecosystem, but not a guarantee to improve client experience or create tangible client value
  • Industry focus: Don't set the focus solely on your current industry – instead, think out-of-the box and take a cross-industry and multinational perspective
  • Design in isolation: Don't design an ecosystem without clear benefits for all participants – instead, provide evidence and incentives for potential stakeholders to actively participate in the ecosystem. Test and co-create your ideas with other participants
  • Rush into go-live: Don’t produce an isolated application or platform – instead, test and measure the additional value-add generated by an interactive change approach - with involved participants
  • Budget restrictions: Don't restrict the available ecosystem implementation budget and project resources to unrealistic levels – instead, provide sufficient resources to ensure a fit-for-purpose design, build-up and go-to-market of the ecosystem

Shaping a financial ecosystem

There are some considerations specific to the financial services industry:

  • Act in a customer centric manner and achieve client intimacy: Strive for a deeper understanding of your consumers and predict their true future needs by leveraging additional data from ecosystem sources
  • Be open to partnerships with non-financial services firm: By building on each other’s core strengths (e.g. data from social media platform in combination with banking know-how), all involved parties will benefit and achieve higher consumer satisfaction
  • Re-think data protection and bank secrecy: Protection of client data is undoubtedly a key factor why clients generally trust their banks. Nevertheless, to thrive in ecosystems, banks will need to think beyond current concepts to leverage mutually beneficial ways of sharing data
  • Develop a Minimum Viable Ecosystem (MVE): Apply a "venture like" step-by-step approach when developing a MVE, starting with a sample of services (e.g. insurance products via your e-banking channel) and continuously expanding your service offering

The Minimum Viable Ecosystem (MVE)

The multi-dimensional development of new business and operating models in an ecosystem are complex. How can financial services providers adapt to this environment? One way is to develop a Minimum Viable Ecosystem to test and learn as an organization launches new products or services.

In a first step the financial services provider needs to identify the problem (“Why”) and validate how the corresponding products and services are produced swiftly in a start-up like way (“How”). Based on the combination of products and markets, a Minimum Viable Product (MVP) can be setup (“What”).

How to shape

The final step is for the MVP to be integrated into an initial ecosystem by involving various players (“Who”) and jointly defining the value proposition for the customer. Once defined, this initial ecosystem is tested and validated using prototypes before it is implemented and becomes its own MVE. Depending on the business model of the financial service provider, a MVE can be scaled up to a greater or lesser extent.

“While the Minimum Viable Product (MVP) evolves out of the Problem-Solution-Fit - from problem identification to the definition and application of an appropriate solution - the MVE is defined by the Product-Market-Fit. Instead of designing for a specific customer, you are designing for example a marketplace with many different actors in the value chain — some of whom are customers” (Michael Lewrick, Head Innovation Labs Deloitte Switzerland).

Following the “do’s and don’ts” and understanding the concept of the MVE will avoid potential misunderstandings between ecosystem participants at an early stage, and help to accelerate the process of designing and establishing a successful ecosystem with tangible benefits for all stakeholders involved. In our next blog we will look at the individual roles of these stakeholders more specifically.

 

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Patrik Spiller - Partner, Head of Monitor Deloitte Strategy Consulting

Patrik is the Partner leading the Swiss Financial Services Strategy Practice, with over 17 years banking industry experience. He supported many of the leading international wealth and asset managers in the development of commercial excellence, pricing and innovation strategies,  major restructuring and transformational strategies, strategic cost reduction initiatives, and M&A assessments. Patrik focuses on operating model optimization and commercial excellence, improving bank’s revenue and cost base and delivery capability. He managed projects for most of the leading global banks, developing expertise in areas such as corporate strategy, IT strategy, organisational design, cost reduction, and offshoring strategies.

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Cyrill Kiefer - Partner,  Consulting 

Cyrill is Partner in the Banking Transformation Practice. He has successfully led various «end-to-end» transformation projects from strategy to go-live in the area of trading, regulatory, sales excellence, digitalisation and organisational change management. He has more than 18 years of consulting experience in serving retail- and private banks as well as market operators. Cyrill focuses on optimising the interaction between banks and clients by using digital solutions and develops agile front-end solutions for the Fintech industry.

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Michael Lewrick - Head of Innovation Lab Deloitte Consulting

Michael is a digital leader and author with 15 years' experience in strategy and business development, 4+ years of leading innovation and digital transformations, and 3+ years as entrepreneur.
Michael has a high technology affinity to Blockchain, Big Data Analytics, AI etc. He is a fast learner about emerging technologies able to quickly apply those learnings, multitasker and self-starter who is driven by achieving business objectives.
He teaches Design Thinking as a visiting professor at various universities. With his help, a number of international companies have developed and commercialized radical innovations. In his international bestseller, “The Design Thinking Playbook”, he postulates with his colleagues from Stanford University a new mind set of converging approaches of design thinking in digitization. Currently, his research is focused on the Design of Business Ecosystems in the digitalized world.

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Alexander Eppenberger - Manager, Deloitte Consulting Strategy & Operations

Alexander is a Manager in Strategy and Operations practice. He has more than 8 years of consulting experience in the financial services industry and supports the identification of new value chains and the transformation of existing business into the desired target state.
With his in-depth knowledge in Ecosystems, Technology and Regulatory he advises leading financial institutions by applying the Design-Thinking approach and fosters business excellence principles.

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Comments

  • Great!

    Posted by: on May 30, 2019 at 09:46

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