Financial Services: Who will be leading the next Ecosystem? - Banking blog

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Ecosystems and digital platforms are expanding across economies, influencing and disrupting traditional business models of multiple industries worldwide.

Michael Lewrick, Head Innovation Labs, Deloitte, predicts that in the next 10 years approximately 1/3 of all revenues worldwide will be generated by only 15 ecosystems: “So it is time that we rethink and consider what role one can take in an ecosystem”.

Especially in the financial services industry an ecosystem play becomes paramount to reduce the risk of future marginalization and to tap into new ways of strategic growth. But who are the predominant players in an ecosystem? What roles can financial services providers play in it? And, most importantly: Who will be leading the ecosystems of tomorrow?

Five different roles in ecosystems

  1. Keystone player: Orchestrates the system, provides standards, interacts with other providers and often is one of the imitators of the ecosystem (example: Amazon)
  2. Niche provider: Leverages existing channels, offers (mostly) specialized services, contributes with select elements to the value proposition (Example: Wirecard)
  3. Value dominator: Maximizes the share of profit while accepting a win-win-situation for all ecosystem partners (example: Nespresso)
  4. Standard provider: Achieves cost benefits by enabling standardization or mass customization through artificial intelligence and end-to-end automation (example: State Street)
  5. Physical dominator: Maximizes the internalization of the value chain with the aim to extract additional benefits, strong focus on independencies (example: Migros)

To create maximum value for participants of an ecosystem, it is of importance to determine their desired positioning in an ecosystem. Own strengths and capabilities as well as the composition of the participants of an ecosystem are key factors to determine this positioning. For example, technology and trust are crucial for the keystone player, whereas the niche provider is focusing on providing specialist knowledge and services.

Financial services providers in ecosystems

Financial services providers who have the ambition to establish or become part of an ecosystem, should have three dimension in mind while engaging with a new ecosystem:

  • Focus on your core competencies: Be aware of key capabilities and select an ecosystem role which leverages specific expertise
  • Collaborate with partners: Produce and deliver products and services jointly in collaboration with suitable ecosystem partners
  • Leverage technology standards: Build a service-oriented IT architecture to share data and offer services along the full value chain

Findings from the Deloitte study "Ecosystems 2021 – What will the future bring" revealed that most Swiss financial service providers strive to position themselves as keystone players or value dominators. However, not all financial service providers can be taking this role due to a limited amount of roles available and the needed strength and skillset for these roles.

Types of ecosystems

Ecosystems are based on the collaboration of specialized players that may or may not include competition. They are orchestrated market structures which balance flexibility and control and they are not hierarchically managed. Three types of ecosystems exist:

  • Innovation ecosystem
    Has the purpose of developing new products, services or processes through collaboration and co-creation between multiple actors (e.g. joint work between fin-tech start-ups)
  • Knowledge and information ecosystem
    Includes ecosystems that use knowledge and information resources to create value (e.g. collaborating with universities)
  • Data ecosystem
    Allows for exchanges of data to improve customer understanding and to ameliorate pricing, operations, and marketing decisions (e.g. collaborating between competitors or industries)

Business ecosystems – the next generation

The next generation of ecosystems evolves from various relationships, interactions and trust networks. The value for consumers is created by combining key elements of the three types of ecosystems:

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The next generation of business ecosystems position themselves somewhere along the interface of the three ecosystem types. This new version of ecosystems aims to create value by leveraging and combining resources from all three ecosystems.

A leader in such an ecosystem will orchestrate existing ecosystems and will need to accurately manage the complexities of all involved interfaces. Firms that are already positioned as orchestrators of current ecosystems may have the most suitable skillset and expertise to take a leading role in participating in the next generation of systems. From a macro perspective, this "winner takes it all" phenomenon may therefore lead to an increasing consolidation of market power.

In the next blog series, we will provide practical insights on how ecosystems successfully drive business value by focusing on selected existing case studies.

P.Spiller Photo

Patrik Spiller - Partner, Monitor Deloitte Strategy Consulting and Wealth Management Industry Lead

Patrik leads Monitor Deloitte and the Wealth Management Industry Practice in Switzerland. He has over 17 years of experience in banking industry consulting. He supported many leading international banking institutions and wealth managers in the development of innovation and transformational strategies, technology and operational strategies as well as shaping cost reduction programmes.

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Ch-blog-michael-l

Michael Lewrick - Director, 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.

Michael 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, he focuses on the Design of Business Ecosystems in the digitalized world.

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Christoph Kunzle 06

Christoph Künzle - CFA, Senior Manager, Monitor Deloitte Strategy Consulting 

Christoph Künzle is a Senior Manager in the Monitor Deloitte Financial Services team in Zurich. Since over 14 years he is responsible for the Swiss and European banks in the field of Wealth and Asset Management and has extensive experience in the areas of growth strategy, digitization, innovation, organisation and governance as well as front-to-back transformation of financial services providers. 

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