Dream of Platformification - A New Era for Banking

As we discussed in our previous article on the subject of micro-branches, the need for physical branches is diminishing, even if it hasn't yet entirely diminished.

This is driving a new ethos for banking where it is sold as a service rather than a traditional agreement between bank and customer for the storage and investment of capital. Digital transformation is of course nothing new, but we are now seeing a new kind of application for that principle, and it's one which has only been reinforced by the COVID-19 pandemic.

We are discussing the concept of platformification and the potential it presents to severely disrupt, not only the future of the physical bank branch, but the entire direction of the industry. However, we are always ones to find opportunity in challenge, so let's dive in and see what we can learn from the onset of platformification.

Platformification

Recent data from Capgemini has revealed that 81% of banking customers would be motivated to switch banks if another brand was able to provide ease of access and more flexible services than their existing one.

Naturally, Fintech and cloud developers are driving innovation in these areas and banks need to find a way to create new monetization opportunities and make their services more open and receptive to the new technologies and concepts being produced from these corners of the industry. This is where platformification comes in.

Platformification uses open APIs to securely expose banking brands to fintechs and cloud developers. Banks can then combine traditional services with these third-party offerings and make them available to all customers via their preferred channels.

"By overcoming outdated legacy mindsets and adopting Banking-as-a-Service, financial institutions will move beyond their core banking products, create new offerings, and provide their customers with personalized experiences," said Anirban Bose, CEO of Capgemini's Financial Services and Group Executive Board Member. "Banks must focus on how they can add value to their customers to retain and engage them. Through platformification and by leveraging data, banks can better cater to the needs of the modern customer as well as create new revenue streams."

It may seem at first glance these innovations are almost entirely focused on digital banking and have little to nothing to do with the physical branch space, but you couldn't be more mistaken. The key part of the sentence above is "via their preferred channels" and this can mean physical branches just as readily as it can refer to a smartphone app, social media platform, or web portal.

Platformification for Branches

Now we have a firmer grasp on exactly what we mean by platformification, no we need to consider how the concept might best be applied to the physical banking space.

We've already talked about micro-branches and how they use digital technology to compress the branch experience into a much smaller space than would have previously been thought possible. Well, it should be a simple matter to envisage how platformification could further drive innovation in this space.

The tablet computers and high-tech ATMs which make micro-branches possible will benefit greatly from platformification. Fintechs and cloud developers can help further develop the services and functionality these machines can offer to customers and make the micro-branch an even more service-laden proposition. Through platformification, it may be possible to offer full mortgage consultation and other high value products entirely through digital means - while enjoying the benefits, reassurance, and security of a physical branch complete with real human staff.

"Many large financial institutions have their own internal API platforms, and some with a 'not invented here' mindset hold back from working with other third-party platforms," writes Vincent Pugliese for Finastra. "But often such platforms can offer a speedy turnaround and ROI. For example, think about the cost, complexity, and time required to add useful functionality on top of existing core systems. An openness to reaping the benefits of a platform-to-platform approach as part of a fully connected open ecosystem will allow financial institutions to tap into and offer the latest fintech developments to customers."

Platformification is limited only by the imaginations of those implementing it and there is absolutely no reason it could offer just as lucrative benefits to the physical branch space as it can to digital banking services.

Final Thoughts

There you have our crash course in platformification and some guidance on how it might be applied to the physical branch space. Fintechs, cloud developers, and banking brands are a marriage made in heaven and through platformification all three can work together in perfect harmony.

Platformification is set to be a hot topic at Future Branches 2021, taking place in December at the Hyatt Regency, Austin, TX.

Download the agenda today for more information and insights.