Financial services companies can build ecosystems to create value for all stakeholders – but must transform their operations to deliver.

Ecosystems are gaining traction across all sectors thanks to their ability to unlock up to $100 trillion of value for business and wider society over the next decade, as estimated by the World Economic Forum (WEF)

Amid the rapid growth of digital technology, changing customer expectations and the need for organizations to rebuild trust and resilience, ecosystems offer advantages that traditional ways of working and partnering cannot.

We define ecosystems as purposeful arrangements between two or more entities to create and share in collective value for a common purpose and customer.

FS companies can help non-financial companies improve their customers’ experience 

How? – By making finance more effortless. The integration of financial services into non-financial value chains, known as embedded finance, via ecosystems makes this possible. It is already helping car manufacturers to offer subscription services and enabling telecoms companies’ customers to charge the cost of movie rentals and other content to their phone bills.

But succeeding at ecosystems should not be taken for granted. While there is recognition of the need to embrace an ecosystem approach, many companies are not culturally or structurally prepared to participate in, orchestrate or monetize them. Addressing the challenges inherent to ecosystems are crucial to unlocking their opportunities.

Establishing one’s role within an ecosystem, for example, is commercially, operationally and technically complex. Reaching internal agreements on areas such as cost allocation and strategy, and maintaining cyber security — a crucial area of focus given threats — are other obstacles that need to be overcome.

To capture the wider potential of ecosystems, organizations need to focus on three key areas:

1. Identify where and how an ecosystem can create value

2. Define your role in the ecosystem

3. Transform to accelerate delivery

A roadmap to make finance effortless

Do you know what your customers really want? Do you think your organization can provide this on its own? If the answer to both these questions is “yes” then, increasingly, you are in the minority.

Companies are aware that alliances are needed to deliver what customers want and to access capabilities that remove friction and cost while building agility and resilience. This is particularly true for FS companies — just 29% of FS respondents to a recent EY Tech Horizons survey said ecosystems were too difficult to execute or manage.

“By identifying where and how an ecosystem can add value, defining your role, and transforming to deliver — FS companies have a roadmap that will enable them to make finance effortless for their ecosystem partners and their end customers. That will increasingly make FS providers key to delivering the value that ecosystems promise,” Jan Bellens, EY Global Banking & Capital Markets Sector Leader.

Source: EY Must Reads