Ecosystem Enabled Banking Part 2: What makes your bank different?

I recently published a paper on what I now call "Ecosystem Enabled Banking ", which is my view and approach for undertaking a successful progressive modernization with a focus on implementing capabilities from an ecosystem of ISV and Fintech partners to accelerate time to market, drive future flexibility and reducing risk. Whilst the focus is on the modernization journey, this approach lends itself just as well for building a new digital bank or any other green-field solution.

I wrote a part one some weeks back, setting the scene and giving an introduction to my view on Ecosystem Enabled Banking with a focus on defining the scope in the form of a capability model. You can find that post here .

Today, we explore the nuances of identifying and documenting your competitive differentiation and the strategic implications of choosing between developing in-house technologies versus purchasing or subscribing to external solutions in relation to your differentiation - let's take a look at the Build vs Buy vs Consume considerations within the Samlink Ecosystem Enabled Banking model.

Unpacking Competitive Differentiation in Banking

Banks typically engage in a range of activities, probably as much as 90% of which is common across the industry. It's the remaining 10% that provides a competitive edge. For instance, faster more engaging user on-boarding, or a mortgage origination process that take minutes rather than weeks.

I have worked with several banks that see their origination process and implementation as a key differentiation and therefore have considered custom developing these elements.

The bottom line is, do not put in-house development effort on things that will not drive critical differentiation for you, let vendors provide appropriate solutions. Put your focus on developing the elements that makes your bank stand out, and the required integrations. But we can see some basic pros and cons with the options on the table.

Building a Custom Solution

Buying an ISV or Fintech Solution

Consuming a as-a-Service Solution

Each option should be evaluated not only on its merits but also on how well it aligns with the bank's strategic goals, operational requirements, and competitive landscape. While custom solutions offer the most tailored fit, they can come with high costs and complexity. Conversely, buying or consuming solutions can be more efficient and cost-effective but may require compromises on customization and control. Understanding these trade-offs is crucial for making an informed decision that best supports the bank's objectives and future growth.

The following is an example of the criteria that would be evaluated to derive a best fit analysis for a build vs. buy selection.

Conclusion

As banks navigate the complexities of the modern financial landscape, the principles of Ecosystem Enabled Banking provide a framework for leveraging technology to enhance competitive advantages effectively. By thoughtfully integrating ISV and Fintech solutions into their operations, banks can achieve not only operational excellence but also superior customer engagement and market differentiation.

The next step is to undertake the analysis of the defined capability model in regards to Configuration-led vs Engineering-led offerings (including low-code and no-code offerings) followed by:

• Architectural principles
• Legacy Analysis (Legacy anchored or legacy replaced)

But we will dig deeper into these next steps in a later blogpost.

If you are keen to explore further or know more, then please reach out and we can have a coffee and a chat. Or join our upcoming breakfast briefing on Ecosystem Enabled Banking:

?? Date: May 8th, 2024

? Time: 8.30–11 AM

?? Location: GLO Hotel Sello, Espoo

Reserve your spot and be part of the conversation shaping the future of banking! Register now ? https://lnkd.in/dFpJPukf

Find the Ecosystem Enabled Banking paper here: https://lnkd.in/eUPx-B67