And when one company can\u2019t meet all our needs, we quickly google another.<\/p>\n
If public transport is crowded, we get an Uber. If the local store is out of our soap, we order it on Amazon. If our primary bank doesn\u2019t have trading functionality, we try an app instead.<\/p>\n
The grass is greener<\/em> fallacy (paired with effective marketing) has prompted us to seek better experiences for whatever we do.<\/p>\n In the financial industry, this has led to two things \u2014 the FinTech boom and then the progressive rise of digital financial ecosystems.<\/p>\n There are two ways to interpret a financial ecosystem:<\/p>\n Both definitions sound complex, right? Here\u2019s a simple analogy to explain the concept of a financial services ecosystem.<\/p>\n Let\u2019s picture an ideal<\/em> coffee shop.<\/p>\n You order ahead through an app (built by a tech partner). After picking up your brew (an in-house product), you settle in to do some work on your laptop. This coffee shop has excellent free Wi-Fi, courtesy of their telecom partner.<\/p>\n The morning goes by, and before you know it, it\u2019s almost noon and you get a ping from the coffee shop app offering to schedule a free lunch delivery since the coffee shop doesn\u2019t have a kitchen (channel partnership). In 20 minutes, you get your poke bowl and pay for another drink from the bar using the coffee shop app.<\/p>\n When you\u2019re ready to wrap things up, it starts raining. You live several blocks away and don\u2019t feel like walking. Once again, the coffee shop app gives a quick ping and offers to call a ride.<\/p>\n On your ride home, you think about how a single company \u2014 the coffee shop \u2014 fulfilled six different requests for you.<\/p>\n Now, the world of finance is more complex than ordering a coffee.<\/p>\n But a similar dynamic is at play: consumers have a wide range of ongoing and spur-of-the-moment needs you can meet through technology and channel partnerships.<\/p>\n In fact, that\u2019s what many successful FinTech ecosystem players already do:<\/p>\n SoFi<\/b><\/p>\n Source: Partnerbase<\/a><\/em><\/p>\n SoFi leverages technology and channel partnerships to deliver a one-stop-shop experience<\/a> for their customers. Savings, lending, insurance, mortgage, investing \u2014 you get a complete service through one interface (but not always from the same provider).<\/p>\n And this market strategy is paying off.<\/p>\n In 2021, SoFi<\/a> attributed their double-digit (and even triple-digit!) year-over-year growth in members, revenue, and product adoption rates to their Financial Services Productivity Loop (FSPL) that \u201ccreates a compounding effect on member referrals, greater adoption of multiple products and cost-efficient scaling of our broad-based offering.\u201d<\/em><\/p>\n Source: SoFi \u2014 SoFi Technologies Reports Third Quarter 2021 Results<\/a><\/em><\/p>\n They say finance is a \u201ctraditional\u201d world.<\/p>\n Indeed, many of the core tech advancements in the industry date back to the 1960s to 1970s: ATM technology, the SWIFT payment system, IBM mainframes for core banking systems. Many banks are still tied to their legacy back end<\/a>.<\/p>\n At the front end<\/a>, the branch was historically the main hub for interactions. Need to deposit money? Go to a teller. Want to trade some assets? Call your personal manager.<\/p>\n All things went well, but then the 2008 financial crisis hit and many of the underlying back-office inefficiencies came to light.<\/p>\n Consumers lost trust in financial institutions. They also grew progressively disenchanted with the lack of convenience, low transparency, and oftentimes inaccessibility of banking services.<\/p>\n By the mid-2000s, the first FinTechs started to emerge.<\/p>\n What initially appeared like a \u201cclosed,\u201d regulated industry no one liked soon became one of the fastest-growing market verticals.<\/p>\n Between 2010 and 2017<\/a>, over 1,470 FinTech companies, specializing in banking and capital markets, were founded globally.<\/p>\n By 2021, 96 FinTech unicorns had amassed a collective worth of $404 billion<\/a>. And the growth is far from slowing down.<\/p>\nWhat is a financial ecosystem?<\/h2>\n
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![\"Collaborate](\"https:\/\/d17ocfn2f5o4rl.cloudfront.net\/wp-content\/uploads\/2022\/03\/BP-Collaborate-to-Win-The-Power-of-Financial-Ecosystems-1-info.jpg\")
<\/p>\n![\"Collaborate](\"https:\/\/d17ocfn2f5o4rl.cloudfront.net\/wp-content\/uploads\/2022\/03\/BP-Collaborate-to-Win-The-Power-of-Financial-Ecosystems-2-info.jpg\")
<\/p>\nWhy the finance industry drifts to ecosystem thinking<\/h2>\n
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