Banks and Fintech on Platform Economies

PAOLO SIRONI is the global research leader in banking and financial markets at IBM, Institute for Business Value. He is one of the most respected fintech voices worldwide, providing business expertise and strategic thinking to a network of executives among financial institutions, start-ups and regulators. He is a former quantitative risk manager and start-up entrepreneur. Paolo's literature explores the biological underpinnings of financial markets, and how technology and business innovation can bolster the global economy's immune system in today's volatile times. Visit Paolo's website thePSironi.com for more information.

Discover the future of the financial services industry with this insightful new resource on Contextual and Conscious Banking
 
In Banks and Fintech on Platform Economies: Contextual and Conscious Banking, accomplished fintech professional and author Paolo Sironi delivers an insightful examination of how platform theory, born outside of financial services, will make its way inside banking and financial markets to radically transform the way firms do business.
 
You'll learn why the financial services industry must master the necessary shift of focus from selling business outputs to selling client outcomes. You'll also discover how to steer the industry towards new forms of digital transformation underpinned by Contextual Banking and Conscious Banking platform strategies that will benefit stakeholders of all kinds.
 
This important book:
* Describes the shift in mindset necessary to help banks strengthen and extend the reach of their Banking-as-a-Service and Banking-as-a-Platform operations.
* Shows how a renewed interpretation of fundamental uncertainty inspires the usage of exponential technologies to achieve architectural resilience, and open the reference theory to spring new business models centered on clients' and ecosystems' antifragility.
* Financial services industry can break-out from a narrow space of value-generation to reclaim top spot against bigtech contenders, enjoying greater flexibility and adaptability at lower digital costs
 
Perfect for CEOs, business leaders, regulators, fintech entrepreneurs, wealth managers, behavioral finance researchers and professionals working at financial technology companies, Banks and Fintech on Platform Economieswill also earn a place in the libraries of bankers seeking a firm grasp of the rapidly evolving outcome economy and a view about the future of the industry.

Forewords xv
 
About the Author xxix
 
Disclaimer xxxi
 
Introduction 1
 
Part One Foundations of Platform Theory
 
Chapter 1 Platform Essentials on Outcome Economies 15
 
1.1 Introduction 16
 
1.2 Platforms and ecosystems 17
 
1.3 Innovating from output to outcome economies 22
 
1.4 Linear and non-linear thinking 24
 
1.5 Platform types 25
 
1.6 About platforms and innovation theory 27
 
1.7 Shifting the perception of value 29
 
1.8 Banks and fintech on outcome economies 31
 
1.9 Conclusions 33
 
Takeaways for banks and fintech 34
 
Chapter 2 The Trust Advantage 35
 
2.1 Introduction 35
 
2.2 Elements of platform creation 37
 
2.2.1 The platform challenge 38
 
2.2.2 The chicken-or-egg dilemma 39
 
2.3 Transparency generates trust 42
 
2.3.1 It's marketing, stupid! or not? 42
 
2.3.2 Trust in the middle kingdom 43
 
2.4 The trust advantage for banks and fintech 44
 
2.5 Conclusions 47
 
Takeaways for banks and fintech 48
 
Chapter 3 Open Innovation and Data 49
 
3.1 Introduction 49
 
3.2 Closed and open innovation 51
 
3.2.1 Attributes of closed and open innovation 52
 
3.2.2 Open innovation in platform economies 53
 
3.3 The strategic role of complementors 55
 
3.4 The monetisation perspective 56
 
3.5 The monetisation of APIs 58
 
3.5.1 Free use 59
 
3.5.2 API consumers pay 59
 
3.5.3 API consumers get paid 60
 
3.5.4 Indirect monetisation 60
 
3.6 The monetisation of user engagement 61
 
3.6.1 Imposing transaction fees 61
 
3.6.2 Asking for access fees 61
 
3.6.3 Tiering enhanced access fees 61
 
3.6.4 Delivering enhanced curation 62
 
3.7 The API economy for banks and fintech 62
 
3.8 Conclusions 65
 
Takeaways for banks and fintech 66
 
Chapter 4 Platform Governance Founded on Transparency 67
 
4.1 Introduction 67
 
4.2 Power comes with responsibility 68
 
4.3 Platform monopoly between competition and regulation 71
 
4.3.1 Intensified regulation 71
 
4.3.2 Better governance to fight monopoly powers 73
 
4.4 Negative externalities threaten platform resilience 74
 
4.5 Governance of openness and curation 76
 
4.6 The transparency governing principle 78
 
4.6.1 Transparency about platform management 78
 
4.6.2 Transparency about platform orchestration 79
 
4.7 Transparency for banks and fintech 80
 
4.8 Conclusions 82
 
Takeaways for banks and fintech 83
 
Part Two Reinventing Financial Services
 
Chapter 5 The Existential Shift of Bank Business Models 89
 
5.1 Introduction 89
 
5.2 The new normal of central banks 91
 
5.2.1 Lehman Brothers' default 91
 
5.2.2 The annihilation of central banks' systemic put 92
 
5.2.3 Banks' Catch-22 95
 
5.2.4 From product-centricity to human-centricity 98
 
5.3 About the tension between information and communication 99
 
5.4 The banking reinvention quadrant 101
 
5.4.1 The map and the compass 101
 
5.4.2 The information and communication quotients 103
 
5.5 Four BRQ business value spaces 104
 
5.5.1 Traditional Banking 105
 
5.5.2 Digital Banking 105
 
5.5.3 Contextual Banking 105
 
5.5.4 Conscious Banking 106
 
5.6 Conclusions 107
 
Takeaways for banks and fintech 108
 
Chapter 6 Lessons Learned from Fintech Innovation 109