Abstract
Mutated market conditions, the advent of new players and digital technologies, and a significant regulatory push, are profoundly changing the banking industry. Banking business models may shift significantly from a pipeline, vertical, paradigm, to open banking models where modularity can be an opportunity for banks. Not only are the abovementioned factors representing a threat to the traditional model, but also they are spurring significant new opportunities to pursue new revenue streams. Those opportunities are exploited through new banking paradigms that entail higher levels of openness towards third parties and a crescent number of modular services bundled together. Models can go to mere compliance with the prescriptions of openness of PSD2, to the inclusion of new services, the opening of the banking core and data, and the aggregation of those within a platform experience. Value is created in platforms through economies of scope in production and innovation.This paper has explored the evolution of Fintech and Techfin in the market and the emergence of platform models in banking. It has investigated the evolution of that concept, also introducing an interesting banking case (BBVA), which gives several insights on the choices made toward a Banking-as-a-Platform model within the context of Fintech and Open Banking.
Highlights
New trends are constantly appearing in the market; some of them can be good for banks, while others may appear not being so good
This paper has explored the evolution of Fintech and Techfin in the market and the emergence of platform models in banking
The main idea is that retail banks should leverage from the increasing power and the digital age instead of running behind them; this is the meaning from running to changing a bank business model
Summary
New trends are constantly appearing in the market; some of them can be good for banks, while others may appear not being so good. Each economic choice has its own constrains and this occurs when an agent must determine the optimal combination of choice variables (given some relationship between combinations of those variables and payoffs) in the face of a constraint limiting the set of feasible combinations for those variables available to the agent This situation arises when agents must make forward-looking decisions or when they are uncertain about the future (Mas-Colell, 1995). The aim of this work is two-fold: describing why Fintechs and Techfins entered the market (paragraph 2); and exploring the themes and economics relating to a digital open bank approach (paragraphs 3 and related) In this regard, a managerial perspective is given to outline the changes needed to move from running to changing a bank. In paragraph five conclusions and implications have been outlined
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