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Banks and Fintech on Platform Economies: Contextual and Conscious Banking

Paolo Sironi

Global Research Leader Banking and Financial Markets, IBM, Institute for Business Value


Buongiorno a tutti, my name is Paolo Sironi. I’m the Global Research Leader in Banking and Financial Markets at IBM, the Institute for Business Value and I’m an author literature about fintech innovation and the transformation of the platform economy of the banking industry. In particular I’m looking at the wealth management transformation in Venice. I will have the chance to share with you content about my latest bestseller, “Banks and FinTech on Platform Economies”, whose subtitle is Contextual Banking and Conscious Banking, which are the two emerging platform strategies That means positioning value outside the banking border to create ecosystem platforms or transform their relationship with clients, bundling back a variety of services into a transparent and trusted advisory platform.

Now, the European Central Bank researchers a few years ago published a paper titled “Financial Innovation with Technology”. And they said that the way financial intermediaries have market power is to excel in information and communication. Now, what’s information and what’s communication which actually made the axis of the banking invention quadrant, which is at the heart of this piece of literature? Information is everything contained in a bank’s core banking system, that means the transactions for payments or the adverse selection. So, the understanding of the corporate positions in front of the client. Now, given the current macroeconomic conditions, the ECB researchers already realized that it’s difficult for financial institutions to remunerate shareholders after the price for risk using core banking information within the banking proposition as it is today.

So, they suggest the bank should be banking as a service platform to position that value outside the banking border to the benefit of third parties like other fintech or big tech, that can create a new engagement mechanisms in front of the customers that are actually banks which are creating those ecosystem platforms to engage the customers where they are in their life journey or their business journey. But the researchers recognize in particular that communication is becoming more and more important, especially in Europe, to define the revenue mechanism of financial institutions compared to information and communication is about me and you as a warm relationship and this is the human relationship that allows institutions in particular to position investment products and insurance products. So, the big question is how can you digitize that relationship if you take the warm relationship out of the equation?

Well, that is the transformation towards the trusted advisor platform or the conscious banking platform as I define it, which means to learn how to build a banking as a platform that allows to bring inside the banking charter. The innovative value of a third party is like other fintech that specialize in particular segments of the client journey in order to bundle everything into a planning exercise that can invite the client to pay transparently for the services, for accessing the trusted advisory platform and basically being a service in a different way compared to the past, as the focus shifted from the product, whose margins are more and more complex into the relationship.

So I will be very happy to discuss all of this in Venice, and I look forward to meeting you all.