“Platformification”: The Who, What, Why And How Of This Fintech Business Model

Photo by Austin Distel on Unsplash

Another day, another buzz word in the tech space; but don’t let this long word fool you — there’s a good reason why “Platformification” is snowballing at speed. Originally coined out of the Fintech space, Platformification is a term that has been touted as a business model that will allow traditional banks to “survive and thrive” alongside shifting customer demands.

“(Platformification) Is a plug and play business model that allows multiple participants to connect to it, interact with each other and exchange value.” — Ron Shevlin, Managing Director of FinTech Research.

The “plug and play” concept is a natural reaction to the plethora of modern technologies like Mobile, Cloud, AI/Cognitive, Blockchain and IOT; all of which serve granular solutions to common pain points, but lack the breadth of an end to end solution for a consumer. In past years, banks have found themselves scratching their heads trying to choose the right software partners to work with so they can digitally transform and remain competitive against challenger banks, and they have found that the answer is not software partnership, but “platformification”.

“The customer wants to open their banking app, put their thumb on the login button for quick identity verification, then have the platform know it’s them. In my opinion, the best way to create a product this intuitive is to bundle various companies’ services together,” says Vince Passione, the founder and CEO of LendKey, an American financial institution that became a platform-based service back in 2009.

Ironically, the biggest challenge faced by traditional banks is the demands of the consumer that call for guaranteed security and privacy, while allowing full movement and accessibility of their funds. This paradox presented by the customer is reflective of another trend that has been slowly realised by the market: the decentralisation of data. While this term may sound downright bogus in a time where privacy online has never been so important to the public, customers are wanting less data entry, but visibility over products and services that matter to them. A great example of just how far decentralisation of data has gone is Traity.com, a service that ranks people based off their social media footprint, and ratings on services such as eBay, Amazon, AirBnB and Uber.

And at home here in Australia, the 1st of July this year marked the start of an “Open Banking” pilot, which will see the decentralisation of customer data held by the four major banks:

“Having better access to your data will allow you to make better and more informed choices about the financial products that are right for you. It will also drive competition within the financial services sector, promoting innovation and allowing new and better products and services to be developed.”

If you think this sounds like Platformification, you’re on the right track.

While the big 4 banks of Australia may be the leaders in this new business model, that’s not to say that smaller organisations or even different industries can’t utilise a “plug and play” mindset for their own benefit. The benefits of adopting a platform approach are simple but proven:

1. Reduced costs: From minimizing administration work to the lowered total cost of ownership on abstraction resources like hardware, there’s a lot to be gained for the bottom line of the business.
2. Scalability and integration: With Platforms, your door will always be open for more business and more solutions, whatever the future holds. When using a platform approach, if you have your own development teams, you’ll always reap the rewards of being able to build great software quickly.
3. Happier Customers: minimising data entry and clunky workflows is a huge driver for customer satisfaction.

Finally, you’ve read about the benefits of using a platform to combine services and delight the customer, but the fact remains that this can be a large task. Implementing new digital solutions into your business can be tricky as you need to juggle many moving parts, but to make it simple, we can boil it down to three “shifts” that your organisation will need to undertake:

1. IT Infrastructure Shift: Monolith to Microservice. Microservice architecture simply put allows modular software to work independently within the same platform. The benefit to this is that you
2. Agile, iterative project management: Making the switch from microservices to monolith will be more than an architecture change, it will open the door to agile, phased software development that will close the feedback loop much quicker and allow development teams to build better apps, faster. For more information on agile software development, click here.
3. Choose Differentiating Emerging Technologies: Depending on the business solutions you need to tackle, you have a large field of choice to play in. Cloud, mobile, AI, Blockchain, IOT, PaaS. Each technology will have its own benefits and use case, and potentially you may need to combine these on the one platform.

We at Codafication will be ready for whatever comes next in the tech world, Platformification in particular. For any questions around Open Banking, modular software solutions, or unleashing your legacy software, feel free to reach out at hello@codafication.com

This article was originally posted on LinkedIn by Dominique Tuck