Digital Transformation Blog

Digital Transformation Blog

Opinions expressed on this blog reflect the writer’s views and not the position of the Capgemini Group

Open Banking Ecosystems: The Platform’s Network

Part 3 of the Open Banking Ecosystem blog highlights the importance of the platform’s network. Platformization is changing business models in all industries. Be it retailers with no inventory, taxi companies with no cars, or car manufacturers that become mobility providers. Open Banking is the new keyword in the banking industry, pushed forward by regulations like PSD2. It means the creation of not only a platform, but an entire digital ecosystem. Follow this blog series to find out what an open banking ecosystem is and how to get there.


Changed ways of value creation

In recent times, the exponential growth of multi-channel online services of the internet has unleashed a movement that is rapidly redefining how industries work. In their former glory, industry leaders grew multifaceted with complex supply chains.

Today, power is shifting towards digital platforms. The platform phenomena is expected to have strong implications for all industries, and particularly for banking. Ralph Hamers, CEO of ING Group, challenges the business model of banks and suggests they might experience groundbreaking changes that redefine how the industry operates:

What is new about this concept is the way value is created. By bringing together network participants on a platform, the platform-owner inflames their interest to create and share value at near zero marginal cost, resulting in firm and low-cost scaling.

Many wonder what the platform structure looks like. Across industries, theorists have identified three layers as a common platform structure:

  1. The Network
  2. Application Programming Interfaces (APIs)
  3. Data Management[1]

Let us take a closer look the first layer, the network, by answering this key question:

How can we enable others to create value?

In order to enable others to create value, the platform`s network needs to be attractive to both producers and consumers. Once producers and customers are drawn to the platform, network effects are the platform owner’s main objective. Three essential steps have been identified to successfully aim for network effects:

  • Connection: How easily can others plug into the platform to share and transact?
  • Gravity: Does the platform attract participants, i.e. both producers and consumers?
  • Flow: How well does the platform foster the exchange and co-creation of value? [2]

Positive network effects will change your game

Positive network effects occur when one user of a good or service has an effect on the value of that product to other people. When positive network effects kick in, growth follows an exponential trajectory. In other words, companies can scale exponentially when positive network effects arise on the platform. The importance of positive network effects applies to all sides of the platform – vendors and buyers, and producers and consumers.

The platform owner has to manage the process of content, data and knowledge exchange between the participants. At first sight, this process seems endless with an increasing number of participants. However, an enlarged network creates the opposite: the curation accuracy and value can be improved by the multiplicity of data. Consequently, it can be deduced that larger networks can achieve a higher and qualitatively better degree of control through the multiplicity of data. The following figure shows how positive network effects are created:

Attention: The chicken & egg problem

One key question when building your platform is: Who do you need to address first, consumer or producer? And how do you attract one without the other? Generally, it is recommended to first partner with companies that offer specific supply. Secondly, sustainable pricing and incentives on the consumer side of the platform should be established. Eventually, partnering with companies to create value while continuously taking ownership for the network curation needs to be ensured. 

What does that mean for banks?

  • Network effects are a significant driver for value creation on the platform
  • The network requires moderation, stimulation and orchestration in order to monitor positive network effects
  • Banks hold the pole position: Having access to the mass market brings a multiplicity of data that can be used to foster content, data and knowledge exchange



[1] S.-P. Chaudary, Pipelines Platforms and the New Rules of Strategy, Harvard Business Review

[2] S.-P. Chaudary, Three Elements of a Successful Platform Strategy, Harvard Business Review 


Über den Autor

Sandra Ficht
Sandra Ficht
Als Head of Digital Banking & Payments für Central Europe begleitet Sandra Ficht Banken auf dem herausfordernden Weg in die Digitalisierung. Ihre Fokusthemen reichen von der Customer Journey bis zur End-to-End-Prozessdigitalisierung.

In her role as Head of Digital Banking & Payments for Central Europe Sandra Ficht accompanies banks on their challenging way towards digitization. Her focus topics range from customer journeys to end-to-end process digitization.

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