It’s time to accept that digitisation is not going to create the step change needed. Banks need to realise the benefits of being born digital and the boost to services it provides.
Platformification has been the ‘biggest banking trend’ a few years running. A concept built on the platform models that have been central to so much digital transformation across an array of industries.
But while the concept may be trending, the lack of delivery from anyone suggests a great deal of confusion on the issue. So what is platform banking? And why does it matter? Network effects
Much like how Netflix can plug in and play different tv shows from different providers to deliver shows that customers love; platform banking can literally plug in and deliver third-party financial services. That is meant to give customers optionality, enable economies of scale and tap into the ‘sharing’ nature of digital ecosystems. But that’s hit a snag as current banking business models are not geared towards network effects.
The author outlines the problem. Central control of accounts is no longer. Here is the new banking model:
The bank releases digital bearer dollars on behalf of its client. The bank then acts as trusted miner and the digital bearer notes are limited to ledger services and protocols identified in the contract.
Go with this flow model and everything else will fall into place. Your accountants will be releasing protocols to check other ledger services and verify transactions ex post. Your platform is trusted miner. The bank also participates in insuring counterfeit proof smart cards, meaning bankers and processor engineers gonna have to talk. It is not a technical issue any more, we cracked that case.
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