How to be a platform-based financial organisation
‘Platform’ is such a non-descript word to be used to describe an innovative approach for technologically enabled businesses…but it seems to fit, so let’s unpack the use of the word prior to getting into the competitive advantage that platforms can create.
A ‘platform’ as stated in the Collins English dictionary is ‘a raised level surface on which things can stand’… but maybe more pertinently, in developer language it broadly means ‘a place to deploy things’.
‘A place to deploy things’ only really isolates one foundational role of a platform and doesn’t accurately articulate the more nuanced meaning in modern parlance, which is much more about the realisation of iterative business value, than it is about where your file storage is and where your databases are.
If you think about an example like the digital bank Monzo, it is clear from a customer perspective that their app-first mobile customer experience is one of the best out there, but the thing that sets them apart from traditional banks is the way that their platform-based digital business model was set up for success from it’s incarnation. This kind of technology-enabled platform-first business leads to more successful integrations, more productive developers, quicker features-to-market, quicker pace of isolating & fixing defects and flexibility in deploying & measuring tests.
It is their engine for productivity, refinement and continuous improvement.
If your IT infrastructure is already the enabler of organisational innovation and less of an estate that ‘just gets in the way’ of your talented people, you have probably isolated and fixed the foundational platform upon which your business stands.
But how you structure the subsequent platforms will be the engine of business value, product and service offering, customer journeys and more… and will likely redefine the defensibility of your organisation’s competitive advantage in the medium to long term.
Let’s explore more around this idea.
What does a platform-based business looks like
You may think that a platform-based business would have one central, foundational platform where all applications are deployed, where all customer journeys are powered, and where all APIs exist, but you’d most likely be wrong.
In complicated enterprise organisations, it is incredibly difficult to stand up a ‘one size fits all’ platform as individual business units will have complex and varied needs… and therefore you will be more likely to find a group of platforms that have been architected and deployed for interoperability and flexibility rather than uniformity.
To create the kind of IT infrastructure that empowers ideas at the execution end, the focus needs to switch from platforms being a ‘fixture’ to platforms being a ‘service’. Platforms should be a business solution that serves an internal or external client, they should be run by a platform or product owner… and they should really operate as independent functions that bring together the technology, the business dependencies, the processes and the governance. That’s why you see the rise of terms like ‘banking-as-a-service’ or ‘payments-as-a-service’ in the financial services industry.
They are a little agile operations in their own right.
To explain further the idea of the different types of platforms, let’s split them into four categories:
- Foundational core IT
- Digital business capabilities
- Product / service offerings
- Customer journeys
A closer look at a platform-based model
Now that we have been bold enough to categorise the types of platforms that exist in modern tech-enabled businesses, we better explain why we categorise them that way and how they differ.
Foundational Core IT
In this platform, your business will likely deal with cloud storage, data management, access control, identity management, operational automation and more.
Put simply, this is likely the platform that your developers think of when they say that a platform is a ‘place to deploy things’.
Digital Business Capabilities
In this platform, your business will architect key middle office capabilities that benefit your operation. In finance, for example, this platform will power credit decisioning, loans origination, insurance underwriting, payments processing and white-labelled products, to name but a few.
Put simply, this is where the platform creates business opportunities by utilising APIs to create a two directional flow of value for partners and better operational efficiency for your organisation.
Product / Service Offerings
In this platform, your business will create new products and services that are oriented towards your customer, by taking contextual information and mapping it to the closely coupled, loosely aligned components of your product or service.
At one time, in Insurance, you would be able to choose to add your bike to a standard policy as part of your home contents cover. You might have the flexibility to choose Gold, Silver or Bronze ‘cover types’… in the new platform-enabled business environment, you can get a policy that takes into account that you ride a Colnago, three times a week for 60km, on busy roads with a high propensity for traffic accidents, you want cover for your Rapha kit and your POC helmet, and you want to get a like-for-like replacement should the worst happen.
Flexibility of product offering can be built in as standard.
In this platform, your financial services organisation will allow your customers to search, apply, transact, save, change details, get quotes, advice, get support and all from the ambient computing power that exists around them.
Put simply, this platform is the engine of omni-channel engagement & customer acquisition, which drives the relationship with the customer, whether your customer is an individual, a group or another organisation.
Why platform categories?
The reason that we think it is important to create and call out platform categories, is that the hardest job of all is being able to understand the sum of the platform parts and make well-thought through, horizontal decisions about priorities when we have spent the better part of one hundred years working in well architected siloes.
This requires a big shift in mindset from a c-suite that is tech-savvy, an exec committee that understands that the biggest business value may not always sit in their portfolio and a senior leadership team that understands the value of hypothesis generation, testing and trying new things.
The biggest benefit of platform-based model
Becoming a platform-based business is less about what and much more about how.
People who know great businesses understand that culture isn’t a shiny brochure or a beer fridge, it is ‘how’ things get done every day.
To shift into the platform-based approach, you are essentially committing to becoming a fast-paced, ideas fuelled, innovative, test and learn operation that isn’t afraid to fail fast and learn.
In traditional industries like finance, healthcare and energy, the potential competitive advantage of setting up your IT infrastructure around a set of modular platforms that are run by accountable platform (or product) teams with each platform consisting of a range of logical clusters of activities and associated technology is that… Your best people can focus on delivering against the OKRs (Objectives & Key Results).
Rather than being stuck in a mire of antiquated technology and bureaucratic waterfall processes, your best brains will be given autonomy, flexibility and ownership. They will be stacked alongside stream-aligned teams, enabling teams and sub-system teams to scale up and back with their individual discipline level expertise and they will do all this to the benefit of your profit and loss sheet.
Digital transformation has been overused in the last ten years, but transformation means just that ‘a complete change in the nature or character of something’… and coming back to banking for a moment that means changing a legacy telephony platform bank into a modern multi-platform digital bank built for the 22nd century.
What does the backend infrastructure of a platform-based business really look like?
To answer this question adequately, we need another 700 words… so look out for the follow up article which will be published next week covering why platform-based businesses leverage microservices to enable their business to scale, move fast and stay highly available.
We believe that modern tech enabled businesses empower innovation from the c-suite to business leaders, product teams to engineering functions… and we think the value proposition whilst consistent can be articulated differently to get buy in across the board!
But why does all this matter?
Well, if we have learned one thing over the last 14 years it is that building innovative digital products fuelled by amazing ideas is incredibly difficult in businesses who 1) haven’t addressed the legacy platforms as a starting point and 2) haven’t addressed the mental models that need to be adopted from c-suite to foot soldier to leverage the best of what digital technology enables for business in 2022 and beyond.
If you are looking for a technology consultancy that can help you execute innovative ideas from a foundational level of IT excellence through to customer journeys that surprise and delight, we can partner with you every step of the way — find out more