Selling in an ecosystem environment – growing while maintaining focus on your core value proposition

Banking at a crossroads

The financial services industry is undergoing a seismic shift. Traditional banking models are being upended. Rapid changes in technology and ever-evolving customer expectations are meeting a dynamic regulatory and competitive landscape. In this brave new world, retail banks find themselves at a critical juncture: adapt or risk obsolescence. But, as the saying goes, ‘a challenge is an opportunity in disguise’. The key, as always, is how to capitalize when the opportunities present themselves? Ecosystems to the rescue. We explored the concept of ecosystems in more detail in our article "If ecosystems in banking are the answer, what is the question?", but put simply they are where forge strategic partnerships with fintechs and other third-party providers, enabling them to offer an expanded suite of products and services.

For growth-oriented senior business leaders, ecosystems hold great promise to drive sales and expand their customer base. This article delves into the intricacies of selling in an ecosystem environment, exploring how banks can innovate, reach new customers, and unlock fresh revenue streams, all while staying true to their core value propositions. By embracing the ecosystem model, not only can banks survive but they can thrive in this dynamic landscape.

The ecosystem explosion

Ecosystems have existed in banking for decades in the form of networks and partnerships. Today’s ecosystems are reshaping the banking industry by fostering collaboration and innovation. By partnering with specialist providers, banks can offer a wider array of products and services, enhancing customer experiences and driving revenue growth. For instance, Citibank's partnership with Google allows them to offer digital checking and savings accounts through Google Pay, tapping into new customer segments and markets.

Strategic partnerships are at the heart of successful ecosystems. These collaborations enable banks to integrate complementary products and services into their offerings, creating a seamless and comprehensive customer experience. Barclays' collaboration with TransferMate, for example, streamlines fee collection for universities, demonstrating the potential of ecosystems to address specific customer needs.

Opportunities abound

The advantages of ecosystems are manifold. By broadening their product offerings, banks can enhance customer satisfaction and loyalty. Ecosystems also open up new revenue streams by allowing banks to tap into previously inaccessible markets and customer segments. Additionally, operational efficiency is improved as banks can outsource non-core functions to specialized partners, allowing them to focus on their core value propositions.

Ecosystems also enable banks to extend their digital distribution channels, improving product quality and reducing customer acquisition costs. This is crucial for staying competitive in a digital-first world, where customer expectations are constantly evolving.

Hurdles to overcome

However, selling in an ecosystem environment is not without its challenges. Integrating multiple partners and their technologies can be complex and time-consuming. Banks must ensure that their core value propositions remain strong and undiluted while expanding through ecosystems. Navigating different regulatory environments across partners can also pose significant challenges.

To overcome these obstacles, banks must adopt a strategic approach to ecosystem partnerships. This involves identifying key partners that align with their strategic goals and leveraging advanced technologies to optimize these collaborations.

Core values matter

At the heart of any successful bank is a clear and compelling core value proposition. This is the unique value that a bank offers to its customers, setting it apart from competitors. Understanding and sticking to this core value proposition is crucial for maintaining customer trust and loyalty.

When banks stray too far from their core value proposition, they risk diluting their brand and confusing their customers. For example, if a bank known for its exceptional customer service starts focusing solely on cost-cutting measures, it may lose the very customers who valued its personalized service. Similarly, a bank that prides itself on financial stability but ventures into high-risk investments may undermine its reputation and customer confidence.

The perils of diversion

Straying from the core value proposition can have significant consequences. It can lead to a loss of customer trust, decreased loyalty, and ultimately, a decline in market share. For instance, some banks that expanded too aggressively into non-core areas during the financial crisis faced severe reputational damage and financial losses. These examples underscore the importance of staying true to the core value proposition while exploring new growth opportunities.

Tech to the rescue?

Technology plays a pivotal role in the success of ecosystem partnerships. Advanced technologies such as AI and machine learning can optimize ecosystem partnerships by providing insights and automating processes. Cloud-based solutions enable seamless integration and scalability, while digital platforms facilitate collaboration and data sharing among ecosystem partners.

Moreover, cybersecurity is paramount in an ecosystem environment. Banks must ensure that their partners adhere to stringent security standards to protect customer data and maintain trust.

Winning strategies

Several key factors contribute to the success of ecosystem partnerships. Building and maintaining strong, strategic partnerships is crucial. Banks must prioritize customer needs and preferences when integrating ecosystem partners, ensuring that the expanded offerings resonate with customers and add real value to their banking experience.

Effective use of technology is another critical success factor. By leveraging advanced technologies, banks can enhance ecosystem partnerships and streamline operations. Clear governance structures are also essential for managing ecosystem relationships and ensuring compliance.

Collaboration in action

Several banks have successfully embraced ecosystem partnerships. Citibank's collaboration with Google to offer digital checking and savings accounts through Google Pay is a prime example. Barclays' partnership with TransferMate to simplify fee collection for universities and HSBC's collaboration with Tradeshift to enhance supply chain financing further illustrate the potential of ecosystems to drive innovation and growth.

The bottom line

In conclusion, ecosystem partnerships offer retail banks a unique opportunity to achieve sustainable growth while maintaining a strong focus on their core value propositions. By embracing these partnerships, banks can navigate the complexities of the modern financial landscape, drive sales success, and stay competitive in a rapidly evolving market. As senior business leaders, it is imperative to recognize the transformative potential of ecosystems and strategically leverage them to grow while staying true to what makes your bank unique.