Many industries have been profoundly disrupted by digital era, Media/Entertainment (Netflix, Spotify), Transportation (Uber, car sharing) Travel/Hospitality (Airbnb, trivago) and Retail (Amazon, Alibaba) to name a few. Many see the manufacturing industry to be one of the next ones to face the phenomena. Products need to be more intelligent and communicate with other things, production efficiency needs to go up, producer wants to know how their products are used and product users wants to know more where the products were produced, under what conditions and how it was transported, especially in cold-chain products.
Attributes: How the products were produced, consumed, where did it came from, how was it delivered – just to name a few. Think how to design products to drive more iterative, intelligent, purposeful learning (of how they were produced and used)
Supply Chain: How autonomous supply chain would change your business models? Drones, autonomous cars, robot delivery. --> Augment supply networks autonomously to drive margin, safety and reliability.
Selling: Who is selling your products and how? What do you know of end-customer needs and how are you interacting during the sales process? Hoe you are connected to your customers, if there’s suppliers in between you and your customer? --> Automate sales processes leveraging machine learning to engage with partners.
Ecosystem: How to connect to other peers, expand your offering, give your product to the market through others? -->Build a product, information and service network/ecosystem mindset
Business Value: Optimized Inventory, Reduce customer’s costs, optimize internal or external inventory, improve productivity --> Embrace alternative business models and design products with data as value stream.
This is one of the sectors where the long-used slogans like “disrupt or get disrupted” and “we line in a world of ecosystems” really starts to kick in. With PSD2 requirements kicking in, banks need to start opening their systems to 3rd party companies. This means it will no longer be the bank or their app that you are using when interacting with banks in the future. Customers will be able to move from using bank’s systems into using 3rd party services with their daily banking interactions.
Think of Apple Pay, Swish and MobilePay. For this, the banks will need to change their business models, as it will be easier than ever to change the bank or bid between banks when acquiring loans. After all, the same app could now offer same services with unified view from all your competitors. What does this in turn mean for the industry?
Banks and financial institutions either needs to start offering their services in someone else’s platforms or create platforms that are so good that others want to join their platforms. Few great examples of forerunners in disrupting the industry was Banco Original from Brazil, that has started to offer full APIs to their services for others to use in their platforms. DBS in Singapore has created a digital platform and connected car sales portals into their ecosystems in a way that you are interacting with them when you are searching for a new car, thus probably taking a loan from them when buying one.
One more example is Kasikornbank from Kazakhstan that added value in their digital ecosystem by bringing a lifestyle services and products to their banking app. Through the banking app, you are able to find restaurants, rate them and much more.
What this all means for financial industry? Banks cannot anymore be the monoliths with 1-to-1 contact with their customer and offering only their own services to their customers. They need to collaborate with other industries and find new ways of creating revenue streams for them. It’s time to decide what to do with platform business: Ignore them, join them or beat them by creating new relationships to the markets.
SVP Shift, New Digital Business Models
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