Standard Bank announced back in 2021 that they wanted to launch a platform business.
With One Hub, that journey is well underway.
But what exactly is a platform business, and what are the implications of this decision?
I'll be asking Jonathan Lamb, who heads up Standard Bank's CIB Platform Businesses, exactly that on 23rd September, as part of the future of biometric discussion.
But if you can't wait until then, here's a short explainer....
First up, what is a platform business anyway?
f you are wondering what a platform bank is, you're not alone, as it is still somewhat ethereal and may mean different things to different people.
I found it helpful to think about a few non-banking platform examples, to digest what Standard Bank means.
Take Airbnb, for instance.
Their "platform" allows homeowners to rent their properties out for short holiday-lets to anyone in the world.
I use the platform regularly, and It has just been of phenomenal value because it's removed some of the most significant entry barriers, such as marketing, distribution, cash collection, customer validation and security.
Kindle for publishers is another excellent platform. If you want to author a book, Amazon will guide you through the whole process, so the only thing you have to worry about is the writing.
And Salesforce is my third example. Less known perhaps than Kindle and Airbnb, but they are the market leader in customer relationship management software.
They were able to outperform Microsoft, SAP and Oracle, not because their 'product' was so much better, but because they partnered with third parties, who built additional solutions onto the Salesforce chassis.
DocuSign, for example, was quick to add its e-signature solution to the Salesforce marketplace, which allowed customers to seamlessly move from pipeline management to contract sign-offs at the flick of a switch.
Platform businesses are all similar in that they create a marketplace that allows other businesses to increase their distribution, reduce costs/friction and/or reduce business risks.
And the platform provider often benefits most of all.
By providing a 'generic' infrastructure, which others can use for their own purposes, they are able to create highly scaleable businesses, where marginal costs reduce significantly for each additional customer that is added to their platform.
Airbnb, for example, now has a valuation that matches the whole hotel industry, which is remarkable when you consider they don't own a single room.
So it shouldn't be a surprise that many, perhaps even the majority of today's most valuable companies, are, in fact, platform businesses.
Alibaba, Facebook, Netflix, Amazon, Google, Salesforce, Airbnb....are just some of the names that spring to mind.
It, therefore, makes logical sense that Standard Bank should exploring platform businesses.
In fact, it would be commercial suicide not to because the entity that monopolises this opportunity first is going to become incredibly hard to dislodge.
What Could A Platform Business, Run By A Bank Look Like?
So what should Standard Banks's platform business offer?
Back in 2021, I suggested three possible models being...
1. Standard Bank lets businesses build or offer a wide range of products and services within their own ecosystem.
Imagine, for example, you want to buy a house. How would the journey improve if you could do everything you need to do in terms of researching, pricing, surveying, insuring, moving, borrowing and legalising with one bank-hosted platform?
Initially, this might still be disjointed, with a variety of bank-approved providers being offered up, perhaps with significant discounts if you decide to use Standard Bank for your mortgage.
Over time this would be improved with all of the different actors, being able to access common data sets, reducing the overall amount of form filling and reducing the risk of fraud for all parties.
Eventually, you could imagine a savvy FinTech working in partnership with Standard Bank, building a standalone software-as-a-service offering that automates the majority of the house buying steps and ultimately aims to offer the fastest and cheapest all-in conveyancing package on the market.
(If you want a great example of a housing-related platform business, then check out the US firm Zillow to see how by starting with a pricing tool, they have created a rich marketplace for buyers, sellers and related service providers.)
Could Standard Bank develop something similar to Zillow?
2. Standard Bank opens up a wide variety of plug-and-play services for partner businesses to use as they wish.
Here you could imagine you are a standard bank customer but you decide to take out insurance with a competitor. Wouldn't it be nice if that competitor could pull your KYC data from Standard Bank to make a less frictional onboarding? In this case, Standard Bank isn't your cash custodian; they become your data custodian and offer you a simple app to 'sell' your data to a third party.
The transaction isn't the bits and bytes that represent cash, but rather the bits and bytes that represent your profile or persona. Another alternative could be where a car dealer decides to offer its own in-house financing, therefore standing as a principle with a client rather than acting as an agent to a bank. They are unlikely to take on the cost of developing an appropriate credit scoring and funding model, but why should they if this service (calculation) could be provided by Standard Bank? Perhaps the service can be automated so smaller dealerships can calculate the capital, liquidity and insurance they would require to run the financing offers, with a (say) 90% probability of being profitable in normal market conditions.
3. Businesses with large networks start to offer Standard Bank Products directly to their customers
Something I'd love to see in this space is a Klarna style offering, where someone like a Takealot, gives immediate deferred payment terms to all retail customers at the click of a button. Another platform player Standard Bank could support would be the $1.5billion startup Deel. Deel's solution helps companies almost instantly onboard unlimited numbers of employees and contractors from anywhere in the world whilst still ensuring they are legally compliant. As Deel are also a platform business, I'm certain they would welcome any number of Standard Bank offerings that benefit their own community of employers and employees, especially if they could be quickly integrated within Deel's own ecosystem.
So how did I fair with my predictions?
Well, based on what I know about One Hub it looks like model 1 is being driven hard.
For example, I imagined....
a savvy FinTech working in partnership with Standard Bank, building a standalone software-as-a-service offering that automates the majority of the house buying steps, and ultimately aims to offer the fastest and cheapest all-in conveyancing package on the market.
Well, Standard Bank has partnered with the incredibly tech-savvy iiDentifii, to offer biometric identity authentication directly to their business customer base.
Ok, so not quite the saas home buyers offering I'd imagined, but this is a critical first step that can absolutely enable others to build these types of services.
Sounds Like Paradise. Will It Work?
The opportunities could be vast.
There are hundreds if not thousands of benefits that a platform play could bring to Standard Bank, its customers and indeed society at large.
And if they find the right offerings, they improve their potential to scale, with falling marginal costs, improved customer satisfaction, less disintermediation, better brand presence, more diversity and the more regular ability to create adjacent opportunities.
So how are they fairing just a year or so into their platform journey?
As one of the first fintech to use Standard Bank's One Hub marketplace, I'm looking forward to learning both about their journey to date and expectations about the future.
Is this fintech + incumbent marry-up a match made in heaven?
How have they dealt with the typical compliance and risk concerns that startups can typically ignore?
Why did iiDentifii choose to use One Hub for distribution when they could deal directly with their target customer base?
And how will biometric identity solutions change our lives over the coming decade?
I can't wait to find out on the 23rd!
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