Platform banking – what is it?
Platform banking is a digital marketplace used by the customers of the given institution. Its main goal is to provide the consumers with a wide range of services that would otherwise be available in branches only. Platform banking can be owned and operated by a bank itself or by another third party, i.e., the provider of IT services. The premise behind the technology is that banks can serve customers better, reach them remotely and, therefore, retain the relationship.
In platform banking sharing of customer data requires his consent. The further transmission of the information is processes in secure channels. This also applies to the technologies provided by a third-party providers, including software houses. Thus, the implementation of platform banking results in a transformation of the connection between a customer and their bank from a one-to-one relationship to a one-to-many relationship.
Traditional banking vs platform banking – what’s the difference?
Platform banking stands in opposition to branch-based banking, which is generally considered more traditional than its digital counterpart. However, the channel used to deliver the services to the customers is not the only difference between those two banking models.
|Branch-based banking||Platform banking|
|Advisor’s support for customers||Obligatory||Optional; majority of processes is fully automated|
|Host-to-host integration||Human support required||Included in platform banking|
|Availability||Limited by opening hours and other restrictions (I.e. caused by the pandemic)||24/7; remote access available|
|Security of the documents||Easy to compromise – loss or theft of the documents in paper possible and likely (both for a customer and for the bank)||Paperless processes with all the data processed and saved in secure channels|
|Communication channels||Face-to-face or via insecure phone calls||Omnichannel communication with advanced security protocols|
|Advertisements||For general public only||Personalized offers based on previous interactions|
|Access to account and services||Only one account can be managed at the time||One login for multiple accounts|
Based on the table above, we can clearly see that while the operation of branches is limited, the platform banking can easily fill the gaps created by traditional processes. What is more, platform banking reduces the costs of operations and sales, as it does not require human support in majority of the cases. Still, we have to ask ourselves – is it the answer to corporate customers’ needs?
Customer relations based on platform banking
There are no doubts that corporate customers will demand much more from their banking partners. The digital transformation powered by coronavirus pandemic have certainly shaped the expectation of small and medium businesses for the years to come. That is why branches are no longer enough to meet their needs that usually include:
- Immediate and unlimited access to their bank accounts and services – preferably all in just one login
- Simplified, yet secure processes that require no additional advisor’s support, as it is often unavailable or requires a long wait.
- Diverse communication channels a customer can choose from based on his needs at the very moment.
- Easy access to all the documents and consents, with a possibility to introduce changes if needed.
- Tailored offers based on the previously used services.
One can easily conclude that neither of those demands can be met by branch-based banking. Platform banking, on the other hand, can and will support all of those processes. Thus, banks will have to adjust to this sudden shift in consumers’ requirements in order to survive.
Benefits of platform banking
However, introduction of platform banking is something more than just a burden – it is also a chance to increase profits and optimize the processes.
Lack of human support combined with automated processes included in the transformation can lead to a sharp drop in the operational costs previously caused by the need to hire additional advisors and experts. Those two factors also have an enormous impact on customer journey, as they simplify it and make it more seamless than ever before. Therefore, platform banking can simultaneously improve customer satisfaction.
Platform banking can also be used as an advanced marketing tool. It allows the banks to reach their customers wherever they are and provide them with personalized offers based on the data gathered during previously taken actions. It can act as a communication channel, ensuring secure and quick contact whenever it is needed.
What is more, this technology can be a tool capable of eliminating the threat of large companies’ self-financing operations and tech giants expanding their banking services. Thanks to platform banking, financial institutions can still compete for customers and increase their share in the market in the years to come.