Business model innovation report 2022.pdf

Ecosystem

Innovation

Playbook
Lessons for banks from cross-industry transformation stories
Sangeet Paul Choudary

Puneet Chhahira
Copyright 2022 Platformation Labs and infosys Finacle

Table of Contents
Foreword
4
Integrators
Large scale connectors of diverse actors across the production and
consumption ecosystems act as a cross-industry switchboard
powering partnerships and integrations across the API economy.
7
Action
1
Forces/Shift
Converging forces - shift in market structures, emergence of new
technology infrastructure, and changing value chain economics - are
powering the shift towards modular ecosystems across all industries.
2
Framework
Our core framework highlighting key opportunities for business model
innovation identifies four core positions at which value will
accumulate in the emerging ecosystem landscape.
3
Aggregators
Large scale market makers aggregate consumers and orchestrate
ecosystem actors to serve consumer needs in the consumption
ecosystem.
5
Infrastructure
Large scale providers of core production capabilities to value chain
producers in the production ecosystem standardize core industry
infrastructure and capture gains from industry-wide innovation.
8
More
opportunities
to learn
Engage our ecosystem mapping and business model innovation
strategy services to turbocharge your ecosystem strategy.
6
Capabilities
Thin-sliver capabilities and services that specialize in specific
ecosystem activities embed themselves across ecosystem players
and gain benefits of scale and specialization simulatneously.

Authors
Puneet is the global marketing and platform strategy leader at Finacle - Infosys’s digital
banking products business. Today, financial institutions in more than 100 countries rely on
Finacle to help more than a billion people and millions of businesses to save, pay, borrow,
and invest better.

Puneet has been with Infosys Finacle for over 17 years and has played multiple roles
across consulting, product management, marketing, startup engagements, and platform
strategy. With his close collaborations with global banks, startups, and industry thought
leaders, he brings along a deep understanding of the evolving financial industry landscape
and how modern technologies can help unlock new possibilities.

Puneet is a frequent speaker at industry events and has regularly contributed point-of-
views on business model innovation, and scaling digital transformation. In particular, he
has written extensively about Banking as a Service, marketplace banking, embedded
finance, digital engagement, core modernization, and unlocking value from modern
technologies.

Before joining Infosys Finacle, Puneet was a regional business leader at Bajaj Allianz Life
Insurance – one of the largest life insurers in India. Puneet holds an engineering degree in
computer science and specialized in Marketing & Finance during his post-graduation.
Sangeet Paul Choudary is the founder of Platformation Labs and the best-selling author of Platform
Revolution and Platform Scale. He has advised the leadership of more than 40 of the Fortune 500 firms
on applying platform and ecosystem strategy and has been selected as a Young Global Leader by the
World Economic Forum.

Sangeet's work on platforms has been selected by Harvard Business Review as one of the top 10 ideas in
strategy, alongside Michael Porter, Clayton Christensen and others, and is one of the rare articles to have
been featured on four occasions in the HBR Top 10 Must Reads compilations.

Sangeet serves on the 5-member high-level national advisory committee to the Ministry of Housing and
Urban Affairs, Government of India, advising the ministry on applying a building blocks approach for
urban innovation. His other appointments include the Global Innovation Council at ING Bank, the
Business Engineering Advisory Board at Standard Bank, the Digital and innovation Committee at Grupo
Pao De Acucar, and the board of directors at the ASEAN Financial Innovation Network.

Sangeet is a member of the WEF's Global Future Council, an Entrepreneur-in-Residence at INSEAD
Business School, the co-chair of the MIT Platform Strategy Summit, and the youngest ever recipient of
the IIMB Distinguished Alumnus Award.

Sangeet is a frequent keynote speaker at leading global forums including the G20 Summit, the World50
Summit, the United Nations, and the World Economic Forum
Co-founder

Platformation Labs
Sangeet Paul

Choudary
Puneet

Chhahira
Head of Marketing and Platform

Strategy, Infosys Finacle

1
Foreword
Welcome to this playbook on ecosystem innovation, a collaborative effort between Infosys Finacle and a well-known global
thought leader on the platform business models, Sangeet Paul Choudary. Sangeet’s international best-seller Platform
Revolution is a Forbes ‘must-read’, and his work has been featured on multiple occasions in the HBR Top 10 must-reads
collections.

The timing of this initiative is significant. Today, business model innovation is one of the most discussed topics in our
conversations with banking executives, amid indicators that the traditional banking model will not be sustainable for long
going forward. Some of these indicators include the facts that a large number of western banks, especially in Europe, are
delivering a return on equity that is below the cost of equity; in several cases, a price to book ratio (P/B ratio) of less than
one suggests weak investor confidence; and revenues are growing at low single-digit rates in a large number of banks.
Seen in conjunction with disruptive market forces, arising both from customers and competitors, the writing on the wall is
clear. Banks need to rethink their business models for a sustainable future.

Consider customer engagement, for example. In about two decades, banking transactions have gone from 50 percent in-
branch to 90 percent on digital self-service channels. That is set to change again as trends, such as open banking and
embedded finance, drive more and more transactions to third-party, non-bank channels involved in the fulfillment of
primary customer needs – for a home, a car, a holiday, or other things. For instance, in India, at the leading edge of this
change, open payments transactions running on the Unified Payments Interface have skyrocketed to nearly 6 billion per
month, 80 percent being routed through Google Pay and Walmart-owned Phone Pe. This is despite the fact that there are
more than 60 apps from incumbent and challenger banks to initiate these transactions.

Slowly, but surely, the boundaries between industries are blurring with new-age competitors reimagining the ‘traditional’
banking space. For example, on Google Pay, customers can now get a term deposit, as well as unsecured loans from a
bank without ever visiting their branch or website or mobile app. Similarly, merchants selling on Amazon can take a loan
from Goldman Sachs within the Amazon Seller portal. Customers are responding favorably to these trends and are taking
their interactions to ecosystems that fulfill their requirements with convenience, attractive pricing, and highly personalized
offerings. Incumbent banks acknowledge the threat in these shifts and the risk of being edged out of customer
engagement in a broad range of transactions.
...
Chief Business Officer

& Global Head,

Infosys Finacle
Sanat

Rao

2
Thus, incumbent banks must rewrite their old models to remain relevant in a digital-first world where various ecosystems offer banking services and allow
financial propositions to be embedded seamlessly within primary customer journeys.

As a partner to financial institutions in more than a hundred countries worldwide, we strive to support banks in the journey of business model innovation with
various initiatives. One such initiative is this collaboration with Sangeet Paul Choudary, who has written extensively on the platform business model. In this
playbook, readers will find the experiences of other industries that got disrupted before banking, and the transformation stories of both incumbent and disruptive
businesses. A few examples are Nike, Sephora, EasyPost, AutoDesk, Maersk, and Alibaba, that responded with strong, digital-first, ecosystem-driven business
models. Also featured are several inspiring initiatives from global banking pioneers such as Goldman Sachs, DBS, HSBC, Plaid, Galileo, Stripe, SBI, and Discovery.

The playbook looks at reinventing business models through an ecosystem prism, focusing on four ‘families’ of models with the maximum opportunities, namely
aggregators, integrators, infrastructure providers, and specialist service providers. It discusses ways in which banks can adopt these models to launch, scale and
dominate, and exploit the network effect to grow the business. It also touches upon a subject that even the most successful companies have yet to master &
monetize these ecosystem-based models for profit.

It is our hope that the playbook will act as a valuable resource for evolving banks’ business model innovation strategies and gives them the confidence to
implement without delay. Embracing business model innovation is a multifaceted and long journey. It takes years of painstaking, deliberate change. Speed is of
the essence because the window of opportunity for catching up with the digital leaders will not be open for long.

I hope the playbook helps you discover new avenues for creating value and leaves you with ideas to convert new possibilities into new realities.

Key
Shifts
Business Model
Innovation - Why Now

4
Shifts in markets
Shifts in infrastructure
Shifts in economics
Shiftsinmarkets,
infrastructure,andeconomics
arereshapingecosystemsin
whichfirmscompete,driving
theneedforbusinessmodel
innovation.Thissection
exploresthesethreeforces.
Keyforcesdrivingurgencyofbusiness
modelinnovation

5
Market participation by key
participants - customers,
competitors, and regulators - is
undergoing massive shifts with the
rise of digital technologies.
Shifts in markets
Customers Competitors Regulators

6
Banking is increasingly embedded into serving
customers' primary needs
Connected, informed, and highly demanding digital
consumers have redefined the rules of engagement in
financial services. For instance, twenty years back, more
than half of all banking transactions occurred within the
branch network; today, less than 10 percent of
transactions occur within the traditional branch network,
thanks to the rise of various digital self-service channels.
An increasing number of bank transactions are initiated
outside bank-owned digital channels, specifically in
third-party channels, enabled by embedded finance and
open banking initiatives.

Banking customer journeys now originate at the point of
primary need, well before a banking product or service is
actually required. For example, the mortgage journey
starts not when customers come looking for a loan but
rather when they initially decide to buy a house.
Similarly, a car financing journey begins with the need
for a new vehicle. Banks participating in or even
aggregating marketplaces to serve primary needs
improve their odds of securing the associated financing
business at a later stage.

Embedded finance is also visible in business banking,
with banks integrating their services – payments, FX,
liquidity management, trade financing – with popular
ERP solutions. Progressive banks also offer ERP
solutions to small business clients with the goal of
embedding their banking services into business
workflows. Banks integrating with corporate systems,
such as ERP or treasury management, increasingly aim
to create the default operating system for the business,
managing primary demand use cases such as payroll
and invoicing.
Customers
Source: DBS Annual Report 2020

7
Source: Infosys Finacle, EFMA - Innovation in Retail Banking 2021
The financial services industry, while traditionally protected from external competition, is
now witnessing an evolving competitive landscape. Fintechs, big techs, and neobanks are
making noticeable inroads across the value chain, particularly attacking fee-based
profitable segments like payments and wealth management.

New entrants undercut incumbents by introducing better solutions to customers’
problems – solutions that offer better experiences, better prices, better rewards, and
better products. They succeed through their ability to personalize offerings to individual
customers based on data-driven insights.

Rapid consumer adoption of new service providers (challenger banks and neo banks),
new services (e.g. Buy Now Pay Later), new touchpoints (e.g. chatbots, voice assistants),
and new service models (e.g. alternative lending, p2p forex exchange) demonstrates the
changing competitive landscape.
Competitors
Blurring industry boundaries are changing the
competitive landscape dramatically
Deposit Services, Investment & Wealth
Payments, Cards & Digital Delivery
Lending Services & Digital Delivery
Checking Accounts & Small Business relationships
Below players will be leading innovation in the respective areas over the next 5 years.
Banking innovation leaders by 2025

8
Regulators have moved from enforcement
and systematic risk management to
catalyzing banking innovation worldwide.
Central Banks are now offering more
licenses, both for full service and niche
banks (e.g. Digital Banking Licenses in
Singapore). Progressive regulators have
also introduced open finance frameworks
(Europe: PSD2, Australia: ADR, UK: CMA,
India: Account Aggregator) while many are
aggressively championing the protection
of customer interest by reducing MDR
rates, investment management fees, etc.

These measures from regulators have
had far-reaching consequences – they
have structurally changed banking
markets, but also increased compliance
costs while reducing revenues and
profitability. New regulations
concerning service delivery, data
privacy, pricing, or communication
unfold require industry players to act
with greater transparency and
efficiency.
New Banking
Licenses
Open Banking
Regulations
Consumer Protection
Regulations
Data Privacy
Requirements
Capital Ratio
Requirements
Liquidity Ratio
Requirements
Operational Resilience
Requirements
Pandemic Speciﬁc
Guidelines
….
Regulators
The new role of regulators in banking

9
Shifts in
infrastructure
Increasing infrastructure
maturity is transforming
the financial services
industry.
Maturing

Technology
Maturing Digital

Backbones
Maturing

Industry Utilities

10
Overthepastdecade,we’vewitnessedtheriseandrapidconvergenceofvarious
technologies-Cloud,API,AI,Blockchain,IoT,andMixedReality-eachpowerfulenough
tochangetheeconomicsofindustries.Smallfirmscannowsetupbusinessonthecloud.
AnyonecanleverageAPIstocomposenewservicesandexperiences.Blockchain-enabled
solutionsaredisintermediatingcentralizedinfrastructure.Mixedrealityholdsthepotential
tointegratephysicalanddigitalworldsinthemetaverse.

Combinedtogether,thesetechnologiesreinforceeachotherevenfurther,transforming
theeconomicsofentireindustries.
Cloud Computing
Augmented Reality
Technologies
Natural Language Processing
Virtual Reality
Advanced Analytics and AI
Blockchain
Open APIs
Internet of Things
Technology
infrastructure
The formidable confluence of modern technologies

11
Navigating digital transformation with digital infrastructures

In many geographies, digital infrastructure managed by the government (or an overseeing
authority, such as a regulator or industry association) is also growing rapidly to enable
innovation at speed. Such public digital infrastructure include real-time payments,
consent-based data sharing standards, data privacy policies, or entire national digital
identity platforms. Consider India’s Aadhaar. With the e-KYC that Aadhaar enables, the
cost of onboarding a customer has plummeted from INR 800 in the days of paper-based
checking to INR 20 today. This has helped several industries expand their customer base
dramatically. For instance, the Indian Mutual Funds Industry has grown its assets six-fold
in a span of 10 years.
Source: https://ispirt.in/our-industry/indiastack/
Example: India Stack
1. Consent Layer: This is a data privacy layer to enable consent-based data
sharing
2. Cash-less layer: Instant payments systems that enable real-time money
transfer from a bank account
3. Paper-less Layer: The paperless layer uses Aadhaar identity data to provide
e-KYC (Know Your Customer), e-Sign, and e-Documentation services
4. Presence-less Layer: This layer offers a unique digital biometric identity with
open access for over a billion users
National digital
backbones

12
Aiming to scale through collaboration, industry players increasingly pool

resources, expertise, and capabilities to create utilities providing non-
differentiating services that (industry) participants can readily consume at
low cost, instead of investing in creating the same in-house. The utilities
offer a Business Platform as a Service (BPaaS), combining technology,
operations, and data.

Adoption of the utility concept has been slow among banks but has
gathered pace in the past ten years. In addition to efficiency benefits,
utilities provide banks with key value chain components that may be used
to assemble differentiated services for customers.

Example:
Dutch mortgage processor Stater offers a complete range of services across the mortgage
and consumer lending value chain with deep capabilities in digital origination, loan
servicing, and collections
1.7 million mortgage and
insurance loans for approximately
50 ﬁnancial institutions in The
Netherlands and Belgium
Manages 40% of all mortgages
in The Netherlands
Clients: ABM AMRO, Allianz,
Deutsche Bank, Lloyds Bank,
among others
Unlocking value in collaboration
Industry utilities

13
Shifts in
economics
Digitization is transforming
market economics.
Exerting pricing

pressures
Reducing the cost of

composing business
Cost of mass reach and
personalization
$

14
Pricingisincreasinglyunderpressure.Withincreasingpricetransparencyon
theInternet,customerscomparemultipleofferingsbeforebuying,making
marketshighlycompetitive.Further,asmentionedearlier,consumer
protectionlawsestablishaceilingonpricesandpreventhiddencharges.
Sinceinterestratesremainedlowthroughthelastdecade,banksand
consumershavebeenseekingnewsourcesofreturn–forexample,through
corporatedebtmarketsandalternativeinvestments.Non-traditional
competitorssuchasneo-banks,challengerbanks,big-techplayers,are
lookingtogainanedgeoverincumbentsbyofferingcustomersattractive
pricingthroughlow-interestratesonloansorlowerfeesonbanking
transactionsandattractiverewards.

320,000
customers
31
European
countries
Brokered 30.5
Billion Euros in
savings across

Europe
Deposit marketplace Raisin partners with banks across Europe to offer
savers best interest rates
Banks remain under pressure

Pricingpressures

15
Digitization enables standardization and ease of integration across industries.
Technologies such as APIs make it easier for players to compose and recompose new
businesses. We now see several new business models built on propositions like Banking
as a Service. Regulatory and industry initiatives around open banking further drive
standardization and enable a policy framework to facilitate over-the-top business models.
Digital technologies also remove operational inefficiencies and drive automation to new
levels.

Collectively, this reflects in lower cost-to-income ratios of digital challenger banks (20-30
percent) compared to that of omnichannel incumbents (40-50 percent).
Evolving trend for cost-to-income ratio in banking industry
40-50 20-30
Incumbent Banks Digital Challenger Banks
Digitization is enabling standardization and ease of
integration across industries
Reducing cost of
composing business

16
The cost of onboarding and serving underbanked customers has also reduced
dramatically because of digitization. Digitization and automation enable a shift from
“Low Volume, High Value, High Cost” to “High Volume, Low Value, Low Cost”
transactions. Self-service electronic transaction fees will also continue to decrease.

The banking revenue model is evolving from interest and fee income-based models to
data-led monetization models. Furthermore, improving cloud infrastructure, data, and
AI-based algorithms drive down the cost of personalization dramatically.

Personalization opportunities at population scale
Digitization reduces operating costs
Diminishing cost of mass
reach and personalization

Descriptive insights
Diagnostic insights
Predictive insights
Prescriptive insights
include visual inputs and categorization of spends
that inform customers about their financial lives
explain the "why" of descriptive insights (e.g. you
saved less because you spent more on category X)
predict future possibilities, e.g. cash flow
challenges or potential penalties for non-compliance
nudge customers towards specific goals along a
recommended journey, e.g. balance cash flow, rebalance the portfolio,
reduce expenses etc.

Framework
Future value positions
in the evolving digital
landscape

18
Consumers
Integrators
Infrastructures
Aggregators
Aggregators
Capabilities
Capabilities
Distributors
Integrators
Producers
Infrastructures
Suppliers
Value primarily accrues towards four key business models in an ecosystem
In the emerging digital ecosystem, value accrues to aggregators of consumer demand, integrators of demand and supply, and infrastructures that enable supply. Players who
excel at these three layers benefit from both agility and scale. Finally, individual capability providers that own proprietary IP in a specific capability may specialize and scale
through ecosystem partnerships.

19
Aggregators Aggregate consumer demand, attention, and data at
scale to take on dominant positions in the
consumption ecosystem
Integrators Integrate across a diverse range of production partners
(providing supply) and distribution partners (serving
demand) to organize a fragmented ecosystem.
Infrastructures Provide critical infrastructure and standards to
enable, coordinate, and organize production.
Capabilities
Provide one or more
narrow capabilities, each
focused on addressing a
specific use case at a
specific part of the value
chain.
We see four dominant business model families in ecosystems

Aggregators
Aggregate consumer
demand, attention, and
data at scale to take on
dominant positions in
the consumption
ecosystem

21
Characteristics
Aggregators aggregate consumer demand by building engagement
through consumer-facing services. They leverage this control over
consumer engagement (and data) to mediate interactions between
consumers and third party producers.

Aggregators typically benefit from low marginal costs of serving
consumers which allows them to build consumer engagement at
scale. As ownership of consumer engagement becomes more scarce
in a digital world, aggregators act as gatekeepers of market access for
producers looking to interact with consumers.

The largest technology companies today - Facebook, Amazon, Netflix,
Apple, Google - span multiple business model families but almost all
of them established their dominance first as an aggregator. Even
banks like DBS are embracing aggregator business models.

Facebook's social network created a high engagement consumer
service to aggregate demand.

Amazon's Prime membership as well as its voice assistant Alexa are
examples of aggregators that aggregate demand towards its
commerce and media services.
Aggregator
Integrator
Capabilities
Infrastructure
Functions
Providing consumer services: Aggregators provision services to end
consumers and engage consumers through data-driven personalization and
habit design.
Managing consumer data insights: Aggregators capture consumer data at
scale and package this back as analytics to consumers (e.g. fitness
applications) or as insights and targeting products for producers (e.g. market
insights provided to sellers by ecommerce platforms).
Matchmaking between producers and consumers: Aggregators match third
party producers and their products/services to consumers, using data about
both sides to facilitate the match.
Aggregators: Characteristics and
functions

22
Learning effects:

Aggregators benefit from learning effects, where the more data they capture on
consumers, the higher is their ability to deliver a personalized and relevant
experience, leading to greater consumer engagement and even greater scale and
scope of data capture.
Network effects

Aggregators benefit from cross-sided network effects, where more consumers coming
on board attracts more producers, and more producers coming on board increases
choice for consumers, attracting even more consumers. To strengthen network effects,
aggregator platforms seek to increase multihoming costs for both sides, particularly for
consumers.
Two factors concentrate greater power and value with aggregators over time.
Aggregator
Integrator
Capabilities
Infrastructure
more
producers
increases
choice for
consumers
attracting even
more
consumers
more
consumers
More
personalised
and relevant
experience
Greater
consumer

Engagement
More data
captured on
consumers
How aggregators scale and dominate

23
Overview
Aggregators gain traction by aggregating consumer demand
around a core service. This service may typically be served to
users at low marginal costs allowing aggregators to scale cost-
effectively.

Incumbents with consumers-facing assets - e.g. leading
consumer brands and retail businesses - may leverage these
assets to launch aggregator business models.
Walgreens CASE study 1
Leverage incumbent assets to kickstart
aggregator business model
Walgreens launched an aggregator business model by
launching a digital loyalty program - the Balance Rewards
program - across its pharmacy network. Users who signed up
for the loyalty program, earned reward points not only for the
purchases they made within the Walgreens pharmacy network
but also across a larger partner ecosystem of fitness
applications.
Aggregator
Integrator
Capabilities
Infrastructure
Mint.com CASE STUDY 2
Create a decision support layer across multiple
providers
Mint.com, and other financial profile aggregators, aggregate
data across financial institutions to create the user's unified
financial profile and provide spend and/or investment analytics
to the user. These aggregators also connect users with relevant
offers from third parties.
Nike CASE STUDY 3
Leverage brand and partnerships to create an
integrated brand experience
Nike leveraged its strong brand to launch a series of connected
applications to engage users around running and fitness use
cases. Nike's partnership with Apple helped kickstart initial
ecosystem activity. Nike curates expert trainer content for training
new fitness enthusiasts and provides community engagement
tools to drive network effects. By driving user engagement, Nike
also obtains data about the user to inform better product
decisions.
Some aggregators may take off by creating a decision support layer on top of
other providers and organising data captured across these providers to enable
consumers to make better decisions.

In general, aggregators need a right to play as the consumer interface.

They typically achieve this by:

1. Informing an important consumer decision, or

2. Creating a high engagement service.
Launch strategies for aggregators

24
Aggregators monetize their control over the consumer in multiple ways. First, aggregators that facilitate a marketplace transaction
may charge a transaction fee to producers and/or consumers. Second, aggregators may charge producers for access to consumers
and the ability to brand and promote themselves to consumers. Third, aggregators may leverage engagement on consumer
services to generate leads and drive sales of products and services in their traditional business. Finally, aggregators may charge
advertising fees from third-party advertisers looking to target consumers. Aggregators also have a significant data moat that may
be monetized in the form of data products.
Sephora'sapplicationsinfluencebothin-storeandonline
shoppingexperiences,capturinguserpreferencedataand
usingitforbettercategoryandinventorymanagement.
Primarily,Sephora'saggregatorplayismonetizedthoughhigher
salesandlifetimevalueofuserswhoopt-intotheecosystem
services.Inadditiontopersonalization,virtualtry-onservices,
reducebarrierstotransactionforusers.
Useaggregatorengagementtodriveproductsales
SephoraIQandVirtual
applications
CASEstudy 1
Brazil'sleadingonlinemarketplaceMagazineLuizastartedasa
brickandmortarretailerandsubsequentlyleverageditsretail
footprintandconsumerconnecttoopenoutitsmarketplaceto
thirdpartymerchants.Themarketplaceschargesacommission
onsaleswiththirdpartymerchants.
Chargeafeefortransactionswiththirdparties
MagazineLuiza CASEstudy 2
LinkedInaggregatesprofessionalsthroughfreeaccesstoits
socialnetworkbutmonetizesenhancedaccessforrecruiters
andsalesprofessionalsaswellasanalyticsandpremiumtools
targetedattheseusers.
Chargeforenhancednetworkaccess
LinkedIn CASEstudy 3
Aggregator
Integrator
Capabilities
Infrastructure
Overview
Monetizationmodelsforaggregators

25
Sephora’s integrated brand experience integrates its in-store experience with digital
marketplaces and social networks, linked together through the user’s digitized profile.
Aggregator
Integrator
Capabilities
Infrastructure
PARTNER ECOSYSTEM
Sephora convenes a community of beauty influencers to engage users, recommend products, and
educate users on best practices through the BeautyTalk platform.
MONETIZATION
Sephora monetizes primarily through product sales driven through personalized recommendations.
The integrated brand experience delivers a more immersive shopping experience and the superior
data profile enables highly targeted recommendations. Data collected across its touchpoints may
also help drive decisions on category & inventory management.
LAUNCH AND GROWTH
Innovation: Started in 2015, Sephora’s innovation lab has invested heavily in facial feature
recognition AI to track facial features and build augmented reality experiences using this capability.

Partnerships: Sephora also leverages third party partnerships to drive innovation. In partnership
with Modiface, it launched virtual try-ons to enhance its digital commerce experience. In partnership
with Inhalio, Sephora has developed a platform to help consumers sample different scents and
fragrances.

Community: Sephora also invests in community creation. E.g. it launched Beauty TIP (teach, inspire,
play), an integrated experience workshop, where customers learn via group beauty classes, using
Sephora’s Virtual Artist technology, Beauty Board, and its gallery of products.
1. Fragance IQ
4. BeautyBoard
6. BeautyTalk 2. Color IQ
5. Skincare IQ 3. Virtual

Artist
1.Fragrance IQ

Recommendation engine for fragrances
using personal preferences profile
5.Skincare IQ

Recommendation engine for skin
lotions using user preferences and skin
type profile
2.Color IQ

Recommendation engine for foundation
colors using user preferences and skin
tone profile
4.BeautyBoard

A Pinterest-like social platform that
allows users to upload photos of their
makeup and interact with other users
around these photos
6.BeautyTalk

Social blog and engagement platform for
learning and interactions with experts and
other users
3.VirtualArtist

Virtual try-on mobile application
which enables users to virtually test
products while shopping online,
replicating the in-store experience.
Sephora
BusinessModelTypeAggregator
Sephora Case Study

26
Nike aims to create an integrated experience around sports, wellness, and fitness,
centered around the usage of its connected products and services.
Aggregator
Integrator
Capabilities
Infrastructure
Nike's integrated brand experience spans several components including:
PARTNER ECOSYSTEM
Nike creates same-sided network effects by allowing users to connect with other users and engage in
competitive challenges. It also creates cross-sided network effects between master trainers and users on the
TrainingClub, where trainers provide content to train and engage users.

Nike's third party integrations with Spotify, iTunes, iWatch, WeChat etc. constitute an integral part of its
connected ecosystem, allowing it to engage users across a variety of touchpoints.
1. TrainingClub
4. Connected

Shoes (Adapt BB)
6. RunClub 2. Nike

WeChat
5. Nike

Instore connect
3. D2C

Channel

SNKRs
MONETIZATION
Nike's growing consumer engagement, through the integrated brand experience, increases consumer connect
with the brand. It also drives direct transactions through D2C channels like SNKRS. The platform enables Nike
to capture rich user data, ranging from sizes, fits, profiles, activity (use of footwear), preferences etc. This data
enables recommendation of the most appropriate products and services to users. As of 2021, more than 30%
of Nike's revenue was driven by digital channels, which constitute an integral part of the integrated brand
experience.

Nike also monetises subscriptions to the Nike Training Club Premium services.
LAUNCH AND GROWTH
Nike's first generation connected ecosystem involved the Nike+ iPod kit, launched in 2006, which allowed
Nike+ compatible connected shoes to share data with the Apple iPod nano, allowing runners to receive audible
alerts on their running statistics during the run.

Nike's subsequent launches, including the Sportband kit and the "Nike+iPod for the Gym" were all launched as
connected devices, primarily in partnership with Apple. In 2008, Apple added a native capability to receive
Nike+ signals in the iPod and iPhone without requiring a receiver, further deepening the integration.

Nike subsequently launched several connected devices, some in partnership with other companies like Polar
(Polar WearLink+). However, between 2014 and 2018, Nike has progressively moved away from connected
devices and instead focused its integrated brand experience on membership-based services, including the
Run Club and Training Club.
1. TrainingClub

Allows fitness enthusiasts to train through
a personalized Training plan, users can
select available plans or build their own. It
also provides access to pre-recorded
tutorials and an activity tracker to track
workout history.
5. Nike Instore connect

Uses geotagging to identify Nike+ app users visiting the stores and
provides with targeted information, offers and exclusive content, to
create a connected offline experience in-store.
2. Nike WeChat

Partnered with WeChat in China to launch a
Mini Program that offered Nike’s
consumers a full range of products and
services including unlocks to exclusive
products and events and member passes.
4. Connected Shoes (Adapt BB)

Allows players to lace their shoes remotely
through a mobile application and also
automatically adjusts its fit to match the
foot shape of the player depending on the
use.
6. RunClub

Allows running enthusiasts to develop their running habits.
RunClub provides tutorials for runners, tracks daily activity, and
enables creation of community challenges which may be shared
with friends and community.
3. D2C Channel SNKRs

Direct-to-consumer channel that lowers
purchasing barriers and gives users
exclusive access to the latest content on
the brand's new launches. The application
allows personalization of shoes, reordering
from old favourites, and a one-touch
buying option during 'shoe drop' events.
NIKE
Business Model Type Aggregator
Nike Case Study

27
BankBazaar acts as an online financial services marketplace and provides users with the
required decision support tools for comparing offers across third party financial
institutions, based on users' credit profile.
Aggregator
Integrator
Capabilities
Infrastructure
BankBazaar aggregates a variety of financial services in its ecosystem, including:

PARTNER ECOSYSTEM
BankBazaar manages the end-to-end application for loans and other financial products, unto disbursement
and transaction completion. In the process, it works with third-party financial institutions as a distributor of
their financial products.

BankBazaar's paperless loan application process drives lower operating costs for partner banks and reduces
fraud risk, by preventing document forgery.

As data accumulates with the platform, this data may be further leveraged to provide market analytics to third
party financial institutions and/or to drive product innovation.
MONETIZATION
The platform is free to use for consumers and monetises through applications-based commissions from third-
party financial service providers. Financial institutions are charged for leads generated and successfully
converted through the marketplace
LAUNCH AND GROWTH
BankBazaar started out in 2008 as a portal showcasing financial products with relatively low facilitation of the
application beyond the initial search. In its early days, it would generate leads and pass them on to financial
institutions. This model had low barriers to entry and was highly competitive.

With the launch of the India Stack, BankBazaar positioned its e-KYC and e-Sign capabilities to start facilitating
the end-to-end paperless application of loans, by integrating with the India Stack's identity management and
consent management capabilities.

Further, integrating with the core banking systems at financial institutions provides BankBazaar the ability to
manage the end-to-end loan application.

This integration with India Stack spurred BankBazaar's adoption and positioned it as a leading aggregator in
the financial services space.
1. Credit Loans
3. Credit/

Debit card
2. Investments
4. Credit Score
1.Credit Loans

Takes users through a personalized loan
approval journey and provides instant
approvals for credit for various needs.
These include personal loans, home loans,
vehicle or 2 wheeler loans, and education
loans.

2.Investments

Provides an online comparison portal for
comparing various investment and wealth
management products, including mutual
funds, precious metal investments,
national pension schemes, and fixed
deposit schemes, thereby acting as a one-
stop platform for supporting all personal
finance decisions of an individual.

4.Credit Score

Allows users to check their credit history
and score for free and, in turn, benefits
from learning effects to recommend
personalized product offers for them.

3.Credit/Debit Card

Takes users through a personalized journey
before recommending the best credit/debit
cards based on their financial position.

Bank

Bazaar
Bank Bazaar Case Study

28
Yono aggregates multiple services, spanning both financial services (offered by the
bank itself) and lifestyle services (offered by ecosystem partners).
Aggregator
Integrator
Capabilities
Infrastructure
When SBI formed a vision of the super app along with its digital bank — it
envisioned a comprehensive online platform with three pillars:

1. Digital Bank
3. Personal

Finance

Management
2. Financial

products

superstore
Manages end-to-end digital banking
customer journey, across origination,
account management and
transaction management.
Creates a comprehensive
financial profile of customers by
aggregating data from various
sources and providing money
management and investment
decision support.

Provides one-stop access across
all financial products.
Provides offers and discounts across
60+ ecommerce merchants
spanning verticals as diverse as
travel and healthcare such as
Amazon, Uber, AirBnB, etc. Provides
personalized and targeted offers
using artificial intelligence.
SBI
PARTNERECOSYSTEM
Provides offers and discounts across 60+ecommerce merchants spanning verticals as diverse as travel and
healthcare such as Amazon, Uber, AirBnB, etc. Provides personalized and targeted offers using artificial
intelligence.
MONETIZATION
Yono allows SBIto own all financial needs of the customer, thereby increasing customer lifetime value. By
aggregating financial data to create a comprehensive user data profile, the app can also recommend relevant
financial products and non-financial services, earning sales fees and commissions.

There is a significant potential for YONOin future by making the app a complete Digital Bank. The company
also has plans to hive off YONOas a standalone platform and monetize the platform by allowing other banks to
use its underlying technology as a plug and play model.

YONO’s valuation would be equivalent to $40-50billion today had it been launched outside the bank.*

*Source:Bloomberg Quint :SBI YONOValuation
LAUNCHANDGROWTH
SBIstarted out by integrating across its internal operations and external touchpoints to enable a digital-first
customer journey across its financial products and touchpoints. By centralizing the consumer profile across all
its product lines, SBIYONOset up the starting point for a super app business model. This eventually allowed it
to scale across external ecosystem partners as well.

Much like other aggregators that have gained traction in India in the late 2010s, SBIYONOalso benefited from
integration with UPIand India Stack. As the underlying digital public infrastructure gained adoption, SBI
onboarded its customer base onto this digital-first banking experience.
SBI YouOnlyNeedOne (YONO)Case Study

29
Paytm started out as a wallet and bill payment provider and moved into e-commerce and
banking. Collectively, it has evolved into a super app centered around payments,
commerce, investments, and banking.
Aggregator
Integrator
Capabilities
Infrastructure
PayTM's super app aggregates several financial and non-financial services:

1. Payments

Payments (through a phone number or a QR code) is
the core interaction. Also provides integrated billing
management and merchant payment solutions,
including API-based payments.
2. Banking

Through a Payments Bank License, it also
provides savings accounts and payments.
3. PayTM Money

Provides consumers with investment and wealth
management services, through Paytm Money
4. Paytm Insurance

An online marketplace for insurance products from
various insurers
5. PayTM Mall

E-commerce marketplace covering categories ranging
from electronics to apparel to travel.
6. Paytm First Games

Online multiplayer game streaming services to drive
increased engagement among users beyond
transactional use cases.
7. Paytm Risk

AI-based risk management solutions targeted at
business clients.
8. Paytm First

Subscription-based loyalty program to encourage users
to transact across the partner ecosystem.
1. Payments
7. PayTM

Risk
7. PayTM

First
2. Banking
3. PayTM

Money
4. PayTM

Insurance
5. PayTM

Mall
6. PayTM

First Games
PayTM
PARTNER ECOSYSTEM
Millions of small merchants that accept Paytm to enable cashless payments from the customers.

Additionally, Paytm enables marketplace transactions and has partnered with IndusInd Bank for deposit products, Citibank for
credit cards, and several financial companies for lending offerings.

Paytm today has nearly 350 million total users, over 64 million bank accounts, and more than INR 4 trillion in Gross Merchant
Value (GMV) and AUM worth over 50 billion in its new wealth management business.

LAUNCH AND GROWTH
Paytm started out as One97 Communications, a prepaid mobile recharge platform, and bill payments solution. Between
2010-2015, Paytm continued to expand its bill payments solution by integrating with a variety of large payment partners. With
the rise of e-commerce and investment from China’s Alibaba, it subsequently evolved into an e-commerce player like Amazon.

Paytm's growth as a payments application accelerated with the government of India announcing demonetization in Nov 2016.
Paytm's integration with India Stack and UPI (India’s open payments protocol), combined with the impact of demonetization
drove demand for cashless payments across the traditional cash economy in India. QR codes integration allowed customers to
make payments to small businesses through their phones. Paytm soon emerged as India's leading payments-led super app
provider.

Paytm’s strategy is to exploit the network effect of its vast ecosystem. Typically, new customers are acquired through the
payments business and then encouraged to try other offerings in banking, lending, insurance, commerce, wealth products, etc.

MONETIZATION
Charges a transaction fee on transactions with third party merchants on its payments product and ecommerce marketplace.

Charges consumers a convenience fee on payments and a subscription fee for its loyalty program Paytm First.

Charges merchants for cloud services and brand marketing campaigns.

Chargers commission fee from insurance companies, distribution fee from credit card issues, brokerage fees from investment
product providers, and collection fee from lending partners.
Paytm Case Study

30
BarodaKisanisanone-stopdecisionsupportandadvisorysolutionservingthefarmer
acrossallagriculturalneedsfromsowingtoharvesting.
Aggregator
Integrator
Capabilities
Infrastructure
PARTNERECOSYSTEM
Platformdevelopers:TheplatformwasdevelopedbyBankofBaroda,inpartnershipwithIBMIndia.

Informationproviders:Partnerslike SkymetWeatherServices,WeatherRiskManagementServices,
BigHaat,AgrostarIndiaetcprovidekeyinformationservicestotheplatform.

Distributionpartners:InpartnershipwithAquaConnect,thefinancialservicespropositionisextendedto
aquaculturefarmers.
MONETIZATION
Theplatformprimarilymonetizesthroughsaleoftargetedfinancialservices(particularlycredit)tothefarmers.
Italsoobtainsacommissiononmarketplacetransactionswiththirdparties.
LAUNCHANDGROWTH
BankofBarodaleverageditsexistingruralagriculturalconsumerbase.BarodaKisanwaslaunchedwiththe
goalofservingfarmersacrosstheirentirespectrumofneeds,beyondfinancialneeds.

Twokeydrivers-digitizationoffarmers’identitythroughAadhaaranddigitizationofthelandrecordthrough
agro/weatherstart-upslikeSkymetWeatherServicesPvtLtd-speededuptheloansanctioningprocess,
drivinggreaterdemandfortheplatform.

TheBankalsolaunched'CentreforAgricultureMarketingandProcessing(CAMP)',acentralizedagri-loans
processingbusiness.

ThebankalsoaligneditsinitiativestotheIndiangovernment’svisionofdoublingfarmersincomeby2022.

Itorganizestheannual‘BarodaKisanPakhwada’,apan-Indiainitiativetoencouragefarmerstoaccess
servicesofferedbytheGovernmentandtheBank.Thebank,inturn,benefitsfromhavingitsofferings
promotedbythegovernmentundertheAatmanirbharBharatAbhiyan.
1. Personalized farming

decision support
Personalized information across
weather, soil, and crop health.
2. Pricing

decision support
Mandi (market) pricing
information across markets
relevant to the farmer.
5. Financial

services marketplace
Enables access to personalized
insurance and credit products
based on the farmer and farm
data profile.
3. Equipment

marketplace
Enables renting of farm
equipment from OEMs
and third parties.
4. Commodities

markets
Enables sale of post harvest
commodities directly to
potential buyers.
Baroda

Kisan
BarodaKisanCaseStudy

31
myWalgreens (formerly the Walgreens Balance Rewards program) aims to create the
go-to health and wellness management platform, centerd around a loyalty program
which incentivizes purchase of health and wellness products and incentivizes pursuing
healthy habits.

Aggregator
Integrator
Capabilities
Infrastructure
PARTNER ECOSYSTEM
API developers: Partners can integrate with the Walgreens API to enable their users to earn reward points based on their
activities tracked on partner applications. Fitness devices and applications such as GenieMD, HoMedics, LifeTrak, and Omron
Fitness have integrated Walgreens’ Balance Rewards API.

Service integrations: Walgreens partnered with UnitedHealth Group’s (UNH) Optum to integrate its MedExpress care services into
the platform. It also partnered with BetterHelp and Sanvello for mental health support, Cologuard for colon cancer screenings
and For Eyes for virtual eye care.

Device integrations: Partners with third party devices (e.g. Abbott’s FreeStyle Libre for continuous glucose monitoring systems or
Laborp’s Pixel for at-home COVID-19 testing)
MONETIZATION
The company monetizes by increasing the lifetime value of its customer base, by creating loyal customers and increasing share of their
wallet.

The company also charges third party partners to utilize its APIs and consumer data for building their applications
LAUNCH AND GROWTH
Walgreens used its existing retail footprint - its offline pharmacies with millions of footfalls every year - as the core asset around
which it drove adoption of the platform. The digital loyalty program, rolled out through the pharmacy network, captures data about
medicines (and other products) purchased. The more often users buy medicines, particularly users with chronic illnesses, the
richer the data profile that can be created about their health condition.

As this loyalty program gained greater adoption, Walgreens opened up its platform to allow third party wearable devices and
applications to integrate with the platform. Through an API developer program, the benefits of the loyalty program were extended
to a larger ecosystem, increasing consumer reach and rewarding them for their healthy activities. This integration allows users to
automatically earn points for healthy activities like walking, running and biking.

With an engaged consumer base, Walgreens has moved to creating a new layer of interaction by connecting these users to health
coaches, nutritionists and other health experts, through a health coaching and tele-medicine platform. It also launched Find Care
Now., a marketplace to connect customers to third-party partner healthcare providers, including telemedicine companies, digitally-
enabled house call companies, as well as traditional care providers. Through the platform, patients can schedule appointments at
partner clinics. It is also engaging in creating disease-specific innovations with partners, which all integrate into the central
platform.
1. Loyalty program:

Rewards loyal customers with
cashback to incentivize purchase
and digitize purchase data
profile.

2. Application ecosystem:

Third party applications integrated
with the platform, which share data
with the platform and allow users to
earn loyalty points for pursuing
healthy habits.
4. FindCareNow:

Marketplace connecting users with
third-party partner healthcare
providers, including telemedicine
companies, digitally-enabled house
call companies, as well as traditional
care providers.

3. Integrated diagnostic devices:

Third party diagnostic devices which
integrate data feeds into the platform.
5. MedExpress:

Access to a network of urgent care
centers.
1. Loyalty

program
2. Application

ecosystem
3. Integrated

diagnostic

devices
4. FindCareNow
5. MedExpress
Walgreens

Balance

Rewards
Walgreens Balance Rewards Case
Study

32
South African insurer Discovery’s Vitality platform enables a health and wellness ecosystem,
structured around behavior change incentives.
Aggregator
Integrator
Capabilities
Infrastructure
PARTNER ECOSYSTEM
Platform provider: Apple Watch is a key partner for Vitality Active Rewards and the data collected from the
Apple Watch is used to drive behavior change among program participants.

Distribution partners: Discovery partners with local insurance firms to launch the program in new markets.
These include AIA, Ping An, and Sumitomo in Asia, Generali in Europe, and John Hancock and Manulife in
North America.

Rewards partners: Discovery engages with multiple partners across lifestyle, fitness, travel, retail,
entertainment etc to provide discounts and benefits to its members.
MONETIZATION
As users engage in healthier living, the insurer benefits not only from fewer claims but also additional sources
of revenue generated through ecosystem interactions. Healthier users lead to higher profits for the insurer.

This additional value can be reinvested in the ecosystem to further create healthy habits.

Data captured by the Vitality platform can also help identify population health trends. E.g., in the US, Vitality’s
data has been used to identify Covid-19 risk factors across the population. Vitality data can be further used to
underwrite insurance products, delivering personalized premiums

LAUNCH AND GROWTH
Discovery launched the Vitality Active Rewards program in South Africa, in collaboration with Apple Watch,
which was the primary source of data capture. Having proven the model in South Africa, Discovery exported
and scaled the model through the Global Vitality Network, an alliance of key local insurers in international
markets. The program runs in 24 countries with more than 16 million members.
The program provides loyalty points across 3 different behavior improvements :
1.Healthprogram
Incentivizesusersforassessmentofmental
andphysicalwellbeing,fitness,andhealthy
eating. Italsoprovidesdiscountsacrossits
partnernetworkofgymsandhealthgear.
2.Driving Progam
Incentivizesuserstoimprove
driving,basedondata
capturedthroughan
installedin-vehiclesensor.
3.MoneyProgam
Incentivizesusersto
managetheirpersonal
financesandforprogress
towardsgoalslikedebt
clearanceandincreased
savings.
Discovery

Insurance
Discovery Insurance Case Study

33
With the decoupling of manufacturing from distribution, non-financial firms that serve the primary journeys of customers are well positioned to
recommend relevant financial products. For instance, an individual's primary demand for housing drives the secondary demand for a mortgage. As a
result, aggregators across diverse ecosystems may be positioned as acquisition channels for financial services.

Digitization increases both scale and scope of serving financial services, while also driving down cost of integration/embedding. Embedded finance,
hence, creates wins all-around. Customers get contextual and frictionless banking. Merchants and brands may now attract customers with Buy Now Pay
Later and other digital lending and payments services, or even earn commissions on the sale of financial products. And finally, banks may expand with
superior economics, thanks to scalable digital infrastructures underlying such services.

Embedded finance offers attractive returns to institutions that can embed themselves across a variety of customer contexts. In growing economies and
underserved markets, the embedded finance ecosystem expands across all types of providers – incumbents, challengers, and neo banks – allowing
rhythm to constantly increase the pie. For instance, household debt in India is less than 15% of GDP - much lower than the U.S. (75%), and China (55%)
- providing enough room for all players to grow together.

Banks looking to lead this opportunity should move fast. Start by building a robust API infrastructure for exposing bank services to a variety of ecosystem
partners. Build APIs in standards-based formats, such as those published by BIAN (Banking Industry Architecture Network), for widespread integration.
Invest in a mature digital core for supporting “high volume – low value” embedded finance transactions, at high-performance levels, and with a low
incidence of technical failure.

Banks should view APIs as a class of distribution products for taking their services to third parties. Deploying APIs requires a dedicated product
management team responsible for prioritizing, developing, deploying, upgrading, and even retiring APIs. Banks will need to develop and test use cases
with partners, especially for non-standard, industry-specific applications, and will need to support developers, partners, and customers with their needs.
EMBEDDED JOURNEYS
Aggregator
Integrator
Capabilities
Infrastructure
Financial services are increasingly embedded across non-financial
ecosystems, changing how customers interact with them
Consumers
Aggregators
Embedded
Journeys
Intelligent Journeys

and decision support
Integrators
Infrastructures
Embedded finance should be developed as a revenue center with dedicated business development teams promoting API banking and
building alliances with external fintechs, e-commerce players, technology giants, and other partners that enable access across a broad
range of primary customer journeys.
INTELLIGENT SERVICES AND DECISION SUPPORT

34
Aggregatorsareimportantbusinessmodelsforthefinancialservicesindustryastheyprovideprimacyofcustomerrelationshipandengagement,
whileallowingfinancialservicestobeembeddedintotheaggregator'scoreexperience.
Aggregatorstypicallyservetheprimarydemandof
thecustomer-e.g.theneedforhousingormobility
-andcreateasecondarydemandfortheassociated
financialservices. Byservingtheprimarydemand
ofthecustomer,aggregatorscommandrightof
customerrelationshipandcanintermediatethe
customer’srelationshipwithfinancialinstitutions
whichservethissecondarydemand.

Financialinstitutionswillneedtoconsiderbringing
primaryservicestoconsumerthroughpartnerships.
Ifnot,theyriskgettingcommoditisedby
aggregatorswhohavenotonlyadataadvantagebut
alsothetrusttodriverecommendationsof
ecosystemservices.
MOVEFROMSECONDARYDEMANDINTO
PRIMARYDEMAND
Aggregatorssuccessfullyserveconsumersby
creatingacomprehensiveuserdataprofile.For
instance,China'sWeChatcreatesacomprehensive
dataprofileoftheuserusingdatacapturedacrossa
largenumberof'miniprograms'createdinits
ecosystem.

Financialinstitutionsseekingtoservetheconsumer
will,similarly,needtocreateacomprehensive
consumerprofile.Thisinvolvescapturingdata
across andaggregatingittowardsacommondata
profile.Moreimportantly,thisimpliesextending
beyondcapturingdatathatmerelyhelpsFIssell
morefinancialproductstocapturingdatathathelps
themdeliverasuperiorvalueintheirprimary
demand.
BUILDA360PROFILEOFTHECONSUMER
Notallcompaniescandominateasaggregators.
Financialinstitutionsthatfinditdifficulttosetup
aggregatorpositionswillruntheriskofbeing
commoditizedbyaggregators.Partneringwith
aggregatorsisn'tsufficientasfinancialproductswill
getincreasinglycommoditizedowingtocompetitive
biddingforthecustomer.

Instead,financialinstitutionsshouldhedgetheir
betsbyproactivelypartneringwithaggregatorsto
co-innovatenewsolutionsandlock-indistribution
offinancialservicesthroughthesesolutions.
LOCK-INDISTRIBUTIONTHROUGHCO-
INNOVATION
Aggregator
Integrator
Capabilities
Infrastructure
Aggregators:Implicationsforfinancialservices

Integrators
Integrate across a diverse
range of production
partners (providing
supply) and distribution
partners (serving
demand) to organize a
fragmented ecosystem

36
Characteristics
Integrators manage interactions between production and
consumption ecosystems.

On the supply/production side, an integrator aggregates product
provisioning APIs across the production ecosystem, and on the
demand/consumption side, it integrates across distribution
environments (websites, apps, and other digital services) in the
consumption ecosystem.

Using data across both the consumption and production
ecosystems, integrators (e.g. in logistics and supply chain) may
also orchestrate movement of physical goods.

Integrators provide an opportunity to bundle multiple services
from the production ecosystem and drive efficiencies by acting
as a one-stop' distribution point' across an increasingly modular
and diverse ecosystem.
Aggregator
Integrator
Capabilities
Infrastructure
Functions
Production side services integration: Integrators integrate services on the
production side to deliver a one-stop storefront for distribution partners.
Data exchange: Integrators facilitate matchmaking and exchange of data
between the production and consumption ecosystem.
Ecosystem Analytics: Integrators may aggregate data across the
consumption ecosystem and provide analytics to production partners.
Integrators: Characteristics and functions

37
Learning effects:

First, Integrators benefit from learning effects where more distribution partners
generate more aggregated demand data, leading to superior matchmaking and
analytics, leading to greater participation of both production and distribution partners.
Network effects:

Second, Integrators benefit from cross-sided network effects, where more participation of
distribution partners, increases distribution potential of the integrator, and attracts more
production partners, which in turn increases available supply at the integrator, attracting
even more distribution partners, thereby creating a feedback loop.
Aggregator
Integrator
Capabilities
Infrastructure
Attracts more
production
partners
which in turn
increases
available supply
at the integrator
attracting
even more
distribution
partners
More participation
of distribution
partners
Leading to
superior
matchmaking
and analytics
greater
participation of
production &
distribution
partners
More distribution
partners generate
more aggregated
demand data
How integrators scale and dominate

38
Overview
Integrator business models typically start off by
aggregating a curated set of production partners
and distribution partners in a closed loop
ecosystem. Over time they open out the ecosystem
to enable new partners to join in, and scale the
ecosystem by alternately scaling adoption across
production partners and distribution partners.
In the travel industry, global distribution systems like Sabre set
up integrator business models long before the dawn of the
world wide web. Most of these global distribution systems were
set up by industry players (e.g. top airline operators) coming
together - often in consortium - to drive supply-side activity on
the integrator, which in turn attracted travel distributors and
agents on the demand side.
Launch as industry consortium
Sabre
Booking.com's B2B integrator business leverages existing
ecosystem relationships through travel agents as well as
through hotel management software to integrate different parts
of the ecosystem together.
Leverage existing ecosystem relationships
through incumbent business
Booking.com
Otonomo, a vehicle data hub, powers an integrator business
model, distributing data from across automotive OEMs to
application developers. The automotive industry's consolidated
industry structure skews power away from Otonomo and in
favour of the OEMs which act as production partners. As a
result, even though Otonomo runs an integrator business
model, it gets automotive OEMs on board as a data broker,
managing their data and driving adoption of this data across the
distribution ecosystem, which constitutes app developers who
build connected car applications.
Manage brokering in favour of the more powerful
side
Otonomo
Aggregator
Integrator
Capabilities
Infrastructure
CASE STUDY 1 CASE STUDY 2 CASE STUDY 3
Launch strategies for integrators
Incumbent firms leverage their existing partner relationships with other value chain
players to:

1 Onboard them onto a closed loop ecosystem

2 Demonstrate value in providing a one-stop exchange shopfront

3 Enable industry-wide connectivity and standardization for access to suppliers.

Integrators may also be launched in consortium when a group of product creators
and/or distributors work in consortium to drive activity across the integrator's
network.

39
Integrators primarily monetize transactions between production and consumption partners by charging a transaction fee on
distribution or by charging an API licensing fee (when reselling APIs of production partners to the consumption side).
Integrators may also charge partners for access to industry-wide analytics. Finally, integrators may also extend to providing key
capabilities to production as well as distribution partners (e.g. international payment capabilities, KYC capabilities etc.) and may
charge a licensing fee for access to these capabilities.
Amadeus, like Sabre, runs a global distribution system in an
integrator model in the travel industry. It primarily monetizes
transaction activity by charging for ticket distribution and
bookings management. It also monetizes anonymised data
analytics by charging a fee to partners looking to get access to
industry data.
Monetize ecosystem-wide transaction activity
Amadeus
Solaris Bank monetizes access to its APIs. By aggregating APIs
from mutiple sources and providing one-stop access across
different APIs, Solaris Bank monetises API access. Using APIs,
partners embed Solaris Bank's modular banking services
(integrated across third parties) directly into their products and
services.
Monetizes access to its APIs
Solaris Bank
As an API integrator in the connected car industry, Smartcar
charges developers for standardized one-stop access to APIs
carrying data across OEMs and other third party partners. The
API Licensing fee depends on number of API calls made by
developers, and includes volume discounts for high call volume.
Monetize API access
Smartcar
Aggregator
Integrator
Capabilities
Infrastructure
Overview
Monetization models for integrators

40
EasyPostactsasanintegratorconnectingparcelshippingandlogisticsprocessesinthe
productionecosystemwitheCommerceretailers,fulfilmentcenters,marketplaces,and
enterprisesintheconsumptionecosystem.

ItintegratesafragmentedcommerceandlogisticslandscapeandprovidesaunifiedAPI
exchange.Itintegrateswithmorethan60shippingcarriersonthesupplysideandallows
onlineretailersonthedemandsidetoaccessalltheseshippingoptionsthroughaunified
interface,allowingthemtocomparepricesanddeliverytimes.

Aggregator
Integrator
Capabilities
Infrastructure
4.Address

VerificationAPI

1.ShippingAPI

2.SmartRateAPI
3.TrackingAPI
5.InsuranceAPI
Easypost
Business Model Type Integrator
PARTNERECOSYSTEM
Intheconsumptionecosystem,EasyPostpartnerswithavarietyofpartners.ItpartneredwithSellerActive,a
multichannele-commerceplatform,toprovideone-stopshippingforallSellerActivecustomers.

IthassimilarpartnershipwithLinnworks,acommerceautomationplatformwhichhelpstoconnect,manage,and
automatecommerceoperations,aswellasInFlow,aninventorymanagementsystemforeCommercecompanies.All
distributionpartnersprovideEasyPost'sshippingAPIstotheircustomerstoenableshippingsolutions.

Intheproductionecosystem,thecompanypartnerswithlogisticscompanieslikeFedEx,UPS,USPSandothers.TheAPI
exchangenowsupportsshippingto200+countriesthrough100+shippingproviders.

EasyPost'secosystemalsoincludespartnersthatextenditscapabilities.ItspartnershipwithElevateallowsusersto
analyzeEasyPostshipmentdataandgatherdeliveryperformanceinsights.ItspartnershipwithShipsaverallowsusers
tofullyautomatetheirworkflowacrosslabelgenerationandshippinginsuranceforallorders.
MONETIZATION
Unlikemanyotherintegrators,EasyPostdoesn'tmonetizebasedonvolumeofusage.Itprovidesafreeandan
Enterpriseplan. EasyPost'sfreetierenablestheshippertocreateupto120,000freelabels.ItsEnterpriseplanprovides
theabilitytocreateunlimitedshippinglabelsalongwithcustombrandedtrackingoption,alongwithsuperioranalytics,
rateshopping,andinsurance.
LAUNCHANDGROWTH
EasyPoststartedoutin2012byintegratingUSPSasitsfirstlogisticspartner.Likemostintegrators,itbuiltoutdemand
usingUSPSandsubsequentlyaddedmoreshippingcompanieslikeFedEx,UPSandotherregionalcompanies.

EasyPosthasbuiltsomegreatfeatureslikemarketplacepricecomparison,customtrackingengine,addressverification
engineonbackofthedataobtainedfromshippersandcommunicationwiththeserviceproviderAPIs.Itisableto
extendthefeaturesextendedbyservicepartnerstotheendshippers.ThecompanyhaspartneredwithElevateto
extendanalyticstoitsusers.
EasypostCaseStudy

41
Galileo is an API exchange that enables one-stop digital banking,
card issuing, and payments processing for Fintech firms.
Aggregator
Integrator
Capabilities
Infrastructure
1. Digital Banking
2. Payments Processing 3. Card Issuing
Galileo
Business Model Type Integrator
PARTNER ECOSYSTEM
Galileo helps distribution partners access financial services. Its APIs offer capabilities like account set-up, funding,
direct deposit, ACH transfer, early paycheck direct deposit, bill pay, transaction notifications, check balance, and point of
sale authorization. Its API consumers / demand-side partners include Chime, Robinhood, Monzo, Revolut, Transferwise,
and Varo.

On the production side, card issuers like Mastercard power Galileo with capabilities to enable new card launches. Its
partnership with Plaid enables ACH transfers. Overall, it offers connection to more than 55 endpoints in the financial
services ecosystem – to networks, issuing banks, KYC providers, and mobile wallets.

Galileo empowers developers to write mashups and recipes by combining the functionalities across multiple APIs on its
exchange.

MONETIZATION
Galileo monetizes through onboarding fees for each account and consumption-based pricing for various services and
APIs.
LAUNCH AND GROWTH
Galileo has been one of the pioneers in this space. It started its journey in 2000. Its market success accelerated in
recent years with growing interest in neo banking and BaaS.

Like most integrators, Galileo scaled out its ecosystem through business development. It has developed integrations
with multiple supply-side partners and demand-side partners which serve solutions based on its banking as a service
APIs across multiple continents.

In 2020, Sofi acquired Galileo for $1.2B, comprising cash and stock. Subsequently, in March 2022, Sofi acquired
Technisys, a LATAM focused core and digital channels platform. With these acquisitions, Sofi is attempting to go beyond
its B2C proposition and set up B2B2C solutions for the fintech industry.

Galileo FT Case Study

42
Aggregator
Integrator
Capabilities
Infrastructure
Banking as a Service” (BaaS) providers are the prominent examples of integrators in the
financial services ecosystem. BaaS providers facilitate the integration of banking services from a
variety of banks (large, mid-sized, small, and community) in the production ecosystem and serve
them into the primary customer journeys of various brands in the consumption ecosystem.
Some providers focus on a specific product or service (for instance, lending or payments).
Others work across a broader suite of services, extending their influence as integrators. But they
all serve a common purpose: to enable brands to integrate and embed financial services
seamlessly in their customer proposition. Consider a car manufacturer offering an auto loan to
car buyers, a travel portal recommending a forex card to vacationers, a small business
processing payments directly through its business accounting solution, and so on. These
integrations are facilitated by BAAS providers acting as integrators in the ecosystem.

Beyond this primary purpose, BaaS providers also add value in other forms: They standardize
processes, APIs, and security protocols to make it easy for brands to work across multiple
financial partners, and vice versa. In effect, this lowers the business risk and costs of both,
banks and consumer brands, by broadening their options.

Because of these advantages, interest in BaaS and embedded finance is growing, prompting the
entry of a number of specialist integrators - for instance, Railsbank, Fidor Bank and Solarisbank
in Europe; Galileo, Agora and The Bancorp in the Americas; and Zwitch and Setu in Asia-Pacific -
which integrate across brands and financial providers to promote embedded finance use cases.

While small and mid-sized institutions provide standardized offerings to brands through these
integrators, many large banks may choose to pursue direct relationships and custom
integrations with brands, leveraging their investments in technology infrastructure, such as API
platforms, sandboxes, API suites, and event-driven architecture, for that purpose.
Larger banks also have solutioning and support teams that actively collaborate with brands to
develop unique use cases. Their digital sales and fintech teams actively engage in selling BaaS as
a product to various partners. However, the banking ecosystem remains heavily fragmented, and
BAAS providers provision a critical service to organize this ecosystem.
Banking-as-a-service integrators play an important switchboard role in
organizing the emerging financial services ecosystem
Europe
Integrators- Accelerating the BaaS Journeys
Americas Asia-Pacific

43
Integrators will play an important role in the financial services ecosystem as financial services are increasingly served through
API-based distribution and embedded across third-party destinations.
Ecosystems, like financial services, which are
unlikely to see the emergence of a winner-take-all
aggregator, will instead allow the creation of a
dominant position at the integrator layer.

Financial institutions should consider pursuing
integrator business models to gain distribution
leadership for their in-house financial products as
well as to scale across fragmented ecosystems like
housing and mobility, where consumption will
increasingly get fragmented across multiple players.
GAIN INDUSTRY-WIDE
SCALE
Integrators capture data across the
consumption ecosystem. This provides them
a unique ecosystem position to create
customer-relevant bundles. Integrators with
the best bundles will eventually attract
distribution partners.

Financial institutions that build out integrator
business models should actively use
consumption data captured to curate bundles
of financial services and resell these bundles.
This also enables integrators to improve
margins on the APIs that they serve to the
consumption ecosystem.
BUNDLE BASED ON
CUSTOMER CONTEXT
Integrators which merely serve as a switchboard connecting
APIs from the production ecosystem to partners in the
consumption ecosystem will see their margins erode over time
and lose competitive advantage. To create and capture a larger
value pool, integrators often bundle proprietary capabilities on
top of ecosystem products.

Financial institutions playing at the integrator position may
bundle core capabilities, including KYC, fraud mitigation, AML
checks, and credit scoring, to increase the margin captured. In
the absence of core capabilities and/or value added through
bundling, integrators may risk becoming commoditised as they
may not add sufficient value as an intermediary beyond
connecting the production and consumption ecosystems.
BUNDLE CORE CAPABILITIES
WITH INTEGRATOR POSITION
Aggregator
Integrator
Capabilities
Infrastructure
Integrators: Implications for financial services

Infrastructures
Provide critical
infrastructure and
standards to enable,
coordinate, and organize
production.

45
Characteristics
Infrastructures provide
core production
infrastructure, standards,
information services, and
data assets to inform,
coordinate, and support
production activities that
firms engage in.
Infrastructures coordinate
the activities of ecosystem
firms across a core
production process,
towards a common
production output.
Aggregator
Integrator
Capabilities
Infrastructure
Functions
Ecosystem vision setting: They formulate a view of the emerging ecosystem and specify standards and data models
(often embedded in their infrastructure) that organize and support participants’ activities.
Knowledge services to the ecosystem: Infrastructures capture industry-wide data on production processes and are
uniquely positioned to provide knowledge services to their ecosystem. Machine learning models are key assets
managed by infrastructural platforms and licensed as knowledge services to the ecosystem actors.
Organize third party service providers: Infrastructures may also organize third party services for producers building
on top of the infrastructure. Consider, for instance, Amazon Web Services, which largely provides cloud computing
infrastructure but also integrates and provides access to offerings from third party service providers through its AWS
Marketplace. Shopify provides the infrastructure for merchants to run an online store, but also integrates third party
logistics providers, through the Shopify Fulfillment Network.
this is all thats
on the
workflowy
Infrastructures: Characteristics and functions

46
Greater Lock-in

First, they may create greater lock-in for industry actors as
firms become dependent on their standards and services.
As firms build on the infrastructure, the more value they
see in managing more of their workflow through the
infrastructure, which results in greater lock-in across
processes, leading to even more commitment to building
on the infrastructure.
Economies of Scale

Next, they benefit from economies of scale, where the fixed
costs of infrastructure ownership may be spread across a
larger number of participating firms, which enables higher
utilisation of these fixed assets, to generate more revenue
which may be invested to increase the asset base.
Learning Effects

Finally, in addition to lock-in advantages and economies of
scale, infrastructures which leverage data assets may also
benefit from learning effects where greater data capture
improves prediction models, leading to even greater
adoption of the infrastructure, which in turn leads to even
more data capture.
Aggregator
Integrator
Capabilities
Infrastructure
Three factors concentrate greater power and value with infrastructure providers over time.
How infrastructures scale and dominate
More value

in managing
more workflow
through the
infrastructure
Greater lock-in
across
processes
Even more
commitment
to building

on the
infrastructure
Greater lock-
in for industry
actors
Enables
higher
utilisation of
these fixed
assets
more revenue,
more Investment
in the asset base
Fixed costs of
infrastructure
ownership across
larger number of
firms
leading to
even greater
adoption of
the
infrastructure
Which in turn
leads to even
more data
capture
greater data
capture
improves
prediction
models

47
Overview
Infrastructure businesses start out as traditional product businesses, selling infrastructural products and services to producers.
However, as they gain producer participation and lock-in, they expand into additional business models, which connect producers
to different types of third parties. Infrastructures typically launch as traditional software businesses and scale out through a land-
and-expand model, where they make the initial scale with an entry-level option and scale up client adoption through further up-
sell and increasing lock-in. The greater the workflows connected and operated through the infrastructure and the higher the value
delivered through enterprise data, the more likely is an infrastructure business to succeed at upsell and client lock-in.
One of the key drivers for Shopify's growth has been the
Merchant Success Program. By creating a repeatable playbook
for driving merchant success, Shopify helps a select group of
merchants scale up, which in turn increases infrastructure
usage and creates greater lock-in over merchants.
Create a merchant success program
Shopify
Autodesk leveraged its market leading position in building
design and modelling software to launch the Autodesk
Construction Cloud as an infrastructure to manage the end-to-
end building lifecycle across design, construction, and
operations.
Leverage incumbent position to expand across the
lifecycle
Autodesk Construction Cloud
Alibaba leveraged consumption data from its B2C and C2C
marketplaces to launch the TMall Innovation Center where
brands can work with Alibaba's consumption data to innovate
and create new products for the Chinese market.
Leverage data assets to kickstart innovation
TMall Innovation Center
Aggregator
Integrator
Capabilities
Infrastructure
Launch strategies for infrastructures

48
Infrastructure businesses start out as traditional product businesses, selling infrastructural products and services to producers.
However, as they gain producer participation and lock-in, they expand into additional business models, which connect producers to
different types of third parties.

Infrastructure pricing improves with scale as infrastructure business models require significant upfront investment, which can be
better amortized across a larger user base. As unit economics improve for new users coming on board, it becomes increasingly
difficult for a new infrastructure provider to compete, as their pricing is likely to be inferior. Infrastructure providers may bundle
multiple services and cross-subsidize some of them to compete with individual capability providers.
AWS charges clients a licensing fee for a bundle of services
across compute, storage, database, networking etc.
Bundle licensing
Amazon Web Services
Google Cloud for Healthcare charges for access to data
products, information indexing services, and AI diagnostic
capabilities.
Data products
Google Cloud for Healthcare
In addition to the above, Shopify charges fees on purchases on
the Shopify Exchange marketplace where shop owners offer
their shops (built on Shopify) for sale.
Secondary market transactions
Shopify
Aggregator
Integrator
Capabilities
Infrastructure
Overview
Monetization models for infrastructures

49
Supply Chain Visibility

Gain valuable insight into performance
Design for Supply Chain

Quantify impact of product
decisions
Risk Management

Reduce vulnerability and ensure
continuity
Supply Chain Diagnostics

Deliver root cause analysis of
missed KPIs
Event Risk

Minimize loss from unforeseen
disruptions
Aggregator
Integrator
Capabilities
Infrastructure
Jabil InControl
Business Model Type Infrastructure
ECOSYSTEM
JabilInControlisbuiltforindustrialmanufacturerstoenablethemtomanagetheir
supplychains.Jabil'sintegratedinfrastructureprovidesvisibility,collaboration,risk
managementanddiagnosticstoitscustomers.Byonboardingallactorsacrossthe
customer'ssupplierecosystem,Jabilprovidesacentralinfrastructureacrosstheentire
supplierecosystem.
MONETIZATION
PricingforJabil'sinfrastructureandapplicationsarebasedonper-month/per-
applicationpricing.InControlalsoprovidesmanagedservicesrelatedtoonboarding,
integration,andimplementationforafee.
LAUNCHAND SCALE
Likemanyotherinfrastructures,Jabil'sownbusinesswas

thefirstcustomerofInControl.InControlstartedbymonitoring,controlling,and
drivingvisibilityacrossJabil’sinternaloperationsandsupplierecosystem.Eventually,it
wasopenedouttoothercompanieslookingtomanagetheirownsupplier
ecosystems.

Jabil'sgo-to-marketpartnershipsincluderelationshipswithconsultingfirmslikePwC
tointegratetheInControlsolutionindigitaltransformationadvisoryandsupplychain
managementpractices.
JabilInControlprovidesanoperationsmanagementanddecisionsupportinfrastructure,whichenables
firmstobettermanagesupplychaineventsanddiagnoserisks.

Jabil InControl Case Study

50
Aggregator
Integrator
Capabilities
Infrastructure
BloombergDataManagementServices(DMS)providesamasterdatamanagementinfrastructureto
enablefirmstomanagefinancialdataandgaincontrolandvisibilityacrosstheorganization.

BloombergDMScanstreamlinetheacquisition,management,anddistributionofinstrument,
pricing,index,legal,andratingdatafrommultiplesourcesbyleveragingcloud-baseddata
managementcapabilitiesandintegratedworkflowmanagement.
ECOSYSTEM
TheDMSdataproviderecosystemincludesthecompany’sfinancialandoperationsdata
sourcesaswellasdatafromthirdpartydatavendorsincludingRefinitiv,Markit.Morningstar.
MSCI,Fitch,Moody’sandmanyothers
MONETIZATION
ThecompanygeneratesrevenuefromsubscriptionsandfeesassociatedwithBloomberg
terminalsaswellasdatamanagementservicesandAPI-basedaccess.
LAUNCHANDSCALE
BloombergDataManagementServicesbuildsoffBloomberg’sestablishedpositioninthe
financialdataindustry.Bloomberg’smasterdatamanagementpropositiondrivesuptakeof
theseservicesamongorganizations.Byintegratinganever-increasingecosystemofdata
partners,Bloombergcontinuestoenrichtheknowledgegraphpoweringitsdataservicesand
alsobenefitsfromdatanetworkeffectswhichmakeitmoreusefulacrossanestablished
clientbaseovertime.
Trading/TradingSupport
Compliance
Performance
FundAccountingand
Administration
Benchmarking
Risk
Collateral
Reporting
KYC/Product
GlobalMarkets
Benchmarking
Bloomberg Data

Services
Metad
ata
BloombergDataServices CaseStudy

51
TradeLens manages global shipments by deploying a blockchain-based
coordination infrastructure. A public record of all activities during the shipping life
cycle - credit checks, signing contracts, coming into the port, and receiving
payment - can be maintained on the blockchain. On TradeLens, event data and
document information are written on the blockchain, which creates a single source
of truth that all can see. Participants who upload information have the right to view
the event data up to that point in the consignment, document, or shipment. This
data includes time of container loading on a vessel, arrival time at the port etc. On
the blockchain, contracts can also be automatically executed. When an event
occurs - such as a delivery at a port - the contracts that correspond to it are
automatically activated in the blockchain, eliminating human error, delays, and
lost documentation. When data about a ship's entry into a port are successfully
recorded onto a blockchain, customs clearance documents that must be
completed can be automatically executed as smart contracts. By integrating data
across all industry stakeholders, Maersk's TradeLens enables greater coordination
across stakeholders within the shipping industry.
Aggregator
Integrator
Capabilities
Infrastructure
ecosystem
The TradeLens value exchange ecosystem comprises cargo owners, ocean and inland carriers, freight forwarders and logistics
providers, ports and terminals, and customs authorities. TradeLens also has a supporting data ecosystem which provides data
integrations, and includes companies like Bolero and Essdocs as partners.

IBM is a key technology partner powering the infrastructure technology. Finally, carriers and shopping companies are key
participants as they constitute the core value exchange players in the shipment lifecycle. These carriers expand the ecosystem
and play key roles as validators on the blockchain network
MONETIZATION
TradeLens monetizes access to its data. It charges the users a subscription fee on a per ocean container basis.
TradeLens can also eventually position itself as an innovation infrastructure and monetize innovation services.
launch and scale
Maersk and IBM worked with a number of ecosystem partners prior to the launch of TradeLens to identify ways to prevent delays
caused by documentation errors.

The TradeLens beta program included the ClearWay trade document module, which enabled importers, exporters, brokers, and
government agencies to share data and conduct activities, with a secure audit trail.

TradeLens initially faced resistance from other container shipping companies who were hesitant to come on board owing to
Maersk’s potential conflict of interest as both an owner and participant of TradeLens. To gain buy-in from industry partners,
TradeLens pursued several approaches. First, it set up an advisory board, where other competing ocean liners also have
representation. Second, by using blockchain technology, Maersk can only access its own ‘node’ and related data and cannot
exercise its rights as the platform owner to access other providers’ data. Third, Maersk subsidized infrastructure access for third
party data providers like Bolero and Essdocs, thereby driving adoption by these players, which in turn attracted customers.
Finally, Maersk has also considered setting up a profit-sharing model with its partners where profits from the platform are not fully
centralized but are distributed across partners.

TradeLens scales via network effects, learning effects, and coordination effects. By integrating more fleets, ports, warehouses,
and containers, the infrastructure gains value. By meditating more shipments, it learns which shipping lifecycle events and which
actors are more likely to generate delivery volatility, and then uses this knowledge to hedge and buffer future operations. Not only
does this enhance performance, but it also reduces costs by improving or removing unreliable partners.
Maersk Tradelens Case Study
Port community system
National

single window
Agent workflow
Shipping events
Smart contract

execution
Shipping contracts
Maersk

Tradelens

52
Alibaba's TMall Innovation Center (TMIC) uses consumer insights
gathered from Alibaba’s TMall's consumption data to co-create and
market new products for the Chinese market, in partnership with
international brands like Pepsi, J&J, Snickers, and L'Oreal. These products
are launched and tested exclusively on TMall, and Alibaba continues to
retain co-ownership even when they are sold outside TMall.
Aggregator
Integrator
Capabilities
Infrastructure
Marketing and Targeting
Product

Development
Innovation and Testing
Data Services
Alibaba TMall

Innovation Center
ecosystem
TMIC is aimed at product manufacturing firms looking to introduce new products and brands in the
Chinese market.As an innovation sandbox, the infrastructure provider provides (1) new product
development capabilities, (2) product testing on actual market data, (3) launch across Alibaba's
ecosystem, and (4) ability to target relevant consumers based on data attributes that were used for
product development and testing.
MONETIZATION
The primary means of monetization involves co-ownership in the developed product. Alibaba may also
charge a fee for targeting developed products within its ecosystem, and a transaction fee on actual
sales.

launch and scale
The Tmall Innovation Center (TMIC) was set up in 2017. As one of the top 3 consumer BigTech firms in
China at that point, Alibaba had unique data insights on consumption in the Chinese market. This
attracted brands who were looking to target the Chinese market. In September 2018, TMIC set up an
alliance with ten of the world’s leading brand consulting firms, including Nielsen, Kantar, and
Euromonitor, to power their brand insights and gain greater legitimacy for TMIC's innovation data
among international brands.
Alibaba TMall Innovation Center Case Study

53
The India Stack comprises a public digital infrastructure that
aims to digitize key socio-economic value levers of identity,
data, and payments across the Indian population, allowing
presence-less, paperless, and cashless service delivery.

Data
Payments
Documents
Identity
Aggregator
Integrator
Capabilities
Infrastructure
India Stack
ecosystem
The biometric identity management system, Aadhaar, serves as the base layer. Next, a paperless layer
provides e-KYC (know your customer) and e-documentation services, using the Aadhaar data and has
powered nearly 20 billion e-KYCs. Above this, the cashless layer consists of an instant payments and
remittances system which enables API-based P2P money transfer, with more than 800 million bank
accounts linked to Aadhaar. Finally, the consent layer powers a data-sharing framework with an open
personal data store, allowing secure and authenticated data sharing, while restoring the ownership and
control over user data to its rightful owners.
MONETIZATION
As a public digital infrastructure, launched by the government of India, India Stack is not monetized.

We can use the reach of:

67 billion digital identity verifications

5.47 trillion INR of monthly real-time mobile payments

2.8 billion monthly real-time mobile payments

4 Operational Account Aggregators
launch and scale
The India Stack's origins lie in the creation of two institutions:the National Payments Corporation of
India and the Unique Identification Authority of India.

Backed by the government of India, the convergence of these two projects enabled the creation of the
first set of applications for benefit transfers by the government into consumers’bank accounts, and
Aadhaar ID-based payments. NPCI's flagship project, UPI - the United Payments Interface - enables
consumers and businesses to transfer money using their mobile phones, authenticated with biometric
inputs.

The India Stack has driven the rise of financial technology startups (fintechs) across the country, all of
which now using this common infrastructure to power their business models.

The India Stack model is now finding adoption beyond the country. The country of Morocco, in
partnership with IIIT-B, an Indian research institution has build out a modular, open source, identity
platform (MOSIP), modelled on the India Stack, to enable national digital identity for Morocco.
IndiaStackCaseStudy

54
Transactionalrails-morespecifically,interbanknetworkinfrastructure-establishdirectlinksforbankstointeract,enablingfasterandsecure
communication,moneytransfer,andsettlementacrossparticipants.ExamplesincludetheSWIFTpaymentsnetworkandDepositoryTrust&Clearing
Corporation(DTCC),whichprovideclearingandsettlementservicestofinancialinstitutions.

Newbankinginfrastructureutilitiesspecializeindeliveringnon-differentiatingservicesbypoolingresources,expertise,andcapabilities.Forinstance,
mortgageprocessorStaterservesover50incumbentandemergingfinancialinstitutionsacrosstheBeneluxregion.

Asmarginpressuresonthebankingindustryincreasewithgrowingcommoditization,andcompetition,theneedforcuttingcostsbyembracingnew-age
utilitieswillcontinuetogrow.Utilitiesmaybedevelopedasgreenfieldinitiatives(suchasClearBank-UK’sfirstnew-ageclearingbankin250years),as
spinofffrombanks(suchasStaterfromABNAMRO,nowownedbyInfosys),orthroughindustryconsortia(suchasIndianBanksBlockchain
InfrastructureCompany(IBBIC)–aconsortiumof18Indianbanks).ModerntechnologieslikeAPIs,event-drivenarchitectures,blockchain,andcloud,
furtherreducethecostofleveragingsuchinfrastructureutilities.

BigTechfirmsaremovinginaswell.Alibaba'sAliyunprovidesfinancialinfrastructuretobanksacrossAsia.AlphaRisk,Ant'sAI-poweredriskengine,
providesimprovedcreditscoringtoexternalfinancialinstitutions.Caifuhao,Ant'sassetmanagementplatform,providestheback-endforasset
managementfirms,whichuseitsAIcapabilitiestounderstandconsumersbetter.

Distributedledgertechnologies(DLT),liketheBlockchain,provideanalternativetotraditionalcentralizedtransactionrailsandarebeingpilotedacrossa
widevarietyofusecasesincludingpayments,tradefinance,securitiesclearing,identitymanagement,andhousing.Forinstance,UK-basedCoadjute
providesblockchain-basednetworksforsecureinteractionsacrossEstateAgents,Conveyancers,Surveyors,Brokers,andLendingBanks.DLT-based
tradefinanceinfrastructurelikeIBBIC,Vakt,andContour.Multiplebanks,oftenoperatinginconsortiawhichincludelogisticsandprocurement
companies,useasharedDLT-basedinfrastructuretoseamlesslysharedocumentationrelatedtotradefinancetransactions.Costreduction,risk
mitigation,speed,traceability,andsecurity,areamongthemultiplebenefitsofDLT-drivenprocessing.Forinstance,theIBBICobservedcycletime
reductionforanInlandLetterofCredit(LC)processingby75%from8–9daysto2–3days.
TRANSACTIONALRAILS
Aggregator
Integrator
Capabilities
Infrastructure
Consumers
Aggregators
Integrators
Infrastructures
Transactional
Rails
Financial

Infrastructure
Technologyistransformingthetransactionalrailsandfinancial
infrastructureunderpinningthefinancialservicesecosystem

55
Financial infrastructure is fundamentally changing. Infrastructures will play an important role in the financial services
ecosystem as new infrastructure players will displace incumbents and standardize financial service development and
provisioning.
Financial infrastructures must develop a data advantage
to become the infrastructure of choice.

Ant Financial provides the Alibaba's cloud services -
Aliyun - as infrastructure to banks and payment wallet
operators. It also uses its AI powered risk engine
AlphaRisk and other AI capabilities to serve fraud
mitigation and credit scoring capabilities to financial
institutions that build on its infrastructure. These AI
capabilities are built on data captured across Alibaba's
operations in China, and enable Ant Financial to gain
infrastructure leadership through a data advantage that
most other infrastructure providers do not have.
LEVERAGE DATA ADVANTAGE TO GAIN
INFRASTRUCTURE LEADERSHIP
Infrastructures can gain greater control of the
value chain by absorbing common producer
functionalities over time.

Infrastructure providers progressively expand
their functionality set to capture common
functionality required across financial
institutions. This increases their
competitiveness against other infrastructure
providers while also increasing their negotiating
power with customers.
ABSORB PRODUCER
FUNCTIONALITIES OVER TIME
Infrastructures benefit from scale economies but may eventually be
commoditized, if they do not set up attractive complements.
Complements make the infrastructure more attractive.

In the healthcare ecosystem, Google bundles key complements with its
Google Cloud for Healthcare infrastructure.

These complements include:
Complementary datasets captured through research programs run
by Googl
Diagnostic services that aid clinical decision making e.g. DeepMind's
Streams ap
Data capture tools like Google’s MedicalDigitalAssist which uses
speech recognition to transcribe conversations and digitize notes
directly into Google Cloud

Financial infrastructures should similarly consider adding datasets, data
ingestion complements, as well as prediction models that help support
financial product provisioning.
BUNDLE COMPLEMENTS TO INCREASE
INFRASTRUCTURE ATTRACTIVENESS
Aggregator
Integrator
Capabilities
Infrastructure
Infrastructures - Implications for financial services

Capabilities
Provide one or more
narrow capabilities, each
focused on addressing a
specific use case at a
specific part of the value
chain.

57
Characteristics
Capabilities are focused on the performance of specific functions, that
may be licensed to third party ecosystem actors, and may be
embedded into aggregators, integrators, and/or infrastructures. For
instance, a financial services aggregator may leverage an external
identity management capability while a healthcare infrastructure may
leverage a healthcare diagnostic AI capability.

Capabilities are built around a core customer need. The customer may
be an end consumer at the end of the value chain, or any intermediary
consumer who consumes the service to deliver value further into the
value chain.

Capabilities benefit from specialisation. By focusing on a narrow set of
functions, firms that scale out capabilities compete through
specialization and out-compete other firms which perform multiple
functions.

Capabilities may be offered on a capability as-a-service model, as APIs
or licensable technology modules, to product developers or may be
offered as a service directly to the end-user, as a connected product or
service.
Aggregator
Integrator
Capabilities
Infrastructure
Functions
Provisioning of capability: Capability providers need to develop IP or data
advantage to deliver a non-commoditized capability at scale.
Architecting for ease of embedding: Capabilities, which are distributed
through third party partners, need to be architected for ease of embedding.
Developer ease of use is critical for adoption of capabilities across the
ecosystem.
Managing capability usage data and insights: Capability providers also
utilise data captured across the ecosystem to improve the functioning of the
capability or to provide analytics and insights as an additional value
proposition.
Capabilities: Characteristics and functions

58
Learning Effects

First, services may benefit from learning effects where the more data
they capture, the better the service experience. The ability to capture,
own, and analyze customer data may help benefit from learning effects
where greater data capture improves prediction models, leading to a
higher attractiveness of the service and greater adoption, which in turn
leads to even more data capture.
Network Effects

Second, some capabilities may also benefit from data network
effects where the more platforms and systems they are
embedded across, the more diverse data they capture and
benefit from the superior prediction models that are built through
this diversity of data.
Aggregator
Integrator
Capabilities
Infrastructure
Two factors contribute to greater power and value accruing to capabilities.
Greater data
capture
improves
prediction
models
Which in turn
leads to even
more data
capture

Leading to a
higher
attractiveness
of the service
and greater
adoption
More data
they
captured
More diverse
data capture
Superior
prediction
models, built
through this
diversity of data
More platforms
and systems
embedded
across
How capabilitiesscale anddominate

59
Overview
Capability providers gain adoption through ease of use. In the case of capabilities that are integrated across other third
party products, ease of embedding functionality into external workflow is a critical driver as well. Most capability providers
targeting product developers scale by lowering barriers to initial usage and providing upgrades and adjacencies that clients
can expand too. Capability providers may also subsidize initial adoption to get embedded in a product workflow. With one-
time integration efforts and costs incurred, capability providers scale up usage-based value capture. Capability providers
often expand into adjacencies to increase this lock-in and capture a larger portion of the client workflow.
In its early days, Stripe was widely adopted among developers
because of the ease of setup, comprehensive API
documentation for developers, and testing capabilities that
enabled developers to rapidly test and deploy applications.
Enable ease of use
Stripe
To target developers, Twilio partnered with development
hackathons and conferences. At these events, the Twilio
presenter would often get on stage, and code out the
application while speaking to the audience, demonstrating ease
of use. This drove rapid adoption among developers, who
integrated the capability into their applications.
Demonstrate ease of use to drive word of mouth
Twilio
Razorpay allows product developers to start with basic
payments functionality and a pay-as-you-go model. As usage
scales, developers increase their usage of the primary
payments capability but also expand to adjacencies offered by
Razorpay, which enables the company to constantly expand
client accounts.
Develop a land and expand playbook
Razorpay
Aggregator
Integrator
Capabilities
Infrastructure
Launch strategies for capabilities

60
Overview
Capabilityprovidersprimarilymonetizebylicensingtheircapabilitiesorbyprovisioninganalyticscreatedthrough
datacapturedduringcapabilityusage.Usage-basedlicensingisacommonpricingstrategy,typicallysetupas
tieredpricingmodels. Capabilityproviderstypicallyprovideafreeorlow-pricedoptiontolowerbarrierstoentry,
andthenstackupadditionalservicestoincreaseclientlifetimevalue.Thispricingstrategyalsoenablesscale
advantagesasnewentrantsneedsignificantinvestmenttocompetewithawidelyusedfreeorlow-pricetier.
Aggregator
Integrator
Capabilities
Infrastructure
Asapaymentscapability,PayPalmonetizesthepaymentflow
chargingatransactioncutfromthevolumeofpaymentflow.
Monetizecorecapability
Paypal
Animalyticsprovidesaserviceforbothusersandpartnersto
recordandcollectdataandchargesforanalyticsthatanalyze
petbehaviorandsuggestactionsforimprovingpethealth.
Monetizeanalytics
Animalytics
SendGridprovidesacapabilityforprogrammaticemail
outreach.Athighersubscriptiontiers,itoffersguaranteed
deliverabilityandtheabilitytovalidatetargetemails.Whileit
providersthecorecapabilityandanalyticsatlowertiers,it
guaranteesdeliverabilityandperformanceathighertiers,
therebymonetizingcapabilityperformance.
Monetizecapabilityperformance
SendGrid
CASESTUDY1 CASESTUDY2 CASESTUDY3
Monetizationmodelsforcapabilities

61
Razorpay provides a one-stop payments
suite supporting multiple payment methods
and input form factors. RazorpayX provides
a full stack of business banking capabilities,
including lending, payroll, and payouts
management.
ecosystem
Razorpay's users include small and medium businesses, large corporates, eCommerce merchants, and digital marketplaces. It services
over 350,000 merchants, as well as digital marketplaces like Zomato, and Swiggy, and large enterprises like Airtel and the public
sector’s train booking portal IRCTC.

In partnership with commercial banks, it also offers RazorpayX services to its business customers. The banking services offer fully-
functional current accounts, payment capabilities, and payroll processing.
launch and scale
Razorpay's founders, originally working on a crowdfunding portal, realized the need for solving the problem of payments fragmentation in
India.

With payments at its core, Razorpay has expanded its capability suite to absorb adjacent capabilities (e.g. auto-filling OTP with Android
SDK, address correction, automated order confirmations) that merchants need, across an ever-growing number of use cases.

Razorpay's integration with Mobikwik in 2016 gave it access to Mobikwik’s Power Wallet API, further accelerating Razorpay's adoption
across merchants. Razorpay then pioneered several payments and SME-focused use cases such as UPI payment gateway, support for
Bharat QR code, fully digital SME onboarding, and recurring payments.

In 2020, Razorpay's growth crossed an inflection point, growing 40–45% MoM, as merchants increasingly moved their business online.

Razorpay is now expanding into adjacencies with an SME-focused neo banking business model with the launch of RazorpayX and the SME
lending arm Razorpay Capital.

Razorpay

SmartCollect
Razorpay X
Razorpay ePos
Razorpay Capital
Razorpay
Aggregator
Integrator
Capabilities
Infrastructure
Razorpay
Business Model Type Capabilities
Razorpay Case Study
MONETIZATION
Razorpay charges 0.25 - 0.5% fees on every transaction made through its gateway. Over time, the company has moved to several new
monetization models. It also monetizes programmable payment pages, buttons, and links. Razorpay's service options include subscriptions
and invoices as well as marketplace vendor payouts through Razorpay Route. By solving an increasing number of use cases into which the
payment capability is embedded, Razorpay progressively increases its value capture with developers who would have had to otherwise
custom-code the additional functionality required for their use case.

62
Stripe is a payments capability provider that offers
software and APIs to enable merchants to accept
payments, send payouts, and manage their digital
businesses.
ecosystem
Stripe’s products power payments for online retailers, subscriptions businesses, software platforms and marketplaces, and everything in
between.

Like most capability providers, Stripe’s ecosystem partners include third-party aggregators (e.g. Lyft) and infrastructures (e.g. Shopify) into
which the capability is embedded. The primary users of the service are merchants who need payment processing for their digital
business. Merchants may directly integrate Stripe into their store or may access it while working with aggregators and/or infrastructures.
MONETIZATION
Stripe has multiple monetization models, not limited to payments. Stripe collects a transaction fee which may go up to 2.9%. It charges a
premium for instant payouts and also charges for invoicing and billing. It also offers automated revenue reporting at a charge of 0.25% of
volume. Stripe Radar monetizes fraud prevention on a per-transaction basis. Stripe Sigma charges merchants for transaction analytics.
Stripe Atlas provides a business-in-a-box for $500. Stripe Capital also makes money through lending. Finally, Stripe also charges for
premium support to merchants.

launch and scale
Stripe was founded by brothers Patrick and John Collison, with seed funding from accelerator YCombinator. The company simplified
payments for developers who integrated the Stripe API to power payments in their products.

Being a part of YCombinator, Stripe gained early adoption among other start-ups at the accelerator. Eventually, Stripe figured out its
killer use case - its ability to process transactions for two-sided marketplaces. By abstracting the complexity away from payments
processing across two sides of the market (i.e. collecting payments from buyers and remitting to sellers), Stripe enabled payments
management for marketplace startups. As marketplaces flourished through the course of the early 2010s, Stripe rode that wave to gain
adoption across merchants.

In 2020, Stripe expanded its offering with the launch of Stripe Treasury. The banking as a service offering enables access to banking
capabilities via APIs through its bank partner network that includes Goldman Sachs, and Evolve Bank. Stripe Treasury enables its
partners to help their customers open accounts, hold funds, pay bills, earn yield, and manage cash flow.

Stripe

(Payments)
Stripe Capital

(Lending)
Stripe Atlas

(Business-in-a-box)
Stripe Sigma

(Analytics)
Aggregator
Integrator
Capabilities
Infrastructure
Stripe
Stripe Radar

(Fraud Prevention)
Stripe Case Study

63
Twilio is a cloud communications capability,
which enables developers to integrate
communications services into their products
through an API integration. Like most
capabilities, it abstracts away the complexity of
managing a cloud communications
infrastructure, allowing developers to integrate
communication services (e.g. make and receive
phone calls, send and receive text messages)
through API calls.
ecosystem
The primary users are developers who need to incorporate communications (automated messages, calls etc.) in their
product workflow. Some common use cases include the ability to manage client communication or automate phone-based
verifications and announcements.
MONETIZATION
Twilio charges for its communication services and infrastructure based on a pay per use model. Twilio's primary
monetization model includes monetization of programmable messaging and programmable voice. It also monetises its
integrations with SendGrid and WhatsApp, allowing access to third party communications services through one integrated
API. More recently, it has expanded to programmable video and programmable wireless on the same pay-as-you-go
model.
launch and scale
Twilio's founder Jeff Lawson had earlier worked at Amazon on AWS and brought the same as-a-service playbook to cloud
communications, in launching Twilio. Twilio abstracted the complexity of cloud communications away from the developer
and provided an alternate model to setting up cloud communications without requiring high upfront investment. Much like
Stripe, Twilio's focus on setting up good API documentation and an easy-to-use API suite drove its adoption among
developer communities. Coding in Twilio was so intuitive and fast that Lawson would often code live at a conference demo
to create buzz among developers.

Over time, Twilio's modular architecture has translated into a suite of more than 50 building blocks, or API, scaling up from
the 5 that were launched initially. Customers can start with a low pay-as-you-go commitment and scale up their usage by
solving increasingly complex use cases using the suite of building blocks that Twilio offers.
Programmable

Messaging
Progammable

Web
Programmable

Voice
Aggregator
Integrator
Capabilities
Infrastructure
Twilio
Twilio Case Study

64
CreditVidyaleveragesavarietyofdatasources
(morethan10,000dataattributes)tocompute
creditscoresandfacilitateinstitutionalcreditfor
thefinanciallyunderserved.
ecosystem
CreditVidyaprovidesadataacquisition,analyticsprocessing,andcreditscoringcapabilityembeddedinsidelendingapplications.
Withuserconsent,thecapabilitycapturesdataaboutuserswhodonothaveaformalcredithistoryandareunderservedby
traditionallendersduetothelackofsupportingdataandfraud/defaultrisks.CreditVidyausespaymenthistory,financial
behavioraldata,andsmartphonedevicedatatodetermineconsumers’likelihoodofdefaultorriskoffraud.Morethan55financial
institutionsuseCreditVidyatodisburseloans.

Prefr,CreditVidya'sembeddedfinancialservicescapabilitytargetesatMSMEs,waslaunchedinpartnershipwithGooglePayand
XiaomiIndia.PrefralsopartneredwithRetailiotolaunchworkingcapitallimitsforpharmaretailersacrossIndia.
MONETIZATION
Thecompanyprimarilymonetisesdatacaptureandloancommissioning.Italsohelpsreducetheoperationalcostsforpartnersby
automatingunderwriting.ItsmonetizationmodelscouldextendacrossAPImonetization,commission-basedmonetization,and
servicefeestoconsumers.
launchandscale
ThreekeyfactorsdriveCreditVidya'sgrowthandscale.

First,CreditVidya'smarketpenetrationisprimarilyachievedthroughpartnerships.Asacapability,CreditVidyapiggybacksthe
adoptionofapplications,aggregators,andinfrastructuresintowhichitisembeddedasacapability.CreditVidya’sSoftware
DevelopmentKitcanbeembeddedwithAndroidapplications,allowinglenderstocollectconsent-drivendata.

Second,togaincredibilitywithpartners,CreditVidyapublishesitsCompassreports,whicheducateandhelptrackkeyeconomic
indicatorsofIndia'sconsumereconomy.ThesereportsdemonstrateCreditVidya'saccesstodataandabilitytoanalyzeand
generateinsights,creatingdemandforitscapabilities.

Finally,CreditVidyascalesbecauseoflearningeffects.Themoredataitcapturesacrossadiverseuserbase,thestrongerits
predictionmodelsbecome.
INCOMEX:

Data-driven

income

determination
EVE:Intelligent
employment

verification
CVSCORE:Alternativecredit
riskassessment
Aggregator
Integrator
Capabilities
Infrastructure
CreditVidya
CreditVidyaCaseStudy

65
Banks that gain scale in balance sheet management may provide this capability as-a-service to smaller banks. Acting as backend
balance sheet managers, these players lend to other banks and companies that own the customer relationship.

In China, China Industrial Bank provides balance sheet management as-a-service to smaller banks. Without scale, smaller banks cannot
competitively price their products. These capability providers aggregate capital across partner banks and serve as the backend balance
sheet operator, benefiting from scale advantages that enable competitive pricing of products.
Balance sheet management as-a-service
Financial institutions can extend their KYC capabilities to create larger identity management capabilities, which may be provisioned
across diverse use cases and ecosystems. Much like the launch of Facebook Connect as an identity management capability for the
social web led to an explosion of sharing economy start-ups, financial identity management capabilities can underpin a large range of
aggregators managing high-risk transactions. For instance, China's PingAn has created an identity management capability called
OneConnect, which is used within the financial services ecosystem, but is also used in other scenarios like airport security monitoring.
Identity management as-a-service
With improved data capture, firms can specialise in creating risk models and licensing them to banks. These risk models may also serve
as a starting point towards creating larger reputation scoring models that may be used by other non-financial player. In China, Ant
Financial’s Sesame Credit acts as a reputation scoring capability provider. It uses data from Alipay and from the larger Alibaba
ecosystem to develop a reputation score, which is used by third party ecosystems, including immigration systems of foreign countries.
Risk modelling and reputation scoring
Aggregator
Integrator
Capabilities
Infrastructure
Fintechs increasingly specialise as capability providers embedding
themselves across the modular financial ecosystem
Cabapilities

Examples
Balance sheet management as-a-
servic
Risk modelling and reputation
scorin
Identity management as-a-servic
Payments as-a-servic
On-demand insurance as-a-servic
Pre-paid card as-a-servic
FX as-a-service

66
Financial services are increasingly getting unbundled into individual capabilities. Financial institutions have an opportunity to determine specific
capabilities that uniquely differentiate them and determine if they may be unbundled and licensed individually.
Developer evangelism is key to success
with a capability strategy. Most successful
capability providers have scaled through
developer adoption, by providing an easy to
use SDK and structuring a well executed
developer program.

In the financial services space, payments is
an increasingly commoditized play and
gaining adoption with a payments capability
requires relentless focus on developer
evangelism. Stripe, Adyen, Razorpay, and
other payments capability providers have
successfully scaled adoption across the
ecosystem by driving word of mouth among
developers.
DEVELOPER EVANGELISM AS SCALING
STRATEGY
Partnerships are key to adoption of capabilities across the
ecosystem. This involves ensuring ease of embedding but
also investing in business development to land and
expand adoption with accounts, especially with respect to
expanding into adjacencies.

For example, Stripe's sales and business development
roles primarily fall into four categories. The market lead is
responsible for penetrating a particular vertical or
geography. The salesperson focuses on identifying new
prospects and drive customer adoption by landing new
accounts. The success/service person is responsible for
supporting existing accounts and expanding their usage.
Finally, the operations person monitors customer activity
and product usage and uses these inputs to inform future
product roadmap, to drive further adoption and usage.
EMBED RELENTLESSLY ACROSS
THE ECOSYSTEM
Financial capabilities can eventually expand to
financial infrastructure by extending to adjacencies
and bundling these adjacencies to solve end-to-end
customer needs. As capabilities extend across
adjacencies, they capture more of the value chain.
Moreover, since capabilities start from a point of
differentiation, they can also eventually replace
more commoditized infrastructure providers.
EXPAND TO ADJACENCIES TO CAPTURE
MORE OF THE VALUE CHAIN
Aggregator
Integrator
Capabilities
Infrastructure
Capabilities- Implications for financial services

68
Strategy Development
Overview
The ecosystem stack mapped out in this report lays
out a central framework for developing strategy in
modular ecosystems. The financial services industry,
in particular, has been transformed with the shift to
modular ecosystems.

To strategize future positions in these ecosystems,
firms must map out their overall ecosystem value
stack and identify key positions and business
models that grant them competitive advantage.
To strategize across the stack,

firms must follow a four-step approach:
Determine current
positions across the
value stack where
your financial
institution continue
to play and current
positions you have
abandoned because
of impending
commoditization.
Select future
positions that
provide competitive
advantage which you
wish to migrate to,
and map out build-
partner-buy options
to aid that migration.
With this portfolio of
future positions
across the stack,
identify factors that
reinforce value and
defensibility across
these future
positions by
developing new
business models.
Focusing on the
target business
model mix, initiate
experiments with
the goal of learning
fast, and scaling
successful initiatives
at speed. Start
small, learn fast, and
scale faster to create
the competitive
moat you need to
build a successful
platform business.

69
Ecosystem Strategy
Spectrum
Occupying traditional production and distribution
positions is no longer sufficient for competing in modular
ecosystems. Incumbents will need to strategize for
shifting industry economics. These strategies will span
both offensive and defensive moves to proactively
defend current positions of value and take up new value
stack positions.
Firms may work across a spectrum of four choices
while participating in modular ecosystems.
Develop a portfolio of
capabilities and embed
yourself across the
ecosystem.
Produce and/or
distribute at scale.
Collaborate with other
incumbents to gain
scale at one of these
three layers.
Pursue horizontal
dominance at the
aggregator, infrastructure,
or integrator layers.

70
StrategySpectrum

CasestudiesfromfinancialServices
Collaboratewithotherincumbentstogainscaleatoneof
thesethreelayers.

ThetopsixbanksinSwedencollaboratedtolaunchthe
paymentsserviceSwish,incooperationwiththeCentralBank.
Swishisusedbyover70%oftheSwedishbankingpopulation.
ThiscollaborativescalehashelpedSwedishbanksresist
movesbyinternationalpaymentsproviders.
Developaportfolioofcapabilitiesandembedyourself
acrosstheecosystem.

PagoNxtisasuccessfulpaymentcapabilityfromBanco
Santander.PagoNxtdeliversitsvaluepropositiontomore
than1.2millionmerchants,200,000internationalSME’s
andcorporatesworldwide,andover700,000consumers.

WhilepartofBancoSantander,PagoNxtisdesignedasan
autonomouscompany,workingasafintechtodeliver
innovativesolutionstothepaymentsmarket.
Produceand/ordistributeatscale.

Producersanddistributorsmaypursuestrategic
partnershipswithecosystemplayerstomoveintonew
productsandnewcustomersegments.Forinstance,
GoldmanSachspartnershipwithAppletoco-createApple
cardhasgiventhemunprecedentedreachandscale.

Pursuehorizontaldominanceattheaggregator,
infrastructure,orintegratorlayers.

TraditionalfinancialinstitutionslikeSpain'sBBVAandIndia's
ICICIBank,aswellaschallengerslikeGoldmanSachsand
GalileohavesetupintegratorpositionswithBanking-as-a-
serviceAPIintegrators.

SouthAfrica'sDiscoveryandIndia'sPaytmhavesetupstrong
aggregatorpositionswithDiscoveryVitalityandPaytm
marketplacerespectively.

More
Learning
Opportunities
Engage our ecosystem
mapping and business
model innovation
strategy services to
turbocharge your
ecosystem strategy.

Map your
ecosystem,
secure your
position!

73
Our Mapping Approach
We've advised more
than 40 of the
Fortune 500 and
several high-growth
startups on their
ecosystem strategy.
Your
Ecosystem
Strategy
Map the
ecosystem
Identify key
value levers
Plot future business
model positions
Determine key
control points
Strategize business model
portfolio
Articulate strategic trade-offs
and choices business model
portfolio
Backed by our extensive library of ecosystem maps created across different industry and market scenarios

74
ECOSYSTEM VALUE STACK MAPPING
Define the various value levers and key building blocks within your target industry ecosystem. This includes structuring a
detailed digital value stack for the ecosystem, across engagement services, consumer management decision support, data
products, infrastructural components, and product innovation building blocks.
BUSINESS MODEL CONFIGURATIONS
Based on these building blocks, frame different business models that firms may leverage, highlighting which ones will win and
which ones will lose in the future ecosystem value stack.
BUSINESS MODEL BENCHMARKING
Benchmark competitive business models and players across the stack to identify key value positions they occupy and key
control points.
BUSINESS MODEL CHOICES FOR CLIENT
Choice of business models that the client should pursue based on its position and how these models will interact with other
possible business model configurations in the ecosystem.
HORIZONTAL VS VERTICAL MODELS
Identifying components where horizontal capabilities may be developed and components where niche vertical strategy must be
pursued. Determining boundaries of the platform based on horizontal vs vertical choices.
CONTROL POINTS
Identification of specific control points at each layer of the stack. Identification of combination of control points that can yield
strong future business models.
STRATEGIC COMMODITIZATION AND STANDARDS
Identifying potential opportunities to componentize and commoditize specific digital assets and capabilities across verticals.
ECOSYSTEM FLYWHEEL
Identifying opportunities for harnessing network effects through ecosystem activity, data-driven learning, standards and
interoperability across the ecosystem.
Map your
ecosystem,
strategize your
positions
At Platformation Labs, we have advised more
than 40 of the Fortune 500 firms in building out
their ecosystem strategy using the approach laid
out in this report. Our proprietary ecosystem
mapping approach includes the following:
Request Advisory Kit
To learn more about our services, request our advisory
kit by writing to liz@platformthinkinglabs.com

75
1. CORE CURRICULUM
ECOSYSTEM FRAMEWORKS

Build core literacy on ecosystem innovation and ecosystem business models by understanding the different business models that
emerge in connected ecosystems.

ECOSYSTEM CONTROL POINTS

Identify key positions of leverage within an ecosystem by understanding specific types of control points and ecosystem positions that
these control points map to.

ECOSYSTEM FLYWHEEL

Identifying opportunities for harnessing network effects through ecosystem activity, data-driven learning, standards and
interoperability across the ecosystem.
2. CASE STUDIES
ECOSYSTEM STRATEGY MODULE - CASE STUDY

A deep-dive case study in ecosystem strategy studying the healthcare ecosystem and the strategies pursued by BigTech firms to enter
this ecosystem.

ECOSYSTEM EXECUTION MODULE - CASE STUDY

A deep-dive case study on how to organize internally for pursuing an ecosystem strategy. Taking the example of the failure of a large
Fortune 500 business looking to pursue an ecosystem strategy, this identifies the key mindsets needed to succeed with an ecosystem
strategy.
3. SPRINTS
ECOSYSTEM MAPPING - MAPPING SPRINT

Define value levers within your target industry ecosystem and map out key building blocks of value across the ecosystem..

BUSINESS MODELLING AND BENCHMARKING - MODELLING SPRINT

Frame business models that firms may leverage, highlighting which ones will win and which ones will lose in the future ecosystem value
stack.

FLYWHEEL CREATION AND CONTROL POINTS - STRATEGY SPRINT

Mapping out different types of feedback loops and applying these loops to chosend business models across the ecosystem. Mapping
key control points to selected business models.
Highlights of our Ecosystem Leadership Program include:
Join our Ecosystem
Leadership Program
at the Platform
Institute
Our Ecosystem Leadership Program equips business leaders
with strategies to map their ecosystem, choose winning
positions, and strategize movements from this position.

Expanding beyond the concepts covered in this report, this
program leverages our core curriculum on platform strategy
combined with new modules in ecosystem mapping and
competitive positioning.

Our Advanced Corporate program on Ecosystem Leadership
also includes case studies and exercises to help drive mapping
of specific industry ecosystems that the client firm engages in.
Our flagship programs have been delivered at several Fortune
500 firms helping them map ecosystems as diverse as elder
care, sports and fitness, vehicle care, automobile sales, energy,
travel, mining and drilling, industrial mobility, construction,
home purchase/ownership, remote work, connected mobility,
petcare, and many others.
Learn More
To enquire about our corporate programs, request our Executive
Education kit by writing to liz@platformthinkinglabs.com

76
finacle@edgeverve.com | www.finacle.com

77
Platformation Labs is a C-level advisory and executive education
firm on platform and ecosystem strategies. Led by its founder,
Sangeet Paul Choudary, the firm has advised senior leadership of
more than 40 of the Fortune 500 firms on applying platform
strategies in their respective industries.

Platformation Labs' advisory extends across financial services,
healthcare, heavy industry, logistics, energy, retail, automotive, and
several other industries. Engagement models include board
presentations, group-level business model portfolio definition,
detailed platform ecosystem design and strategy creation, as well
as competitive playbook development.

For more information, visit Platformthinkinglabs.com
Finacle is an industry leader in digital banking solutions. We are a
unit of EdgeVerve Systems, a product subsidiary of Infosys. We
partner with emerging and established financial institutions to help
inspire better banking. Our cloud-native solution suite and SaaS
services help banks engage, innovate, operate, and transform
better to scale digital transformation with confidence. Finacle
solutions address the core banking, lending, digital engagement,
payments, cash management, wealth management, treasury,
analytics, AI, and blockchain requirements of financial institutions.
Banks in over 100 countries rely on Finacle to help more than a
billion people save and million of businesses save, pay, borrow, and
invest better.

For more information, visit Finacle.com
About Us
Platformation Labs Finacle

78
Disclaimer

The information contained herein is general in nature and is not intended and should not be constituted, as professional advice or opinion provided to the user. This document
does not purport to be a complete statement of the approaches or steps, which may vary accordingly to individual factors and circumstances, necessary for a business to
accomplish any particular goal. This document is provided for informational purposes only; it is meant solely to provide helpful information to the user. This document is not a
recommendation of and particular approach and should not be relied upon to address or solve any particular matter. The information provided herein is on an “as-is” basis.
Infosys Finacle and Platformation Labs disclaims any and all warranties of any kind
© 2022 Platformation Labs, and EdgeVerve Systems Limited. All Rights Reserved.

Platformation Labs, and EdgeVerve Systems Limited, Infosys Finacle, their services mentioned herein as well as its respective logos, are trademarks or registered trademarks
of its respective company. All other company, product and service names and logos mentioned are the trademarks of their respective owners and are used herein with no
intention of trademark infringement. No part of this document may be reproduced or copied in any form or by any means without written permission from Infosys Finacle or
Platformation Labs.

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