How a focus on ecosystem play is important for financial institutions to stay relevant

The territory traditionally occupied by financial institutions is seeing new competition not only from financial technology (FinTech) players but also from non-financial services players. These non-financial services players offer payments, insurance lending and wealth management in addition to other services such as e-commerce, ride hailing or food delivery. To stay relevant, financial institutions need to venture beyond their immediate fields and explore partnerships and ecosystem play. The rise of FinTechs and consumer platforms in South-East Asia comes at a point where customer pain points and unmet needs have long existed and yet not been addressed. Hence, FinTechs and consumer platforms had the opportunity to leverage this gap to entrench themselves in the value chain, and grow in prominence, riding on the region’s strong fundamentals and widespread digital adoption as well as supportive regulatory developments. This paper discusses the growth of FinTech and consumer platforms and explores how participation in digital ecosystems may be the answer to the existential question that financial institutions face. It also lists the different roles that financial institutions can consider in an ecosystem and the five fundamentals of effective participation. As FinTech providers become more popular with customers through lower fees, greater convenience and higher returns, financial institutions need to transform to maintain their market share and competitive advantage. This means streamlining business and operating models, leveraging data analytics, adopting new technologies and transforming talent.