Marketplaces are coming. Time to get real-time analytics ready

Apr 16, 2015

Marketplaces hold public sales to match supply and demand. In a marketplace, instead of having the customers visiting multiple providers, the providers themselves come to the customers with their offers. This makes business and commerce more efficient.  

Such marketplaces are bound to populate the banking landscape. Imagine that you need a loan. You do not really care if the loan is provided to you by Bank Group or Group Bank, what you are looking for is a quick and frictionless process to get your loan at the lowest interest rate possible.

If you are a visitor to such a marketplace, instead of visiting multiple banks, you simply provide your needs and your profile before receiving offers from all the banks interested in your business. You then pick the offer that best suits you. Easy, fast, and efficient.

Marketplaces are coming

At first, financial services marketplaces will likely specialize in specific activities such as lending, remittances, foreign exchanges or wealth management. However, once these marketplaces will have gained some traction, full ‘marketplace banks’ will appear.

Marketplace banks will produce a minimal set of banking products and services themselves (say, bank accounts, debit and credit cards, and digital wallets). All other products and services (loans, insurances, etc) will be provided by third parties, including traditional banks, financial institutions and fintech companies. So, in our example, the marketplace bank will consult all its third parties and offer you the loan that best corresponds to your needs.

In practice, we can imagine a process in which the conditions offered are non-negotiable, but we can also imagine a competitive bidding process to get the best offer for each client at any point in time. In both cases, competition takes a very different form than the way it is today.

The battle for new business will be online and in real time. Bid management will have to be fully automated and include risk management capabilities as well as advanced credit models to determine who are the most valuable customers in the long run and how much their business is worth.

In a world where marketplaces instantly match financial services’ supply and demand, the most successful banks will be those that have the best real-time analytics, from customer profiling to compliance and credit risk models.

David Andrieux, PhD

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