Strategic Treasury

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Open Banking: Levelling the Digital Playing Field for Treasuries of Tomorrow As traditional companies digitise their business models, transactional and financial flows will undergo a paradigm shift impacting treasurers and banks alike. Find out how you can level the digital playing field.

Open Banking: Levelling the Digital Playing Field for Treasuries of Tomorrow

By Sriram Royam, Director, Transaction Banking, Standard Chartered 

 

Digital platforms have begun to penetrate industries and alter supply chains. As traditional companies digitise their business models, transactional and financial flows will undergo a paradigm shift impacting treasurers and banks alike. Open Banking is perhaps the symbiotic factor that can level the digital playing field.


Three centuries ago, the industrial revolution marked a fundamental change in mankind’s history; the development of machines surpassed the physical abilities of humans and animals. Today, as the world seeks new fuel for economic growth and inclusive development, technology-enabled business models are re-defining economic activity with great equalising potential for society i.e., crowd-based capitalism, job creation, financial inclusion, remote access to education and healthcare to name a few. This phenomenon will transform corporations and communities over the next decade and perhaps bring about the fourth industrial revolution. 

An offshoot of this revolution is the advent of digital platforms. The digitisation of supply chains is impacting business more than any other digital initiative, accounting for up to two-thirds of incumbent companies’ revenue growth, and more than 75% of their profit growth [1] where digital ecosystem reinvention is well strategised and executed. Building a fully digital supply chain often involves the creation of a new ecosystem. This opens the door to a reshuffle of the ways in which value is distributed among various players in the value chain, and will provide companies with new opportunities to create value – such as via new partnerships, revenue/business models and market access. 

 

Fig 1 - Digital platform initiatives in traditional companies

Fig 1

 

Fig 2 - Open Banking: From standalone service provider to ecosystem orchestrator

Fig 2 - Open Banking: From standalone service provider to ecosystem orchestrator

 

It’s not just start-ups 

As such, platform-driven business-to-business (B2B) ecosystems are poised to achieve macroeconomic scale of approximately USD10tr [2] in socio-economic value creation opportunities between 2016 and 2025, across 10 industries. Whilst high-technology companies, ‘unicorns’ and start-ups are already part of the narrative, traditional incumbents and industry leaders are becoming digital natives, with more than 50% of Global 2000 [3] companies expecting to see most of their businesses creating digitally-enhanced products, services and experiences by 2020. Figure 1 shows an indicative compilation of digital platform initiatives being pursued by traditional companies [4], cutting across industry sectors.

 

Notes

1 McKinsey study - The case for digital reinvention, https://www.mckinsey.com/business-functions/digital-mckinsey/our-insights/the-case-for-digital-reinvention
2 World Economic Forum/Accenture digital transformation initiatives study, 2016
3 International Data Corporation FutureScape report, 2016
4 Company websites

 

 

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