MARKET VIEWPOINT

Optimise Value Chains through Digital Ecosystems

Jul 21, 2021

Digitisation is transforming industry boundaries, resulting in ecosystems comprising diverse players who provide digitally accessed, multi-industry solutions. The digital ecosystem is a highly customer-centric model, where users can enjoy an end-to-end experience for a wide range of products and services through a single access gateway.

McKinsey reports that more than $60 trillion in annual revenue could be redistributed across traditional sectoral borders in 2025, with ecosystems accounting for 30% of global revenues.i Today, the most valuable companies in the world are primarily driven by the power of digital ecosystems.

Elevate competitiveness with unique services and cross-selling
A leading financial conglomerate has expanded beyond its core insurance business into broader services by incorporating ecosystems into their business model. Providing unique services to customers from multiple sectors including banking, automobile, housing and healthcare, the financial conglomerate expands their consumer base and strengthens their value proposition, creating a technology-enabled ecosystem with 11 new digital platforms, connecting over 1.4 million of insurance agents and more than 500 million online users, with about 40% of whom are first-time financial-services customers acquired through their digital ecosystems.ii
Scale core business through channel partnerships
A large digital bank has developed a digital ecosystem that offers banking, insurance, investment and loan products, as well as an online marketplace through joint venture partners. Enabling customers to bank and shop at the same time, the ecosystem became an attractive platform for merchants and the fastest-growing channel for personal loans in 2019, with over $40 million in monthly disbursements.iii During the first half of 2020 when the pandemic hit, 60% of its liability customer’s onboarding was done through digital platforms.iv More accounts are open daily via the platform, taking the total account registration to 24 million.v
Maintain competitive advantage by data sharing
Seven leading banks collaborated with the public sector to develop an ecosystem of digital services, where people can access their financial information held across different government agencies and financial institutions on a single online platform.vi Banks have built their own ecosystems, enabling clients to retrieve personal financial information from both participating banks and relevant government agencies.vii Consolidating customer data with a holistic view of their overall financial status, banks are able to provide individuals with personalised financial planning services to address their retirement planning and insurance needs.

Identify core capabilities to maximise returns

Many companies are increasingly innovating to offer an interconnected set of services to grow core business, expand the network and portfolio, and create new value streams. Successful digital ecosystems involve a deep bench of partners, enormous amounts of data, advanced analytics and artificial intelligence (AI) capabilities to improve new customer acquisition and refine offerings.

Ecosystem players focus on creating customer-centric platforms and optimising functions to deliver frictionless experiences. Open Application Programming Interface (API) empowers companies to seamlessly integrate products and services with an agile approach to scale their ecosystems.

Accelerate digital ecosystem development with strategic partnership

Digital ecosystems are continuously transforming traditional companies, redefining the nature of collaboration and value creation. To successfully build digital ecosystems, companies shall proactively stay aligned with technological disruption, whether by building their own capabilities or by partnering with a broad variety of industries. Working closely with service providers to strengthen digital capabilities and craft the right strategy will help companies to seize the true value of digital ecosystems.