Published on: June 22, 2023
In the rapidly evolving financial service landscape, core banking holds significant importance. It enables banks and lenders to deliver customer-centric products and services more efficiently.
One key driver behind this transformation is the emergence of technology ecosystems. But what exactly are they, and how do they impact one of the crucial elements of economic growth—SME lending? Let's delve deeper into the power of ecosystems in SME lending.
A partner technology ecosystem is a joining of forces that creates a comprehensive tech solution for banks. This allows them to easily leverage and integrate best-in-breed fintech solutions without building their own infrastructure. Doing so, reduces time-to-market, fosters innovation, and collaboration, and provides scalability and flexibility. Ultimately, these benefits enhance the overall customer experience, leading to enhancing customer experience.
To fully harness the potential of ecosystems, it is vital to adopt a robust and scalable core banking platform. The platform should exhibit flexible and cloud-native characteristics with composable architectures that facilitate the seamless integration of components. Here, the main goal is to extend functionality beyond a bank’s core competencies by integrating with various partners offering niche services or innovative solutions. For a comprehensive understanding of critical technologies in core banking, read more.
Open APIs are pivotal in integration, enabling interoperability and data exchange between systems, components, products, and third-party services. They facilitate seamless communication between various elements such as risk assessment, credit scoring, compliance, and loan origination, among others.
SMEs account for 99% of enterprises in the European Union, making efficient funding of this sector crucial. Ecosystems play a vital role in accelerating digital lending by:
Ecosystems also support lenders in offering:
Ecosystems give banks, and lenders access to best-in-breed solutions to improve efficiency and enhance customer experience. These capabilities are crucial in a rapidly evolving industry where banks may struggle to keep pace with change on their own.
In short, ecosystems give banks the options they need to thrive. However, unlocking ecosystems' true potential requires lenders to comprehensively understand their needs, target markets, and position among industry peers.
Having this knowledge will enable them to design tailored ecosystems and collaborate with third-party providers, enhancing efficiency, improving the customer experience, and future-proofing their business. Embracing ecosystems is the key to unlocking opportunities and driving sustainable growth in SME lending.