Published by Jessica Weisman-Pitts
Posted on October 21, 2021
7 min readLast updated: January 29, 2026
Banking ecosystems are vital for creating superior customer experiences by integrating digital services across sectors, driving innovation and collaboration.
By Seshika Fernando, VP & GM BFSI Practice, WSO2
Today consumers expect great digital experiences. Financial institutions looking to meet these expectations are under more pressure than ever to innovate — while delivering seamless, frictionless, and secure services. As banking has moved from the physical to the digital – accelerated by COVID-19 – so too has the trend towards building ecosystems. In this world, banks must interact with not only their own digital financial services ecosystem but also a network of ecosystems from across economic sectors like healthcare, transportation, and telecommunications. In fact, McKinsey predicts that this integrated network economy will be worth $60 trillion by 2025. This is because successful ecosystem participants have been able to draw insights and bundle together value across these sectors—leveraging data and services from customers, technology vendors, and digital service providers—to build more complete, timely, and personalised customer experiences.
FinTech firms, big tech companies, and forward-thinking banks that are participating in this environment are freeing consumers from isolated transactions and hooking them with highly personalised experiences delivered at the time of need.
Delivering new services through collaboration
This has created a fiercely competitive financial services market demanding continuous adaptation with dynamic, advanced systems that deliver new features and rich real-time data insights.
FinTech firms and neobanks have altered the technology landscape because they are built from the ground up in the digital era with cloud, AI/ML, and connected, interoperable systems. Most traditional banks are tied to expensive, difficult-to-replace legacy systems and are not as agile. However, with competition from FinTechs, BigTech, neobanks, and progressive banks, incumbents yet to look seriously at these technologies can’t afford to stand still.
FinTech firms and progressive banks are driving these new services while many traditional banks have been slow to transform. According to a study from Cornerstone Advisors, only about a quarter of banks surveyed had embarked on a digital transformation strategy prior to 2019, and 45% hadn’t launched a strategy prior to this year. With barriers to entry particularly harsh in a highly regulated space, banks haven’t previously needed to deliver exceptional experiences to capture or retain customers; there has been relatively little innovation in banking over the past 40 years when compared with most other industries.
What traditional banks have in their favour is their banking license. When FinTech firms or BigTech (e.g., Google with Google Pay) want to move into the banking space, they often choose to tie up with banks or get their own banking license to avoid having to worry about compliance themselves. Even Google, when launching Plex banking accounts on Google Pay, took the approach of partnering with several banks from Credit Unions to Citibank instead of getting a banking license, because it wanted to focus on its core competency.
An important takeaway here is that while technology firms find formulas for high growth through customer-centricity, highly adaptable technology, and new business models, they often find it difficult to scale the breadth of services they can offer without help from banks. Similarly, while they have the technical capacity to derive better insights into customer behaviour than traditional banks, they don’t have access to the customer’s financial information held by incumbent banks.
The introduction of the Open Banking Directive in 2018 has lowered the barriers to entry and made customer-centricity a core strategic capability that even incumbents now need to build. On the face of it, Open Banking might not sound like much of a change, but it is increasingly transforming the way we use and consume data and services. It has enabled customers to not only see but also control their own data, and transformed the way banks interact with third parties. Open Banking is far more extensive than just payments; it has fostered deeper relationships between banks and third parties using APIs as the gateway between these disparate applications.
Building more personalised value for customers
Banks that start to leverage external third-party data will be able to offer a more enriched, frictionless marketplace using white-label partnerships to complement their own services and augment what they do. This will reduce the high cost of development, deployment, and maintenance as they move away from focusing solely on custom in-house development to becoming more agile nimble players bundling new service offerings from an ecosystem of providers.
But for less progressive banks, these ecosystems require a deep cultural shift from closely guarded systems and processes to open collaborative value generation. This industry has traditionally had control over the whole end-to-end supply chain, and now finds that it must open its infrastructure and data to partners. Understandably, larger banks are nervous about third parties having access to data as this could potentially weaken their relationship with customers.
Banks that respond to this evolution will continue to play a central role in the future of financial services based on the deep foundation of trust built with consumers over decades or centuries, and for the reasons set out earlier. But to compete, they will need agility, speed, and the ability to collaborate securely. Fundamental capabilities for this will include APIs to integrate both internally and externally, a product platform to rapidly explore and scale new opportunities for partners and consumers, and the ability to use data better.
Digitisation requires a culture transformation
As banks digitise, new business models and a cultural shift will be required to become a partner-focused collaborative company. However, the larger the bank, the harder it will be to make that change – not just from a technology and legacy infrastructure perspective, but with tens of thousands of employees around the world, the culture change will also be challenging. This requires strong leadership and a C-suite that understands technology. There are exemplary larger banks embracing this new model, such as JP Morgan Chase, HSBC and BBV A. JP Morgan Chase started its digital transformation journey more than five years ago, approaching it not from a cost-cutting or efficiency focus but from a customer perspective with the customer journey and experience central to their transformation.
The good news is that the banking industry has a track record of surviving disruption, which suggests it will rise to the challenge. Underpinning all these trends will be the demand for connections between ecosystem players: banks, FinTech firms, and other third parties. One way this will be achieved is by building good interfaces and APIs. However, these APIs must work well, otherwise ecosystems will not consume these consistently enough to deliver business results for the banks. The challenge is creating the right APIs and then ensuring they are reliable, discoverable, usable, high-performing, and flexible to offer long term value to both API partners and their end-consumers.
To make this transition successfully, banks should consider:
What precise form banking will take in the future, and which business models will suit which banks, is not immediately clear. What is clear is that with experience-focused consumers and the rapidly evolving nature of their needs, banks operating within the emerging vast network of ecosystems will need to build the fundamental capability of rapid adaptability. In summary, banks need a combination of the right technology, the right partners, and the right kind of leadership commitment to implement a robust digital strategy to build strong adoption that delivers superior benefits across their ecosystems.
The article discusses the importance and growth of banking ecosystems in enhancing customer experiences and value.
FinTechs are driving innovation with digital-first approaches, challenging traditional banks to adapt and transform.
Open Banking lowers entry barriers, enabling customer-centric strategies and transforming data and service usage.
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