Few times during a century do technological advances enable a banking business model transformation. Today we’re experiencing such a dynamic. Banks are able to harness the potential of a platform strategy thanks to advances in application programming interfaces, cloud-based computing and data storage, data analytics, and artificial intelligence. Like any transformation, adopting a platform strategy requires paradigm shifts. Banks need to migrate from a closed, vertically integrated model to an open one in which the value chain is deconstructed and partnerships play a vital role. This includes banks becoming a trust broker for third party providers, and vetting these providers on behalf of their customers. It means rethinking how a bank can leverage its assets from its customer base, balance sheet, and banking license to its tech infrastructure and payment systems access. It means differentiating based on personalization powered by the data analytics banks and their partners have.

For banking customers, the promise of a platform banking strategy is straightforward: easier, flexible, tailored, contextual banking. Achieving that end state, however, is not simple. Banks will not follow the playbook of the digital giants like Apple and Facebook. Instead, they will develop and adopt hybridized versions with varying degrees of success.

In a Celent Flash Insight, I outline the table stakes and differentiators, provide an outlook, and offer direction on how banks can respond.