Amazon, Airbnb and friends make their way into investment banking

Platform ecosystems are part of the digitalization of investment banking. Vontobel has been pursuing this approach consistently for more than ten years and has been taking an unconventional approach.

  

When we talk about digitization in banking, we’re mostly talking about retail banking. Making payments, taking out mortgages, buying securities all on one online platform: it’s what we’re all familiar with and is how most of us have been doing our banking activities for years.

However, of course, digitization does not stop at the other areas of banking: investment banking in particular is in the midst of digital transformation. In concrete terms, this means that this banking sector is shifting from being a pure transaction and deal processor to platform ecosystems.

These ecosystems combine data, transactions, and software on a single platform. They enhance the client experience and offer a better service to our predominantly institutional clients. We empower our clients, so to speak, so that they, in turn, can serve their clients in the best possible way.

 

Other industries are leading the way

There are some examples from other sectors that show how these ecosystems can function: Airbnb, which started as a platform for sharing accommodations, has expanded its offer to include restaurant reservations, tourist attractions, and other travel-related services. Another example is Amazon, which now generates a significant portion of its sales from distributing third-party products.

Vontobel recognized the opportunities and possibilities of digital platforms early on and has been investing heavily in these ecosystems for years. The first platform, deri-pricing, was launched 14 years ago. Since then, the number has risen to 19, including deritrade, cosmofunding, investerest, and Pension Investments to name but a few.

 

We invite the competition in

The platforms have been continuously developed over the years and were also opened up to third-party providers – a step that should not be underestimated. Only offers from various competitors can turn a simple platform into an ecosystem where clients can find and purchase a product tailored to their needs.

However, this opening up was even more drastic for us as a company: by integrating our competitors into our platforms, we invited the competition into our company. By doing so, our platform business partly cannibalized our other businesses. But this was a deliberate decision based on the deep conviction that this step was necessary to offer optimal benefit to clients. And this is the only way we can actively help shape the digital transformation of the banking sector.

The benefits of our ecosystems and the benefits for users will be discussed in more detail in my next article.

  

Your contact

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Roger Studer

Head Vontobel Investment Banking