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As purchasing behaviors change over time, so does the landscape that solution providers operate in. In 2020, we are spoilt for choice. Power now lies with the consumer – but consumers are short on time and often overwhelmed by choice.
Correspondingly, the balance of power for businesses has shifted in favor of those who can provide these consumers with a seamless service that meets not one, but multiple, needs.
The concept of a digital business ecosystem is now becoming widespread, and companies in Southeast Asia have begun to recognize the importance of meeting new and diverse needs under one single umbrella. Digital ecosystems are eminently suited to provide a marketplace for consumers and businesses to interact, connect seamlessly around products, payments and other important functions, and enable accelerated corporate collaboration in the digital age.
Although Southeast Asia has seen a creeping level of digitalization over the past decade, particularly among fintech and financial service providers, many of the older generations have remained entrenched in their ways as consumers or as small business owners.
Now, change has become imperative as COVID-19 travel bans, lockdowns and safe distancing protocols have been implemented across the globe. Not only have consumers and businesses needed to change their ways, but governments also have had to adapt and offer support to communities that find themselves shut off or unable to access goods and services in their physical form.
On the one hand, COVID-19 has hastened the urgency to move away from physical functions; on the other, it has also meant that mutually beneficial business ecosystems now have the potential to reach a far broader customer base than previously imagined.
As digitalization across all aspects of our lives becomes more common, we are experiencing a rapid shift across industries; and corporations are battling each other to try and become the dominant player in their respective markets.
Collaboration between players, for enabling greater innovation between businesses – from startups to incumbents – is, therefore, more important than ever before, and prioritizing technology investments that effectively differentiate between vendors and ecosystem partners is key.
Despite fintech being at the forefront of the digital revolution in finance, creating an innovative solution by itself has not been enough to succeed. Without group adoption and support from multiple stakeholders to empower and enforce these interoperable systems, fintech companies have often struggled to bring about significant change in the industry or to bring on board the volume of customers needed to make their business successful.
Consumers are looking to choose from a handful of dominant ecosystem drivers for each domain in their lives to give them end-to-end journeys across products and services, and there will only be space for a select few.
An open-source sandbox model is one such answer to this question, allowing participants on the platform to bolster innovation without compromising on ethics or parting with sensitive, competitive data and information. Platforms such as Singapore's API Exchange (APIX), a not-for-profit enabler of these ecosystems, creates partnerships between highly innovative organizations such as fintech companies, with incumbents such as AMTD Digital, BNY Mellon, IFC, and Mastercard and others, which can allow them to prove their value and become a part of a greater whole.
Enablers such as APIX allow problem statements to be published, relevant Application Programming Interfaces (APIs) to be uploaded, and optimal solutions to be arrived at by harnessing the creative power of fintech and innovative solution providers to solve industry problems.
Since the beginning of 2020, the number of solutions uploaded onto the APIX platform has increased by 180 per cent – a clear indicator of acceleration within the industry.
Another key focal point of these collaborations for many solution providers and corporates is the valuable data that becomes available in such partnerships. As the value of data has increased in the past decade and the science around leveraging it has improved, these data stories have become a key pillar in many corporations' growth strategies.
Working together in a digital ecosystem model allows participants to make better use of this data through analytics to drive efficiencies, make their offerings more appealing to consumers and ultimately create a seamless customer experience.
As we move into a new decade, effective collaboration through business ecosystems is crucial to ensure survival. Ecosystems will allow mutually beneficial solutions to service the region, creating opportunities for fintech and financial institutions alike.
We can expect to see more and more corporates and solution providers joining together in an attempt to meet this demand for integrated ecosystem offerings, and as savvy consumers continue to vote with their wallets, we can expect to see the consolidation of dominant ecosystems in every domain.
In the dynamic markets of Southeast Asia, digital solutions have the potential to create impact far and wide; often serving those who may not have previously made the digital shift. To effectively reach these businesses and consumers, fintech solution providers and financial institutions should use these digital platforms to pursue collaboration opportunities and partnerships, creating innovative solutions that can have lasting impact on their markets of interest.
These solutions already play a role in the region to minimize cross-border barriers and encourage collaboration between the private and public sectors; a trend which will greatly accelerate in the coming months.
In short, those who collaborate will have a natural advantage over those flying solo in this competitive regional landscape.