The only limit to DeFi is organisational imagination…
In the following contribution, we suggest that finance can be best ideated not as a process to be improved but as a powerful growth engine in its own right. For retail organisations, as well as their financial partners, DeFi (decentralised finance) can provide an innovative source of profit as well as an effective means of engaging with both your customers and business partners. Let’s explore what DeFi can mean for your business, the potential benefits, and why you should care.
For business decision-makers, new technology is never a business outcome, but a potential lever in service innovation. In this sense, the accepted definition of Open Finance – “data-sharing principles that enable third-party providers to access customers’ data across a broader range of financial sectors and products” – comes up fatally short. Transforming promising ideas into pertinent data practices requires looking beyond the APIs to envisioning what can be done with financial data freed from technological and organisational silos. DeFi (decentralized finance) is a broader vision than that of FinTech, which leverages the cloud to improve upon traditional banking business models in the delivery of financial services. Capturing the full panorama requires attention to both the business benefits and outcomes that DeFi can deliver.
The Business Benefits
More isn’t necessarily better: integrating a panoply of financial services does not automatically translate into value for your customers. For traditional retail banks, Open Finance provides a strategic opportunity to disintermediate retail industries in monetising their knowledge of consumer spending patterns. For FinTech operators, embedded finance offers a much larger market to grow partnerships and ecosystems across various industries and verticals. For ambitious retail organisations, DeFi opens up a range of sales possibilities and economic benefits tied to each commercial transaction. For the ecosystem as a whole, the financial data produced by these transactions provides unique insights into the reality of each customer journey.
The Business Outcomes
The business value of DeFi isn’t in the data itself, but in the outcomes that can be fostered using the data. These outcomes include a more inclusive customer journey, the design of digital communities around an Internet of Value, and powerful incentives to mold business ecosystems.
- The Customer Journey
- The Internet of Value
- Incentivising your Business Partners
Helen Child, Founder & CEO, Open Banking Excellence