Two years ago, Jamie Dimon, chairman and CEO of JPMorgan Chase, wrote in a letter to shareholders, “Silicon Valley is coming.” Since then, there has been a dramatic rise in interest and investment in the fintech market. In 2016 alone, global venture investment in fintech grew by 11% to $17.4 billion in 2016, according to data provided by PitchBook.
A few years ago, a new concept emerged in the banking and fintech industries, a movement dubbed the “most significant trend” of the past year by The Financial Brand. Platformification is the bundling together of multiple services onto one online platform, and provides an efficient, automated and integrated customer experience.
Why does platformification matter now?
Why is the platformification term popping up in conversations from bank boardrooms to fintech conferences? It sounds like something IT directors would own, part of the “back end” of online banking services. However, 59% of banks (according to an Accenture study) are creating full-stack platforms. Platformification is arguably one of the most important practices that banks can implement for their customers. Banks must effectively bundle multiple online products together and monitor how customers interact with those products to deliver a differentiated and compelling customer experience, ultimately affecting their bottom line. According to Gartner, we are just at the beginning of this trend, as it predicts that by the end of 2019, 25% of retail banks will use startup providers to replace legacy online and mobile banking systems.
LendKey is leading the movement
One company leading this movement of bank platformification is LendKey. LendKey pioneered the “lending as a service” model back in 2009 and already works with nearly 300 banks and credit unions nationwide to create custom, white-labeled online lending platforms. The New York-based fintech company, backed byDraper Fisher Jurvetson, Gotham Ventures and Updata Partners, relies on the platformification concept to deliver the best possible array of products to its customers.
I had the opportunity to chat with LendKey’s CEO Vince Passione atLendIt USA in New York earlier this year about how the company uses platformification. Passione is a fintech veteran, who also served as a CTO and COO at Citi Bank.
Vince stated “We started bundling services together that weren’t just created by our company because we wanted to create the best possible lending products for our bank and credit union clients,” he says. “For example, we partnered with IDology because they offer a superior identity verification tool that we used in our student loan applications. We also partnered with DocuSign so that borrowers can quickly and securely access and sign loan documents online. Bundling these services into our pre-existing platform significantly sped up our loan underwriting, funding and repayment process.”
The rest of the article can be found on Forbes.com