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How to Succeed with Marketplace Business Models in Financial Services

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Learn how marketplaces are transforming financial services – and how you can benefit.

The marketplace business model is responsible for the growth and success of tech giants like Amazon, Alibaba and Etsy. Now this business model is set to disrupt financial services firms by bringing multiple parties together for collective gain.

Financial service organizations are uniquely positioned to utilize marketplace models to grow revenue, disrupt competitors and deliver new value to customers because of their large customer base, institutional trust, and rich data. 

According to a recent Forrester report: “A marketplace is perhaps the most versatile of the platform business models, enabling financial services firms to take products and services to market in various ways and adopt different roles: direct seller, distributor via others’ marketplaces, marketplace owner, and potentially a marketplace platform provider.” 

Financial marketplace models are having a growing impact, with successful online marketplaces like financial management app Mint or online lending marketplace Lending Tree demonstrating their legitimacy as revenue-generators and category disruptors.

 

Forrester, Marketplace Business Models in Financial Services

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How to Succeed with Marketplace Business Models in Financial Services.

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What is a Marketplace Business Model in Financial Services?

An online marketplace is a business model where a company, organization or group creates a platform where other companies can sell or provide their products and services to consumers and other businesses. 

One well-known financial services marketplace is the Mint app. This app does more than simply allow users to track their spending and financial habits, it also recommends credit cards and loan options from different providers to deliver solutions precisely targeted to diverse user needs. In this way, companies are able to use the Mint marketplace to reach new customers and increase the number of products and services sold outside of their traditional channels.

 

A chart for different marketplace business models shows four potential options
Source: Forrester.

How Can Financial Services Firms Leverage Marketplaces?

Financial service firms must begin by understanding which marketplace model makes sense for their specific organizational strengths and business goals. As this Forrester report explains, using marketplaces opens up a range of business plan options for financial services organizations such as: 

  • Make ‘as-a-service’ product pivots: Redesign a core capability as a service delivered via your own or third-party marketplaces.
  • Match niche products to niche markets: Help customers find complementary and specialized products or services. 
  • Own the marketplace model: Financial services businesses with significant customer bases, technical sophistication, and effective partnerships can create a platform to become marketplace owners. 
  • Offer marketplaces as a service: Let firms bundle products from an ecosystem of suppliers on the platform.
  • Build services to support marketplaces: Serve the marketplace’s key financial needs by building commonly sought products such as identity verification, payments, fraud protection, or regulatory compliance. 

More financial services firms than ever are using marketplace models to discover new customers, create strategic partnerships, and achieve greater profitability. Are you looking for advice on how to build a successful online marketplace, real-world examples of marketplace business models, or the specifics of creating an effective path to market? 

Get the Forrester Report, How to Succeed with Marketplace Business Models in Financial Services.

 

Image Source: Pexels Thirdman.

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