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How to be a Unicorn (Part Three)

Marko Wenthin is contributing this week. He began with funding and then moved on to the issues you face once you secure that funding. In this final part, he focuses upon why it may be better to focus upon B2B2C, rather than just B2C.

The beauty (and the beast) of a B2B2C platform business model

When starting my last company we were really looking into how to set up a viable business model right from the outset, for the price of making it more complex to explain. As opposed to B2C in FinTech where you can create a great value proposition and a prototype which makes it really easy to explain and show what you are doing and the value of what you are offering.

Take neobanks or challenger banks for example. You just look at N26, monzo, tomorrow, penta or Kontist and you immediately see why they have so much cooler products than incumbent banks. And you understand why customers would like to use those, with little explanation needed.

On the other hand B2C means that you have to work very hard to make your solution known to the consumer, persuade them to swap and eventually find ways to make money with them. Besides even fast growth will go linear rather than in leaps.

B2B solutions whilst often from the start show viable monetarisation concepts, during many years have lacked the sex appeal to investors as by virtue they have a lower reach, are more complex and seem rather boring.

From the market point of view and looking into what FinTech has become in the last decade or so it is fair to state that we could see abundant solutions both in B2B and in B2C spring to life and turning one of the most sluggish and dull industries upside down. And I think we are still in the very beginning of a landslide process which will see the traditional cosmic order of banking being torn apart. And a major factor is the rise of B2B2C platforms. Let’s have a look into the beauty of that approach.

As a derivative of B2B setting up a B2B2C platform you don’t have to look that much around to find a sustainable business model approach. In the age of platformification you provide a technical or legal or procedural solution which other need in order to build their own B2C business models on, and usually are willing to pay for the service.

If done right the platform provides solutions to its customers which otherwise they would have had to build themselves from scratch. Three is a crowd, so if you can provide the basics for three different customers which they would have done themselves you are already creating value in the macroeconomic sense. If they share the same basics it is not the basics they market as their own value. In Math it is called the lowest common denominator. They market a USP what they create as a product on top of the basics. It is really interesting to see how end products differ even if they share 80% of the underlying technology, processes and legal set up. The car manufacturing industry has shown with their platforms that a mass customisation can create substantially different niche products with only incremental efforts. The same is true in finance and banking. The value proposition are not the underlying banking services. They are always the same. The USP is to look at the customers need, life style and create a product which fits exactly to that. A Skoda Kodiaq (SUV) is to a large extent based on the same platform as the VW Golf. Still they go after a completely different clientele. As are FinTechs basing on the same platform. They can spend almost 100% of their resources for creating the (mass) niche products their customers want. Their attitude of almost obsessing with their customers needs is breathtaking (Chris Skinner on Digital Banks´ customers obessesion). This is where incumbents fail with their control freakiness of the entire value chain.

A platform provider can enhance the services and offer those developments to its customers for a fraction of the costs and improve their offering almost immediately. If they did all that by themselves their fraction would be 100% and additionally bearing the opportunity costs for not having spent that effort on their secret sauce. In the long run basing on platforms creates tremendous value for all parties involved.

The beauty of B2B2C platform is hence to develop once and offer the same solution manyfold to customers who create even more mass customised products on top of that. In terms of growth that really can make the difference.

Yet, as always there is a flip-side. The beast of B2B2C platforms. All theory is nice until confronted with the mechanics of real life. If the customers the platform takes on board do not get their butts up, stagnate or even grow negatively it’ll suffer the negative effects as well. And often one can do very little about it. At worst, the platform is trapped in the combined failure of its customers. Eventually, they will fail and stop paying, ultimately threatening the very existence of the platform and the intertwined ecosystem. However, it takes two to tango and there is the possibility that the platform other base their businesses on is not performing. If the platform is the reason the customers offer substandard services it can have remarkable effects on the development of an entire ecosystem. Hence the platform needs particular attention to its performance and services.

Still platforms indubitably changed they way new products come to market. Just look a couple of years back, when starting a company creating a website, services, hosting mail and data was a hassle. Everybody had to redo everything all over again. With platforms providing modular services all that can be created today with very little effort and pay-as-you-go plans with little upfront investments.




About Marko

Marko Wenthin, 45, married, one daughter, lives in the outskirts of Berlin

Marko started his career with an apprenticeship in Deutsche Bank. There he spent 16 years in many diferent positions in retail, corporate and investment banking. Out of his 16 years he spent 10 abroad, in Argentina and in Poland. In Poland he became youngest Board member of a bank in Poland at the age of 30 and acted as COO overseeing IT, operations, back and middleoffices. In his mid 30s he changed the corporate career for entrepreneurship. He founded a couple of SaaS businesses and even a helicopter airline which due to the financial crisis of 2008 had to be shelved briefly before starting operations. He helped Asseco, one of the largest IT software companies in Poland to expand in Western Europe and acted as non exec Board member in a couple of the acquired companies. In 2009 he created Sofort Bank, sister company of SofortÜberweisung, which later on was sold to Klarna. Sofort Bank became Deutsche Handelsbank. In order to bring banking to the next level he co-founded solarisBank and defined Banking as a platform in the real world. He is a regular speaker at FinTech events.


About Chris M Skinner

Chris M Skinner
Chris Skinner is best known as an independent commentator on the financial markets through his blog, TheFinanser.com, as author of the bestselling book Digital Bank, and Chair of the European networking forum the Financial Services Club. He has been voted one of the most influential people in banking by The Financial Brand (as well as one of the best blogs), a FinTech Titan (Next Bank), one of the Fintech Leaders you need to follow (City AM, Deluxe and Jax Finance), as well as one of the Top 40 most influential people in financial technology by the Wall Street Journal’s Financial News. To learn more click here...

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