Digital Ecosystems in Financial Services driven by Embedded Finance Platforms in South Africa

Abstract

Context: Technology, business models, regulation, and strategy performs a substantial role in the end design of banking services and products.

Problem: Digital technology start-ups in the form of fintech’ are now developing products and services traditionally developed by banks using disruptive strategies and business models. Banking still remains an essential service, but it has evolved over the years since the introduction of fintech’s into the financial services ecosystem. This new wave of innovation within the financial services industry is driven by embedded finance. Embedded finance means that financial services are embedded into digital channels and experiences of 3rd parties with the underlining services still offered by the bank. This shift has led to the creation of digital ecosystems being created in financial services whereby banks are creating partnerships with ecosystem participants like digital start-ups (fintech’s) to distribute their products. The ecosystem is enabled through digital platforms in the form of API marketplaces. Not much research exists on the study of digital ecosystems in financial services driven by embedded finance platforms.

Approach & Objective: The research paper provides insights on how digital ecosystems are being created within the financial services industry driven by embedded finance regulation and market activities in developing markets like South Africa with applicability to other developing markets.

Keywords: Digital Ecosystems, Embedded Finance, Digital Economy, Digital Tech Start-ups and Digital Platforms.