COVER STORY 7 Sberbank’s Platform Play Grab, a South East Asian super app, started out as offer a single sign-off for everything from banking a ride-hailing app before branching out into finan-services to food delivery or a doctor’s appoint- cial services. Sberbank, Russia’s largest financial ment. “We have roughly 30 services that glue institution, is doing the reverse.these systems together and that is what makes the In November, Sberbank completed a joint venture ecosystem more sticky,” he says. “The objective is partnership with Mail.Ru with co-investment ofto make people want to stay and use our services.” up to $1 billion in the food delivery and ride-hailing Today Sberbank’s digital ecosystem services businesses Delivery Club and CitiMobil. The two contribute only about 1% to 2% of Sberbank’s ove- companies also announced a separate partnership rall revenues but “it is rapidly growing and it is on to “boost the development of the digital economy the way to becoming a significant contributor to and AI-powered products in Russia.”our bottom line,” he says.it difficult to apply the habits of high performance to their loans, asset management and insurance that is well regu- Sberbank also extended its reach into the dri-position in a fast digitizing world: clarity of vision, ambi-lated for consumer protection, without being constrained verless vehicle market through a joint venture withJ.L.S.tion, energy, productivity, influence, necessity, courage. by the need to establish a large physical branch network. Cognitive Technologies, an established player inThey are trapped by out of date organizational structures, “Today our focus is on the Singapore license application, the software industry that develops driver assistan-IT, product development methods, metrics, and find it but we always remain open to opportunities in other ce systems based on artificial intelligence.harder and harder to attract the best talent.”markets as they become available,” says a company And, the bank is branching out into technologyToo often, he says, incumbents are resorting to keeping spokeswoman. The risk for traditional banks and insurance services. In 2019 it launched Sber Cloud, a cloud solutions marketplace that targets corporateshareholders happy with share buy-backs and dividends, companies is that, unless they start to make bolder moves clients ranging from SMEs to large enterprises.rather than investing in business model innovation and right now, they become unprofitable legacy utilities with In a presentation to investors the state-ownedgrowth. “The good news is that incumbents have assets slowly eroding impact on the role and function of money, bank claims its ever-expanding tech-lead digital that are extremely valuable, if only they can be leveraged says Torrance. ecosystem can now meet most of people’s non-fi-in new ways: customer bases, supplier relationships, nancial needs, including e-commerce, education,trusted brands, cashflow,” he says. “My experience is Research by the London Business School and University of entertainment and medical services. And like the that there are plenty of opportunities for incumbents to Oxford supports that thesis. “Our study of the rise of super so-called super apps, it is using these offerings as generate new growth and value, especially in complex app platforms has revealed that its success hinges on a a way of onboarding customers and cross-selling industries where their domain knowledge and relationships new source of firm value that is increasingly valuable in the products. Although Sberbank has a higher return on equity are so deeply embedded... But they must be willing to age of the Fourth Industrial Revolution: payments data,” than most banks worldwide (23% compared to an fightback against old ways of thinking and acting.”says Nina Teng, a Doctoral Researcher. “It’s important average 8%), relying on pure banking services as a for incumbents to consider who will own and control this business model is no longer an option as margins payments data when deciding whether to create their own are shrinking in the sector worldwide, says David Opportunities platform or to partner with an existing one; in addition to Rafalovsky, Sberbank’s Chief Technology Officer. being mindful of the great responsibility that comes with “In contemplating our future we decided that an In many major industries such as consumer electronics, data ownership with respect to safeguarding consumer ecosystem business model that leverages the transport, advertising, entertainment and retail ‘challenger’ data privacy and protection.” strength of our brand and tech know-how would All these developments create even stronger imperatives allow us to offer new and unique products to our tech companies such as Apple, Uber, Google, Netflix and 120 million + customers.”Alibaba have become the dominant incumbent, but not for traditional banks and financial institutions to create The difference between a holding company and in finance... yet. Tech companies, entrepreneurs and VCs bolder platform strategies, says Torrance. an ecosystem is that in an ecosystem you “have a are eyeing up this $22 trillion global market right now, and “If you look at Return on Equity (RoE) scenarios for business glue and a technology glue and the indivi-fintech innovation is rife. incumbent banks, it’s not looking rosy,” says Torrance. “If dual components work seamlessly together,” says According to a recent study by Google, Temasek and Bain digitization continues to bite, and more new entrants like Rafalovsky. One example of that is to& Company, almost 40% of Singaporeans are underserved challenger banks, fintechs, hyperscale platforms and super by their banks, notes Grab. “Similar to our work in trans- apps nibble away at the most profitable parts of their bu- port, we have taken it as our mission to make financial and siness, then you could see a slide into very unsustainable banking services just as accessible to them as transport - commercial positions. Even if interest rates rise, the global all from the palm of their hand,” says a spokesperson. economy warms up and the banks get super efficient - and Grab says it believes the value proposition of digital banks that’s a lot to ask - we’re looking at tiny RoE growth.” is clear: Southeast Asia is significantly underbanked, but The only way forward to new growth and value is for banks mobile penetration is high. Digital banks offer an opportu- to think beyond traditional banking with a three-part plat- nity to build a mobile-only platform offering deposits, form and ecosystem strategy, he says. The first step is to