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2 July 2021

Vertical Ecosystem Integration in Financial Services

To truly digitally transform your financial organisation, vertical integration ecosystems is the next step to the future.

Before the pandemic, mergers and acquisitions of fintech firms were at an all-time high. Nearly 2,700 deals were made in 2019 alone, while 2020 was lucky to see just over 1,221. But while the outbreak caused a drop in deals, demands for innovation in financial services continue to rise.

That leaves many organisations in a bind as to how to cost-effectively procure tailor-made solutions that allow them to digitally transform their business.

In the past, the division has been between vertical integration and ecosystems. As organisations seek new ways of improving their value chain, a new trend has emerged. There is now a desire to merge these two concepts into a hybrid model – a vertical integration ecosystem.

Defining vertical integration ecosystems

To understand what a vertical integration ecosystem is, we first need to separately review vertical integration and ecosystems. In vertical integration, the company owns its assets and has complete control over its value chain. But regulation changes mean that it falls on the company to ensure that its tech is up-to-date at all times, which can become a costly endeavour.

Meanwhile, an ecosystem is when a company outsourced to numerous vendors. Here, we have issues with security, inflated costs, incompatible software or a clunky user experience, and a lack of control. Using an ecosystem model can help a company leverage cutting-edge technology without worrying about the upkeep, but they must often sacrifice control and precision.

When we look at combining these two models, it appears as a single vendor offering a robust ecosystem. In this scenario, the process is simplified, streamlined, and the company is often offered more control over their offerings. While they don’t have to worry about the upkeep or continuing innovation of the ecosystem, clients can customise their tools to match their current value chain.

Prytek’s innovative ecosystem

As we’ve seen, a vertical integration ecosystem provides a greater level of flexibility without necessarily sacrificing customer experience.

Prytek’s Business-Operating-Platform-as-a-Service (BOPaaS) is one example of such a business model. Founded in 2017, Prytek is an innovative technology group with over 250 clients and 1200 employees worldwide. Prytek builds and invests in its technological ecosystem in the financial services, cyber and tech education, and HR sectors to:

Amplify value – An ecosystem nestled in a vertical integration model provinces the chance to access a rich array of data. With the ability to pick and choose specific solutions within the partner offerings, companies also can customise their own solution that best matches their value chain needs – thus providing value to the end consumer.

Build strategic infrastructure – With a vertically integrated ecosystem, organisations can better decide which programs to keep in-house or acquire while leaning on the ecosystem for their various other needs. They can also take advantage of cutting-edge technology within the ecosystem as soon as it becomes available – so they are never left behind. Applications like BlackSwan allow clients to leverage Ai to solve complex business challenges.

Retain and scale human interactions – With an ecosystem, it can be easier than ever to streamline and automate manual tasks and free up more time for employees to engage in meaningful customer service. For example, its CallVu platform combines technology with human interaction for an end-to-end customer experience.

Optimise underutilised assets – Often, a company may have acquired assets that it is not using to the fullest extent. An array of partners in an ecosystem can help organisations reevaluate and optimise any such assets. Prytek’s OpenLegacy system allows companies to easily integrate complex legacy systems with their ecosystem.

Reduce costs – Overall, a single vendor with many partners in an ecosystem is likely to reduce overall costs. First, companies can pay for what they use in the ecosystem, and they go through a single vendor, thus preventing bloated expenses. Next, they don’t have to worry about the upkeep or compliance of their toolset, as the vendor covers these costs. However, they can use the solutions within their value chain at every level – as if the programs were in their own vertical.

Expanding the ecosystem

One of the biggest benefits of this ecosystem model is that it is continuously growing. For example, through investing in TipRanks and bringing the platform to Prytek’s ecosystem, the technology group is offering more options to financial services clients. With data from TipRanks, this rapidly growing start-up is transforming the way investors and traders pick stocks.

As we can see, when it comes to surviving and thriving, financial organisations require disruptive technologies and constant innovation. A vertically integrated ecosystem is just the solution for most firms, which want to balance overhead with cost-effective strategies for growth.

Author: Andrey Yashunsky, CEO and Founder, Prytek