Business Model Design

With the previous analysis on the value – creation, delivery and capture mechanisms, this section will provide an analysis on aspects surrounding the design of the business model in the strive towards a Small Business Utopia. As this study takes the perspective of third-party providers, where the Open Banking platform and third-party provider Tink have been used as a case-study, the discussion on business model design will revolve around how these types of financial organizations can design their business model in order for them to create, deliver and capture value from the Main Street Business Segment. With this being a cross-sectional study where the phenomenon will be explored in terms of how the situation is today (Saunders et al., 2009), the analysis will focus on aspects considered important today and thus largely neglect possible future developments.

101 This study has looked upon the business model as the underlying logic of a firm, where all choices made have consequences, and the most underlying and important choices are the value – creation, delivery and capture mechanisms (Oswalder et al., 2010; Chatterjee, 2013; Magretta 2002;

Casadesus-Masanell and Ricart, 2010). In terms of value creation, it has previously been argued that third-party providers should avoid Radical innovations as it potentially could undermine the banks, and the relationship and trust that banks have built up with many of their customers. Instead, it has been suggested that third-party providers aiming to provide Main Street Businesses with Open Banking services could leverage the banks´ trust and relationship built up, in order to create value for the segment. However, while it has been suggested that banks currently are in a better position than any newer and smaller FinTechs or other financial organizations, being able to deliver services which are well-functioning and of high quality can be regarded as the most important aspect. While the value created and delivered through the Open Banking services can be considered as being of such high importance, coupling the offering with a great and fitting business model can be regarded as equally, or even more important in order for an organization to successfully capture value from the targeted segment. This can, for instance, be seen with Tink, where they pivoted their business model into offering their technology and services towards financial organizations. By doing so they have been able to grow into becoming one of Europe´s leading Open Banking platform.

With the above insights in mind, it could be argued that third-party providers could be suggested to pursue a business model which is designed around complementing the bank and their offerings, rather than it being set up to directly compete with the banks and their offerings (Guibaud, 2016). In this, third party-providers could pursue a producer role, where the bank is set up as a distributor where them as an established actor leverages innovative solutions created by third parties, which are then offered to the end-customer via the bank´s already broad installed base (Gozman et al., 2018).

Although Tink and the success they found with their “producer” business model (ibid), can not necessarily be applicable nor fitting for all third-party providers operating within Open Banking, our findings on the attitudes of the Main Street Businesses suggests that a similar business model arguably could be suitable. As such, it is argued that, in order to create, deliver, and capture value from and to the segment, the attitudes as well as the factors affecting those have to be incorporated when designing the business model. Additionally, when introducing solutions that have the potential to impact both the existing players within the industry, as well as the intended beneficiaries, it is even more important to know the market before entering (Rayna & Striukova, 2009; Grant, 2016). It is therefore crucial

102 for any third-party providers to adapt their business model (Lee & Shin, 2018) in accordance with the attitudes of the end-users, as their acceptance results in higher willingness to change their practices and adopt and start using new technologies (Succi & Walter, 1999). With Main Street Businesses having moderately positive attitudes towards using Open Banking services, where both trust and STB were found to be influential factors. As well as it was found that they perceive there to be a great deal of value in many of the different suggested services, where a service helping with taxes and payroll being the service which was deemed the most valuable. As such, it could be suggested that a third-party provider aiming to provide the segment with Open Banking services would need to adapt their business model to fit with the Main Street Businesses. As suggested by Hallsworth et al. (2018), companies who aim to develop a business model in this context should adapt it based on trust, and the significance it has for the target market. As such, our findings as well as the results of the study made by Hallsworth et al. (2018) would not only suggest that trust is a significant factor for small businesses. But that it is essential, and that the segment to a very high degree currently are very reluctant and does not consider adopting Open Banking services coming directly from any newer and smaller organization which have not built up any trust towards their customers.

Additionally, as Main Street Businesses displayed the most positive attitudes towards adopting services aimed at helping them with taxes and payroll, a good strategy could be to start offering those services that are perceived as being the most demanded and needed. As the Main Street Business segment has been argued to be somewhat reluctant towards adopting new technologies (OECD, 2018;

Hallsworth et al., 2018), as well as being among the later ones to adopt any new technologies (Rogers, 1962; Franceschinis et al., 2017), third-party providers should aim to adopt their business model and offering accordingly. As such, approaching the segment with a carefully thought out strategy coupled with a limited amount of services, where only the most demanded and crucial services are offered in order to make the Main Street Business segment more comfortable with using innovative financial services can be deemed an appropriate strategy in an attempt to start offering the segment Open Banking services. In this, it is according to I2, of significance to eloquently and clearly explain and display what the services actually can do, by showcasing concrete solutions and use cases, where the fact that it actually is Open Banking services is irrelevant in the communication with the customers.

With the above analysis in mind, it can be argued that third-party providers aiming to design a business model which can create, deliver and capture value to and from the Main Street Business

103 segment, should leverage and form partnerships with banks. However, not only would this require banks to change into a more collaborative model (Remolina, 2019), where many banks already have formed, or are planning to form, a partnership together with FinTechs (Tink & YouGov, 2020). But it would also require banks to become more innovative and adapt to the new industry landscape, where it by I1 is suggested that this is necessary in order to not lose out on a lot of their business.

However, with the head start and luxurious position which banks currently hold; they are in a position which can be regarded as key in order for Main Street Businesses to be provided with Open Banking services. Thus, third-party providers aiming to design a business model which will provide the Main Street Business segment with Open Banking services, in a strive towards a Small Business Utopia, are suggested to leverage the traditional banks, where they act as the consumer facing provider in the role of a distributor of the services.

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