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105 experience the improved services, no matter if their bank is providing the most benefit or not - Although this is dependent on that the bank in question embraces Open Banking as an opportunity, which should not necessarily be taken as a given. However, as mentioned, more research is clearly needed within this area to confirm our results.
7.2 Practical Implications
Looking at the practical implications, the value- creation, delivery, and capture mechanisms can individually bring insights into the specifics of a business model. However, as aforementioned, it is when these three factors are combined that a business model design can be looked upon holistically (e.g. Osterwalder et al., 2010). In the pursuit of a Small Business Utopia, one might argue that there are several learnings from this study that needs to be taken into consideration when designing a business model. Here, we will rely on Osterwalder et al.’s (2010) business model canvas to combine the creation, delivery and capture findings. However, as financial aspects such as revenue and costs have been beyond this study’s scope, the parts relating to revenue stream and cost structure will be excluded.
In terms of the customer segments, businesses are as diverse as the people running them. This is why this study was delimited to look at those businesses that have had the most difficult time being served by banks i.e. the Main Street Businesses, and thus potentially could benefit greatly from a Small Business Utopia (Mills, 2019). Despite a small sample, this study has, by comparing the results with the findings from Hallsworth et al., (2018), been able to distinguish a few learnings which could be helpful for third-party providers in them looking to target the segment with Open Banking services.
For instance, Main Street Businesses tend to be less open towards adopting new technologies compared to other types of businesses, and the trust towards banks is high, regardless of how the relationship is perceived. This means that it is deemed more likely that Main Street Businesses would be more inclined towards using services from the banks over e.g. a start-up, despite them potentially being better at serving them with innovative financial services. Hence, following the business model adopted by Tink, it could be argued that working together with, or towards the banks is most likely the best option in order to increase adoption from the Main Street Business segment. However, as seen with the example of iZettle, it is as a third-party provider also possible to target the segment and end-customer directly. Although our analysis would suggest that it, at the time being, can be seen as
106 a riskier, and less viable option unless you have a trusted bank or institution supporting you. Moving on to the value proposition, it has been found that when delivering value to the Main Street Business segment, it will be important to skip the technicalities and keep the services simple. Here, an underlying purpose containing what problems you want to solve e.g. make tax and payroll matters easily handled will appeal more than technical specifications that might sound impressive. Hence, when striving towards a Small Business Utopia, making the value proposition easily understood and the products easy to use are arguably factors that should be prioritized. With this in mind, this study, in contrast to Hallsworth et al. (2018), do argue that it is possible that the small businesses are ready for Open Banking, as our sample are willing to pay for some of the Open Banking services proposed.
However, one might argue that they are simply not interested in the difficult-to-understand aspects.
As we have seen when them being presented with specific services, there is a massive discrepancy compared to other, more technical questions, which suggest that simplicity should be a priority over e.g. advanced solutions (at least initially). In terms of channels and customer relationships, a similar argument can be made. As Sweden is highly digital (OECD, 2018), and our sample seems to have vastly different relationships with their banks, one might argue that this is where third-party providers could be creative, and establish relationships either through banks or on their own, as both digital and physical channels could be plausible. However, as it is financial technology within a cashless society that is being discussed – primarily aiming for digital channels with a personalized, predictive behavior as in the case described in 1.4 could be regarded as potentially being more scalable in the long-run.
Moreover, learnings can be drawn from Gozman, Hedman et al. (2018) in terms of how to successfully accomplish this. In this, it is presumed that developing a business model where the banks work as a (1) platform, through which third-party providers’ solutions are distributed to consumers, but without the bank making neither an effort into distribution nor creation, could be a successful model. Alternatively, customer relationships could be built with the bank acting as a (2) distributor, where the third-party provider develops the solution and where the bank assists in the distribution of the service, by offering it towards their installed customer base. Both of these models are arguably supported by our findings and can be argued to be viable options, as they could work as an example of how both banks and third-party providers could find synergy through leveraging the banks’ trust as well as the third-party providers’ innovative solutions.
When looking at the left side of the business model canvas i.e. key activities, key resources and key partners, similar stories can be told. In terms of activities, it is as mentioned important to keep the
107 services offered towards the Main Street Businesses simple i.e. solving pain points in the most user-friendly manner possible (e.g. through one click). Through Hallsworth et al. (2018), one might argue that the Main Street Businesses are mainly interested in solving existing problems, rather than taking risks to solve issues that might show up in the future. In contrast, if the banks are the customers, such as in Tink’s business model, simplicity might not be as highly prioritized. Instead, one should rather focus on delivering a product which is superior in solving the problem in which it promises to solve, so that the banks’ customers will get superior service in turn. In this case, key activities will be closely related to key partners (the bank perhaps being the most prominent one in this case), and the activities should arguably be focused on providing the innovative solutions instead of e.g. establishing trust with the Main Street Businesses. Consequently, staying true to the underlying story to why the business was founded, is important (Magretta, 2002), and if the value proposition is phrased in the form of solving a problem - that will pave the way towards a Small Business Utopia - then key activities should first and foremost be prioritized around this area no matter if the third-party provider primarily targets the Main Street Businesses, or the banks. Finally, in terms of key resources, the relations with other entities (regardless if these are customers or partners), and the data on which products and services will be based upon are the most significant, regardless of if one develops solutions for private consumers or businesses. In the context of Main Street Businesses in particular, our results suggest that for the time being, trust cannot be overrated. If the Main Street Businesses establishes trust towards the third-party provider and/or their partners, and believes that they need what can be delivered, then that should be considered powerful. In this, to get to the point where the third-party provider has what the Main Street Business perceive they need, the product or service will be in the center. Hence, the value proposition could also be seen as a key resource.
To summarize, one might argue that when introducing Open Banking services to Main Street Businesses in the pursuit of a Small Business Utopia, a few business model design aspects are especially important: (1) Trust: gaining the trust of a Main Street Business is seemingly not an easy task, but yet important in order for them to be willing to adopt new technologies and innovations. In order to gain this trust, or leverage the trust built up by others, (2) having a good relationship with banks and/or other trusted organizations and large institutions is of importance. As Open Banking is becoming more established, third-party providers now have the opportunity to build something great together with the already established parties, but for that to become a reality, (3) a high quality product
108 and a corresponding value proposition which solves Main Street Businesses’ real problems, and which does not undermine the bank, but rather strengthens them can be considered important.