Remarking Banking for a World of BigTech Ecosystem: An Exploratory Case Study of Ant Financial and Amazon in Banking

Abstract

Banking is to a far-reaching extent being re-imagined and re-created in China by BigTechs leveraging their existing significant user bases, vast consumer data, technology ecosystems, culture of customer centricity and deep funding pockets. This paper sets out to explore this contemporary phenomenon of BigTech in banking by (1) investigating the underlying dynamics that have made BigTech’s recent move into banking possible and (2) analysing the strategic considerations and incentives behind this move. To achieve this aim, we adopt the theoretical model of technology ecosystems from Adomavicius et al. (2007) to build a conceptual framework for the construction and analysis of two exploratory cases studies of Ant Financial and Amazon. This framework is contextualised by, first, incorporating literature informed demand-side forces, and, second, incorporating a strategic variable based on insights from expert interviews with industry leaders and white papers from leading industry practitioners. Through data triangulation and cross-analysis of our two cases studies, we find three similarities in the underlying dynamics; first, the focus on developing modular and shared core capabilities within component technologies. Second, the importance of integrating additional internal business infrastructure to further create value for the focal technology and ecosystem, and, third, a latent demand from neglected segments. The strategic consideration behind moving into banking was found to be a customer-centric effort to solve strategic business problems for the individual BigTech’s platform users and business ecosystem. We contribute to the literature of technology ecosystems and evolution by, first, illustrating how the model of technology ecosystems can be contextualised and made company-specific, and still identify paths of influence, and, second, by illustrating how the internally controlled parts of the technology ecosystems were particularly important in the evolution and the competition from the BigTechs. From a practical point of view, we hypothesise that banking could be on the verge of being re-imagined for a world of digital ecosystems. We argue this by extrapolating the recent success and strategy of ecommerce related BigTechs in finance. Lastly, the application of our conceptual framework revealed three potential refinements, hence we propose to model for consumer trust, government forces and BigTech’s customer dependencies.