“Without a customer, you don’t have a business – all you have is a hobby.” This famous quote of marketing guru Don Peppers dates from earlier this century but customer focus, these days, is more important than ever. To offer customers a total solution, ever more companies in different industries are building digital ecosystems. Finding different services or applications all under one roof is convenient for consumers but does not come without its challenges for the entities setting up these marketplaces. A recent state-of-the-market survey shows that organizations’ investments in technology depend on the maturity stage they find themselves in.
Whether you are a financial institution, a travel or media company or an HR service broker, you realize that you are not the only supplier of services to your customers. A traveler will likely need travel insurance, a hire car, a hotel room. So it’s only logical for airlines to partner with third parties to offer these extra services from a central location. The same applies to payroll providers: they can enrich their portfolio by adding expense tracking applications, time registration apps, etc. A commissioned study conducted by Forrester Research on behalf of TrustBuilder in March 2021 showed that eight out of ten financial service companies are directing their investments for the next 12 months towards developing digital ecosystems and marketplaces.
Technological challenges blocking ecosystem development
The study also revealed the technological challenges that organizations face when they engage in digital ecosystems. As more data, these days, are flying around between applications, adequate data protection of customer data and security become areas of concern, along with the integration of legacy systems into these ecosystems. The further digitization advances, the more organizations need to open up their network, which leads to more exposure to cyberthreats. To match customers with relevant services, organizations need to share customer data bidirectionally. When financial services companies offer third-party services, they connect through APIs, which require airtight security, both on the edge and between services. Another issue is connecting to Identity Providers to verify the identity and privileges of users. Almost half (45%) of the respondents in the survey highlighted security as their biggest concern, followed by challenges with customer data (35%) and legacy technology that further complicate integration (32%). These legacy applications were never built with openness in mind, are perhaps not even refreshed in real time and are now blocking innovation.
Technology vendors that help build digital ecosystems
Not all companies are moving at the same speed in developing digital ecosystems, and the study categorizes companies as leaders, novices or intermediates. Naturally, novices face more technological hurdles on their road towards digital ecosystems, but even leaders recognize they can’t necessarily achieve all of this on their own. So they are either increasing their engagement with particular technology providers or welcoming a new set of technology partners to help them deliver their ecosystem initiatives. Unsurprisingly, because security is one of their main challenges, this is the area where firms are looking for new vendors. For instance, specialists in fraud detection and Identity and Access Management (IAM). Also propping up the list is API aggregation, because there is a lot of complexity out there potentially with open finance and open banking initiatives. 37% of respondents in the study said they will turn to providers of IAM solutions, while three out of ten are engaging API aggregators. Using these partners will help organizations offset the risks and skills gap when building digital ecosystems.
Assessing maturity levels
Depending on their maturity level, organizations will face different security hurdles as they digitize their services and improve on their customer experience. This affects the technology solutions and technology vendors they will partner with. Companies in the first stages of the maturity model will focus on capabilities such as Single Sign-on or passwordless security while organizations in the higher stages will invest more in API security or connectivity with other applications.
Do you want to identify the roadblocks on your journey towards digital ecosystems? If so, check out our Maturity Assessment service.
For more info on the State-of-the-market study, download our whitepaper or rewatch the webinar featuring Forrester Senior Analyst, Jacob Morgan.