A digital ecosystem integrates services, technologies, and users, enabling seamless access to needed goods and services. These ecosystems operate across various verticals such as e-commerce, finance, food technology, media, entertainment, and healthcare. Let's explore how they function and why they are essential for businesses today.
What is a Digital Ecosystem? Consider a traditional financial institution, which historically focused on core banking services like loans, card services, and deposits. As the internet and smartphones gained prevalence, maintaining competitiveness and meeting modern consumer demands made innovation necessary. Banks began to develop mobile applications, making banking services more accessible and straightforward, thereby attracting a broader client base.
To leverage its vast user base, it expanded its offerings beyond traditional banking services to include food delivery, entertainment, medical services, and taxis.
Now, a user can take a taxi home, order dinner, and watch a movie—all within Sberbank’s ecosystem, moving seamlessly with a single account across all services.
Types of Digital Ecosystems Digital ecosystems can evolve in two primary ways:
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Integrated Services: services are gathered under one roof and interconnected, allowing users to access them seamlessly. The head company may either acquire existing businesses or launch new services.
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Technology-based: a prime example is Apple, whose ecosystem includes a suite of devices—phones, tablets, PCs, laptops, smart watches, and more—complemented by services like music streaming, film streaming, and app stores.
Another classification of ecosystems is based on platform openness:
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Open: External developers can create and deploy digital products. Slack, for instance, allows the creation of apps and chatbots within its platform.
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Closed: environments where a company maintains strict control over user data, content, and advertising interactions. Nike, for example, manages a sports service ecosystem, curating content and selecting trainers for its training apps.
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Hybrid: External developers can contribute, but within the organizer’s framework. Tinkoff manages all financial operations within its super app, while lifestyle services are outsourced to partners.
Hybrid models are particularly popular, combining proprietary products in specific areas like payments with lifestyle services offered by various providers.
Ecosystem Benefits McKinsey analysts predict that by 2025, business ecosystems could generate up to 30% of global GDP. This growth is driven by the consumer desire to resolve many of their needs in one place, ideally online, with added benefits. Businesses that can fulfill these needs significantly boost their market competitiveness.
For users, the main advantages of ecosystems are their convenience and value. When technology based, ecosystems provide seamless connectivity and enhanced functionality. For software-driven ecosystems, typically, a single account grants access to multiple services with unified support. Benefits may also include attractive pricing, early access to exclusive products or services, additional discounts, and loyalty programs with points that can be redeemed within the ecosystem.
Ecosystems also offer substantial advantages to companies, beyond financial gains. Users integrated into an ecosystem tend to show higher loyalty to the brand, and companies can quickly expand their customer base.
Why Businesses Need a Digital Ecosystem
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Enhances the competitiveness of all participants.
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Generates revenue from diversified activities.
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Expands the user base.
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Reduces customer acquisition costs.
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Increases brand value and recognition.
How to Build an Ecosystem Using a bank as an example, here are three foundational strategies for building digital ecosystems:
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Develop New Products Internally: Start with core services to attract the main audience, then expand to meet broader financial needs—transport, entertainment, travel, food, and health.
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Acquire Existing Services: Purchase and integrate companies that meet everyday consumer needs, managing them within the bank’s digital platform.
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Form Partnerships: Manage the financial direction internally while outsourcing daily services to partners, integrating their services into the platform.
In summary, a digital ecosystem not only combines various services and technologies for a seamless user experience but also significantly boosts a company’s market presence, potential revenue and customer loyalty. Companies can build ecosystems by developing new products, acquiring ready-made services, or establishing partnerships.
