The most successful companies today are those that disrupt the natural order of business and life. Platform technology companies such as Netflix, Facebook, Amazon, Uber, Airbnb, and the introduction of cryptocurrency enjoy sustained success due to a level of innovation that has rendered “business-as-usual” and “life as usual” obsolete. The platform model offers great potential to keep customers and industry interconnected through a growing number of aggregators and processes such as embedded finance, including mobile wallets and cross-border payments. In addition, continuous innovation in the platform economy has spurred growth while ensuring consumer trust in business and technology for those innovative enough to gain that trust.
The need for sustainable development goals (SDGs)
The platform economy is becoming a priority for governments around the globe.1 Many chide the disruptive impact of some platforms, citing a “platform capitalism” that fosters market inequality, while promoting the potential for a “platform cooperativism” through a social solidarity economy (SSE). The basis for these economic activities is to prioritize social profitability instead of purely financial profits.2 Although the platform economy has already disrupted many highly-regulated sectors, including retail, transportation, accommodation, and finance, the economic and social importance is bound to increase as this economy expands in the number of users, workers, and platforms themselves. Most online platforms remain small in terms of employment and revenues when compared to more traditional companies, but as they flourish globally and develop into multi-billion-dollar businesses in some cases, their future impact is not difficult to envision.
Particularly, the United Nation’s (UN’s) SDGs, a collection of interlinked global goals designed to be a “blueprint to achieve a better and more sustainable future for all,” represent an urgent call for action for global partnership by developed and developing countries alike to be achieved in a platform economy. According to UN officials, ending poverty and other deprivations must go hand-in-hand with strategies such as SDGs that are aimed at improving health, education, and the environment, reducing inequality, and spurring economic growth.
The SDGs include a set of 17 goals and build on decades of work by countries and the UN. They serve as the core of the UN’s 2030 Agenda for Sustainable Development, which calls for bold and transformative steps to shift the world onto a sustainable and resilient path. The goals are expected to stimulate action over the next 15 years to achieve inclusive and sustainable economic growth and decent work for all in all countries. Among the 17 SDGs are eight goals that are relevant to digital platforms3 in particular, thus highlighting the impact that aggregators can have.
Role of aggregators and achieving sustainability
The platform model is based on enabling value-creating interactions4 between producers and consumers while constructing an ecosystem that facilitates relationships that are necessary for value exchange. If SDGs are to serve as the catalyst for change, then platform companies will need to accelerate that change to become a major force of the sustainable development being sought.
Aggregators play a crucial role here due to their capability to provide consumers with personalized services and financial management tools and to serve as a bridge between financial service providers and their clients. An understanding of one’s financial data footprint can assist in determining future financial choices, leading to access to more appropriate products and services while affording institutions the ability to know their customers better. Particularly, the area of financial inclusion has become a highlight of the SDGs and therefore an important function of today’s aggregators. Banks, telecommunications players, and others have deployed mobile and digital technologies to change the economics and to extend the reach of financial services—like credit and insurance—to previously excluded populations.
Today’s aggregators, including platforms such as Stripe, are also going to be brought along the innovative ride being driven by embedded finance, especially given the shifting behaviors and expectations among customers given the coronavirus pandemic. A study conducted in Fall 20205 based on a survey of nearly 150 fintech executives and industry leaders predicts that embedded finance will dominate the industry by 2030, which happens to coincide with the UN’s agenda for sustainable development. Respected thought leaders within the industry also expect embedded finance to change market structures and business models by 2030. Already, payments are moving in that direction with taxi applications and stores without checkouts. It’s also predicted that software companies will embed financial services within their offerings to attract and retain more customers. Moving forward, big tech will become aggregators of bank and fintech services such as payments, lending, insurance, and investments into everyday business. It’s also been said that over time, all companies will become fintech, and this is going to be driven by embedded finance.
Research on digital platforms in terms of their economic, social, and environmental impacts, as well as on ways to improve their sustainability, is still in its infancy as a relatively new phenomenon. The platform economy is both a driver of sustainable and unsustainable production and consumption. Since platforms come in different sizes and dynamics, it will be crucial to focus on comparable business models, and there will be a need to analyze the sustainability of digital marketplaces operating on a global scale ongoing. Marketplaces have caused the “death of distance.” With a few clicks of the keyboard, merchants are now able to sell products almost anywhere in the world, and consumers have gained unprecedented choice and convenience. The platform revolution has opened up myriad new opportunities as well as new challenges in meeting global sustainability goals.
Maintaining privacy, security, ethics
The UN’s Sustainable Development Group acknowledges that the proliferation of digitalization and the use of big data bring with it the potential for security and ethical risks. The Guidance Note on Big Data for Achievement of the 2030 Agenda sets guidance on data privacy, protection and ethics. The increasingly extensive use of data by large and small platforms alike has prompted calls for antitrust scrutiny on the assumption that massive data collection by platforms leads to harmful entrenchment in their respective markets. Much like the concept of financial inclusion, the more that digitalization is available to more populations, including those who are not “tech savvy,” or remain untrusting of technology, democratization of data will become an imperative, in order to avoid being trapped due to ignorance (or complexity) of privacy and security issues. The key is to make data accessible enough to the average person that they do not need to seek the assistance of IT. Some consider data democratization to be the foundation for self-service analytics, and recent research from MIT Sloan Management Review reports that more than 77% of survey respondents saw an increase in access to useful data over the past year.
This increased accessibility raises questions about privacy, security, and ethical standards and questions related to what types of data are being collected, where data are stored, how secure that storage is, how data is used by those collecting it and potential third parties, and ultimately how is user consent obtained, particularly among those whose access to technology is not consistent. Ethically speaking, there must be a point at which technology-enabled collection of an individual’s life details becomes too intrusive. Even if society and industry are learning the “rules” today in real time, industry has an inherent responsibility to tread carefully and to consider that consumers have rights regarding how their data is used and who possesses it.
Because many aggregators operate under limited regulatory oversight and are not subject to regulations that registered financial institutions are subject to, appropriate self-governance is the ethical standard. All consumers should be able to expect clearly communicated privacy and data security measures through a terms-of-use policy that includes:
- disclosure of where data and credentials are shared and/or sold
- use of encryption if it is utilized when retrieving data
- length of time that data are retained
- process of purging or disposing of data once a contracted relationship ends.
Processes related to any data breach, including protocol on notify consumers and financial institutions about a breach should also be easily visible and understood. Information on liability, or lack thereof, as well as potential insurance coverage should be standard as well.
The digital industrial revolution
Today’s platform businesses are part of what’s become a digital industrial revolution. Access to a growing number of individuals is now more achievable than ever before, and the silos of inequity are being challenged on a global level. Global leaders are relying on industry to employ platforms through a lens of trust and inclusion to create a more frictionless marketplace where transactions and feedback between all consumers and service providers are part of the ecosystem. This mindset is a marked change from the traditional (pipeline) business model, but is a necessary shift in consciousness for businesses to survive and thrive if we are to resolve our world’s biggest problems. It’s a mentality that can be applied globally by lowering barriers to entry and through the controlled sharing of data in an open, democratic, collaborative ecosystem.
As the platform economy grows, so does its impact on our economy, society and environment. Online marketplaces are founded on the belief that everybody should be part of the global market. The principles of inclusiveness, growth and prosperity are embedded in marketplace business models. Yet, it remains unclear whether, on balance, these platforms are leading towards a sustainable world. These are exciting times for those who want the opportunity to get us there collectively through the implementation of SDGs and allowing them to guide platform privacy, security, and ethical standards as the transformation to digitalization continues to evolve.
- Morell MF, Espelt R, Renau Cano M. Sustainable Platform Economy: Connections with the Sustainable Development Goals. Sustainability. 2020;12(18):7640.
- What is Social Solidarity Economy? Ripess.org. Accessed online: http://www.ripess.org/what-is-sse/what-is-social-solidarity-economy/?lang=en
- Zarra A, Simonelli F, Lenaerts K. Sustainability in the Age of Platforms. CEPS.eu. ISBN 978-94-6138-736-3. Accessed online: www.ceps.eu//wp-content/uploads/2019/06/Sustainability-in-the-Age-of-Platforms-2.pdf
- Papadopoulos A. The Power Of Platform Businesses: How To Enable Value Creation. IMS. Accessed online: www.imanagesystems.com/digital-marketing/power-platforms-enable-value-creation
- Fintech 2030: The Industry View. TribePayments.com. Accessed online: https://www.tribepayments.com/fintech-2030-industry-report-2020
About the Author:
Ananya Bhattacharyya is an enterprising, process-driven, and globally experienced product leader at MasterCard. She has a strong technical and financial services background and continually strives to guide creative vision, organizational change, customer-driven innovation, product transformation and strategic thinking in her professional career. For more information, please email firstname.lastname@example.org and follow her on
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