I have regular conversations with business owners and promoters–including fintech entrepreneurs–who consistently miscategorize what they have built as a “platform” and simultaneously as “the next big thing” within their circle of influence. It is important to set the record straight on defining what a platform is and what a platform is not so we can appropriately categorize where each product fits within the overarching ecosystem of cloud computing and technology-driven finance.
Understanding the true definition of a platform–fintech or otherwise–will help to quickly categorize whether a particular application fits within the definition and how it is treated in the overall architecture. A platform is defined broadly as:
(1) : a usually raised horizontal flat surface; especially : a raised flooring (2) : a device or structure incorporating or providing a platform; especially : such a structure on legs used for offshore drilling (as for oil)
and more specifically in computing as:
the computer architecture and equipment using a particular operating system
I think it provides color to take the first, more broad definition to heart when discussing fintech or regtech platforms. If we consider a platform as a stand or structure where other items may be built or placed, that helps paint a visual picture. An oil platform with attached dwelling units, rigs and drills is a good example (hence the included image above). Similarly–and in parallel to definition number two above–a true fintech platform includes the ability for build-out and build-up of other “units” or in this case applications. For example, Windows, iOS and Android are all platforms where other applications could be built “on,” much like an oil platform.
Platforms typically provide an architecture or APK or API that provides access to the “operating system” from other third party developers. Platforms are also horizontally-extensible. That is, they can be used across ecosystems. For instance, a true fintech platform would closely mirror that of a regtech or medtech system. Such a platform could be easily white-labeled to provide tools that are ultimately industry-agnostic between the highly-regulated medical world and financial services. In other words, true platforms are industry agnostic. Not only are platforms horizontal, they are also vertical. That is, they have the ability to scale vertically to nearly any size and need. Luckily today’s cloud-computing platforms provide the proverbial juice, allowing other operating systems and platforms to exist in a vertical way.
Contrast a true platform with many of the more simple software applications available to the market today. Many with claims of a true platform identity fail miserably and miss the mark on many of the items outlined above. Most developed solutions to today’s fintech problems are nothing more than applications. A virtual data room, regardless of its complexity is–in and of itself–not a true platform.
The first couple cuts of Facebook mirrored that of an application, not a true platform. It was not until Facebook built-out its developer ecosystem including API/APK tools that Facebook came into its own as one of the largest internet platforms. User scale alone does not equal a platform. Uber and Snapchat–both multi-billion dollar companies in their own right–are not platforms. They are very successful applications. In fact, neither could exist without other available platforms including iOS and Google Android.
No less than 10 supposed fintech promoters have shown me their wares, vigorously describing what they had built as a platform. However, most are–by strict definition–applications without the ability to bring in outside resources for additional bolt-on apps.
Next time a platform promoter asks if you would like to see a demo of their system, ask yourself, “could this be industry agnostic?” “Can I build stand-alone, revenue-generating applications on top of this system using some type of open architecture?” “Does this mirror a desktop or mobile operating system?” “Could there be broad interest to have developers on-boarded to the OS in order to reach critical mass and an eventual full-blown ecosystem?” If the answer is no across the board, it’s probably not a platform.