In Europe alone, marketplaces were worth a combined €685B. Fintech-enabled marketplaces have enterprise value/sales of 6.7x, compared to 5.3x and 4.6x for other marketplaces and financial services, respectively. Online marketplace sales accounted for a fifth of all consumer spending. Pairing financial services with online marketplaces is known to create outsized returns. Online marketplaces are now accelerating and taking advantage of “plug and play” embedded fintech solutions. They are creating new monetization streams, improving user experience, and boosting customer retention.
Insurtech Traction
Socotra, a core platform provider, reported the inclusion of twelve leading insurtechs in its App MarketPlace to provide software apps connected to its policy core, making the platform the fastest way to bring new products to market. Built on its cloud platform, Socotra App MarketPlace enables insurers to add new features and services in minutes. The partners developing apps for Socotra App MarketPlace include CAPE Analytics, property intelligence for buildings across the US and Canada. Others offer digital transformation, emerging technologies aimed at insurance, low/no-code SaaS platform. Also included are a firm that leverages human approaches DataArt; API developer of predictive scoring, life event monitoring Fenris Digital; claims management solution Five Sigma.
Payments Space
Payments processing giant Stripe has an apps marketplace, bringing third-party accounting, analytics, CRM, marketing and e-signature features directly into Stripe. While Stripe had offered extensions for several years, this was limited to transfer Stripe features and data into products. The marketplace works in reverse, creating new possibilities for developers to build additional functionality directly in the Stripe Dashboard – among top requests received from customers. While Stripe had evolved into a $95 billion juggernaut in payments processing, customers still needed to use a suite of tools with Stripe as part of their day-to-day operations. Examples include issuance of refund notices, or management of customer support tickets. This constant context switching — opening and closing multiple apps — invariably causes chaos, errors and slows everything down. The Stripe Apps Marketplace with apps included from companies such as Xero, Dropbox, Mailchimp, Ramp, DocuSign and Intercom, unifies many of the key tools that companies need to use as part of their payments and finance workflows.
Case in Point: The Salesforce AppExchange
With 10 million installs, AppExchange from Salesforce might very well be the world’s largest and longest-running business cloud marketplace. From Fortune 500 enterprises to emerging start-up companies and with thousands of apps and experts, partners’ apps on AppExchange help accelerate digital transformation journeys for customers. Started in 2006, AppExchange took 11 years to reach 5 million installs by 2017. In the next 4-5 years, they’ve added another 5 million installs.
Partners have added thousands of new apps. Customers, on the other hand, have submitted hundreds of thousands of reviews, which have helped other customers make informed decisions while solving key business challenges. Whether ready-to-implement dashboards to track user adoption are needed or out-of-the-box integrations with enterprise solutions, there always seems to be an app available. AppExchange is regularly trumpeted as the future of Salesforce, as it unites partners and customers in ways that create significant growth opportunities.
IDC estimates that for every $1 of revenue generated by Salesforce, five times that number is generated by its partners. A back-of-the-envelope calculation shows that’s $20 billion in 2020 revenue generated by 2,000+ partners selling software on the AppExchange. These partners raised over $4 billion in venture capital in 2020, with Salesforce itself being the most active investor.
The long-term success of marketplaces depends on their ability to seamlessly integrate customer solutions into their platforms. The resulting frictionless experiences swaying customers are leading to growth in stature of fintech-enabled marketplaces. Private capital raises by products aimed at marketplaces validate these trends. More importantly, there remains huge potential in serving unserved and underserved global communities that these marketplaces help exploit.
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