Александр Пашкин

For 2-sided marketplaces, an extension to the traditional marketplace business model -- incorporating financial services to enable new types of on-platform transactions -- is the key to unlocking that higher level of opportunity. In this essay, we'll explain why this apparently simple change will have enormous implications, and how it has already begun to define the next stage in marketplaces. We'll also explain why what we're calling fintech-enabled marketplaces have the potential to upend both traditional offline industries and incumbent marketplaces alike.

To expand on what we introduced above, fintech-enabled marketplaces are marketplaces with tech-enabled financial services built directly into the platform. Recently, we're seeing marketplaces begin to offer services like:

As marketplaces continue their relentless push to capture more of the transaction and provide improved user experience, the path and opportunity for marketplaces to embed financial services is clear. For instance, high transaction value capture by financial services is one reason why 21% of Fortune 100 companies are financial services companies.

By integrating the third party and bringing financial services on-platform, fintech-enabled marketplaces will be well-poised to provide a superior user experience, allowing them to break into major industries with historically low tech penetration. On the flip side, by adding a marketplace network effect to financial services, fintech-enabled marketplace companies will enjoy a level of defensibility not traditionally seen in financial service companies.

By providing key financial services that enable the transaction, marketplaces can drastically improve the incentive for both sides of the market to keep their transactions both online and exclusive.