J.P. Morgan Payments

The rise and rise of ecosystem-based businesses 

5 minute read
Companies are realizing that they can be stronger together by pooling expertise, technologies, and products to take advantage of market opportunities they couldn’t otherwise reach 


The global economy is going through a major reorganization. Businesses are evolving beyond their individual platforms to create ecosystems, integrating their services into a single consumer experience. This shift is having a significant impact—McKinsey estimates that business ecosystems could generate between $70-$100 trillion in sales by 2030, representing approximately 30 percent of the total world economy.1

To understand the impact of ecosystems, we need to understand how they work. According to Jason Tiede, J.P. Morgan’s Global Head of Corporate Development and Partnerships, ecosystems have three main characteristics: 

  • Firstly, they comprise a network of companies that enter into an intentional business relationship. The participants sell diverse but complementary products and services that are often from different industries and involve different business models. They may even be competitors.
  • Secondly, they have a shared client base interested in all these products and services, as this set of customers makes it lucrative for the businesses to partner. 
A good example of an ecosystem is electric vehicle charging stations. The electricity provider, automotive company and retail outlet all work together to let a customer charge their car. Other businesses can also be involved—a phone company, for example, can help direct the driver to the charging location. 

Usually at least one participant orchestrates the venture, and all of the businesses share in the profits. This financial sum is typically greater than a single participant could generate on their own, and it incentivizes them to work closely to provide the most frictionless customer experience. 

Seamlessness, in particular, is the quality that distinguishes successful ecosystems. Imagine that a driver is low on battery and their car automatically routes them to the nearest charging station, while an app on their phone allows them to pre-order their coffee. Or the charging station sends a push notification to the driver when electricity prices are low, allowing them to purchase charging credit ahead of time at a cheaper rate. Strategies like these are what drive ecosystem growth.     

Connecting the dots

Payments play a crucial role as a layer of connective tissue between the companies that make up a business ecosystem. To maximize convenience, customers must be able to transact across a wide range of businesses with a single swipe, tap or voice command. They don’t want to enter their payment details each time they make a purchase or go through an onboarding process whenever they’re routed to a new company on the network.  

Building this type of effortless payments experience is complex because it requires particularly close cooperation between the different ecosystem players. All participants must also support a wide range of payment methods so customers can pay how, when, and where they want. Those payments have to be fast, but speed can increase the risk of fraud, which means it must be carefully balanced with security considerations. 

A number of companies are vying to help ecosystems navigate these challenges. J.P. Morgan, for example, recently launched the Payments Partner Network, a “one-stop shop” to connect businesses with payments operators. “We have a network of hundreds of payment partners spanning most industries and use cases,” says Andy Woodbridge, who supports J.P. Morgan Payments and Commerce Partnerships. “It ensures we can support our clients for all their needs in various shapes and forms across the payments landscape.” For instance, a company may want to set up a new payment gateway to accept digital wallets; they can then use the network to easily see a list of verified providers and choose one that can best meet their needs.  

Future evolutions

Innovations in payments will help ecosystem businesses evolve in new ways over the years ahead. “Just as data can easily flow between countries, in the coming years there will be a more seamless flow of money across borders,” predicts Tiede. Several countries already have domestic real-time payment infrastructures and there are now governmental and regulatory efforts to sync these schemes together. Faster cross-border transactions will allow ecosystems to expand their scope and scale, and better integrate businesses from multiple countries or regions into the network, while also increasing their potential customer bases.  

Another important consideration is trust. Ecosystems comprise various businesses that may take different approaches to risk, so it’s likely we’ll increasingly see trusted parties anchoring networks in an agreed set of frameworks such as business fraud controls, consumer protections, and data safeguards. This, in turn, should boost consumer confidence and, as ecosystems spread their wings internationally, allow participants to enjoy a step-change in resilience and growth. 

Building ecosystems isn’t easy. But a future where a business doesn’t tap the potential of its ecosystem? That might be an even tougher call.   

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