Two weeks ago we published our analysis of the top 10 financial institutions by market capitalisation throughout the decade. We discovered then that the 5 institutions that made it to the top in 2020, overthrowing on their way some of the institutions that ranked in 2010, were all based in platform business models. The extensive use of technology had allowed them to leverage the externalities of digital, creating more efficient business processes that answer the changing demands of clients.
Here is how that decade of technological disruption in finance looked:

Mulling over the success of platform business models, we have set out on yet another journey to understand the resource intensity of the top 10 financial institutions in 2020. More specifically, we have compared the market cap and the number of employees in each of these institutions. This is what we have found.
Platform-based FIs have (much) fewer employees than traditional FIs

There is an acute difference between the number of employees there are in traditional financial institutions in the top 10 and the platform-based ones. When looking at the chart, it stands out that none of the platform-based institutions has over 24,000 employees, when the average for traditional institutions in the top 10 is 251,650 employees per institution.
This goes from less than 10,000 employees for Ant Group (the subsidiary of Alibaba) to 450,000 for ICBC.
The ranking from least to most numbers of employees is: Ant Group, Tencent, Mastercard, Visa, Paypal, China Merchant Bank, Bank of America, JP Morgan, China Construction Bank, ICBC.
The difference is an astonishing over 14 times more employees in traditional FIs than platform ones, on average.
Platform-based FIs yield more value per employee
Intrigued by this difference, we have compared the value that companies derive from each employee, by dividing their market cap by their human capital. The result is a reorganization of the Top 10 chart.

Platform-based financial institutions generate more capitalisation per employee than traditional FIs in the same chart – the average is more than 10 times fold! Platforms lead inarguably the chart when reorganized for this ratio. Ant Group heads the ranking with a market-cap-to-employee ratio of an incredible $26.1m/employee – 50 times more than the $0.5m/employee of China Construction Bank.
Technology is allowing for exponential capitalisation of financial institutions
So, what explains the difference between traditional and platform financial institutions when it comes to their employee numbers and distribution of value? The answer is almost cliché: technology.
Where banks focus on lending and borrowing, payment companies leverage technology to facilitate payments. Facilitating payment transactions require fewer people to deploy than a traditional banking model that also requires risk management and asset-liability matching. As a result, platforms have managed to make it to the top 10 in the last 10 years and, while doing so, secured a high return on their employee investment.
Platform-based financial institutions resemble more technology companies than banks
It is now clear how platform models leverage technology to achieve more with less. But, how far away are they from real technology companies? When comparing platform FIs to Google and Facebook, whose successful business models are based on platforms, the answer is that they are very similar, at least in terms of market capitalisation per employee.

Facebook and Google have an average ratio of $11.5m/employee. This number is much closer to the platforms’ average of over $17.6m per employee than to the $1.1m/employee figure of the other 5. It must be noted that platform-based financial institutions have numbers that are sometimes even higher than Facebook or Google!
Technology in finance is now an industry minimum requirement
Does this immediately mean that platform companies in finance are, in fact, technology companies? Not necessarily – Visa or Mastercard are first and foremost financial companies. But it does throw some light into the path that finance is taking, including technology as a key asset in its business model. The extensive inclusion of technology in finance has now become an industry minimum requirement and it will quickly throw a line between those who will prosper in the industry and those who will fall behind – as the last decade has already shown.
For more information on our sources and analysis click here.