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Reflecting on the 2015 IDC Financial Insights FinTech Rankings

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REFLECTING ON THE 2015 IDC FINANCIAL INSIGHTS FINTECH RANKINGS

Karen Massey, Senior Analyst, IDC Financial Insights

Jerry Silva, Research Director, IDC Financial Insights

The 2015 IDC Financial Insights FinTech Rankings were announced on September 15, 2015, on the eve of Finovate NYC. This is 12th year the analysts of IDC Financial Insights have research the financial services technology market to spot macro trends in the industry, which companies are on the rise, which IT firms are dominating the technology world, and compile the “Who’s Who” among IT vendors to the financial institutions globally. The FinTech Rankings recognize the leading providers supplying the technology that powers the banking, insurance, and capital markets industries.

The IDC Financial Insights FinTech Rankings are based on calendar year revenue from financial institutions. The Top 100 include companies that derive more than one-third of revenue from financial institutions, while the Top 25 Enterprise include companies deriving less than one-third of revenue from financial institutions.

The Top 10 companies on the 2015 FinTech Rankings Top 100 are:

  1. Tata Consultancy Services (TCS)
  2. FIS
  3. Fiserv
  4. Cognizant Technology Solutions
  5. NCR Corporation
  6. Infosys Ltd.
  7. Diebold, Inc.
  8. SunGard
  9. Wincor Nixdorf
  10. Nomura Research Institute, Ltd.

This is TCS’s first time appearing at the top of the list, rising from #2 in 2014. In fact, TCS debuted on the Top 25 Enterprise list in 2004 and has experienced tremendous growth in financial services allowing a jump to the Top 100 and eventual rise to #1. FIS had been in the top spot since 2011 when it surpassed Fiserv, the prior reigning #1 company, after their acquisition of Metavante and Capco. But FIS has stirred the pot again with its purchase of #8 SunGard this year, which will likely return FIS to the top again in 2016.

The Top 5 on the FinTech Rankings Top 25 Enterprise are:

  1. IBM
  2. HP
  3. Microsoft
  4. Accenture
  5. Dell, Inc.

Movement among the Enterprise Top 25 ranks is minimal if not non-existent as there have been few significant financial services-focused acquisitions, and few changes to the composition of industry business mix across the years for these giants of technology.

Combined revenues for the FinTech Top 100 and Top 25 Enterprise companies were $172 billion in revenue in 2014, which is about the size of the Vietnamese economy, the 57th largest in the world. IDC Financial Insights data shows that global IT spend will reach $500 billion by 2019.  More than 65% of those IT budgets at financial institutions are directed to third-party services and solutions (as opposed to internal investment of IT staff), meaning that financial institutions spend more than $300 billion annually with IT providers, and almost 60% of that external IT investment is with these companies featured on the IDC Financial Insights FinTech Rankings.

Further, IT investment by financial institutions has been growing at 3-5% annually for the past decade. It is notable that revenue for the IT companies on the first FinTech Ranking in 2004 was just over $80 billion, far surpassing the average growth in IT investments to reach $172 billion today. While growth has certainly been achieved, acquisition and consolidation has made these influential fintech giants what they are today.

And consolidation has been good for institutions. Large providers are getting larger because they are acquiring assets to broaden their offerings and provide more holistic solutions to institution clients. After years of lip service regarding trusted partnerships between vendors and their clients, we have witnessed evidence of that promise coming to fruition in the recent past and expect to see more. Consolidation is also happening within the CIO’s domain as institutions want fewer vendor relationships to manage, from a logistical and financial perspective, and also establish relationships that are more strategic than tactical.

Furthermore, IDC Financial Insights believes that institutions will continue to consolidate IT providers in favor of those who can guide and support them through Digital Transformation initiatives and Third Platform technologies, specifically Big Data and Cloud, as internal resources come up to speed on these new transformative technologies. Indeed, institutions are benefiting from increased size, scale, breadth of offering, and expertise from these largest companies on the FinTech Rankings.

So from where will growth come for the FinTech Rankings companies? These folks are certainly focused on Digital Transformation and Third Platform technologies. But specifically growth will come from helping financial institutions sort through the issues of today and tomorrow. We at IDC Financial Insights are starting to draft our 2016 Top 10 Predictions, which will be out in November 2016, and a sneak peek tells us both institutions and IT vendors will be busy. Drivers behind IT investments include themes such as thinking differently about risk management, staying relevant among disruptors to financial services, modernizing while running the institution, among several others. Specific to these drivers, IT vendors will need to have the skills and solutions to assist their institution customers with initiatives including leveraging cloud, the Internet of Things and cognitive systems, managing and profiting from customer engagement, next generation payment systems, and leveraging big data across the gamut of functions in need across the organization (marketing, compliance, risk, etc.).

These companies on the 2015 IDC Financial Insights FinTech Rankings have proven through their financial success that they have tackled these pressing industry needs in the past, so are well positioned to assist institutions through this challenging, yet exciting, time.

The 2015 IDC Financial Insights FinTech Rankings has become a critical tool for financial services institutions to use during strategic planning and to review whenever they consider new investments in 3rd party solutions.  The rankings are also an important way to measure the health and growth of the global financial services technology industry every year.  In addition to the rankings and the products listed above, IDC Financial Insights publishes a comprehensive report about the year’s findings that is available to view or download on the IDC web site.

For more information, please visit  2015 IDC Financial Insights FinTech Rankings

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UK seeks G7 consensus on digital competition after Facebook blackout

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UK seeks G7 consensus on digital competition after Facebook blackout 1

LONDON (Reuters) – Britain is seeking to build a consensus among G7 nations on how to stop large technology companies exploiting their dominance, warning that there can be no repeat of Facebook’s one-week media blackout in Australia.

Facebook’s row with the Australian government over payment for local news, although now resolved, has increased international focus on the power wielded by tech corporations.

“We will hold these companies to account and bridge the gap between what they say they do and what happens in practice,” Britain’s digital minister Oliver Dowden said on Friday.

“We will prevent these firms from exploiting their dominance to the detriment of people and the businesses that rely on them.”

Dowden said recent events had strengthened his view that digital markets did not currently function properly.

He spoke after a meeting with Facebook’s Vice-President for Global Affairs, Nick Clegg, a former British deputy prime minister.

“I put these concerns to Facebook and set out our interest in levelling the playing field to enable proper commercial relationships to be formed. We must avoid such nuclear options being taken again,” Dowden said in a statement.

Facebook said in a statement that the call had been constructive, and that it had already struck commercial deals with most major publishers in Britain.

“Nick strongly agreed with the Secretary of State’s (Dowden’s) assertion that the government’s general preference is for companies to enter freely into proper commercial relationships with each other,” a Facebook spokesman said.

Britain will host a meeting of G7 leaders in June.

It is seeking to build consensus there for coordinated action toward “promoting competitive, innovative digital markets while protecting the free speech and journalism that underpin our democracy and precious liberties,” Dowden said.

The G7 comprises the United States, Japan, Britain, Germany, France, Italy and Canada, but Australia has also been invited.

Britain is working on a new competition regime aimed at giving consumers more control over their data, and introducing legislation that could regulate social media platforms to prevent the spread of illegal or extremist content and bullying.

(Reporting by William James; Editing by Gareth Jones and John Stonestreet)

 

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Britain to offer fast-track visas to bolster fintechs after Brexit

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Britain to offer fast-track visas to bolster fintechs after Brexit 2

By Huw Jones

LONDON (Reuters) – Britain said on Friday it would offer a fast-track visa scheme for jobs at high-growth companies after a government-backed review warned that financial technology firms will struggle with Brexit and tougher competition for global talent.

Finance minister Rishi Sunak said that now Britain has left the European Union, it wants to make sure its immigration system helps businesses attract the best hires.

“This new fast-track scale-up stream will make it easier for fintech firms to recruit innovators and job creators, who will help them grow,” Sunak said in a statement.

Over 40% of fintech staff in Britain come from overseas, and the new visa scheme, open to migrants with job offers at high-growth firms that are scaling up, will start in March 2022.

Brexit cut fintechs’ access to the EU single market and made it far harder to employ staff from the bloc, leaving Britain less attractive for the industry.

The review published on Friday and headed by Ron Kalifa, former CEO of payments fintech Worldpay, set out a “strategy and delivery model” that also includes a new 1 billion pound ($1.39 billion) start-up fund.

“It’s about underpinning financial services and our place in the world, and bringing innovation into mainstream banking,” Kalifa told Reuters.

Britain has a 10% share of the global fintech market, generating 11 billion pounds ($15.6 billion) in revenue.

The review said Brexit, heavy investment in fintech by Australia, Canada and Singapore, and the need to be nimbler as COVID-19 accelerates digitalisation of finance, all mean the sector’s future in Britain is not assured.

It also recommends more flexible listing rules for fintechs to catch up with New York.

“We recognise the need to make the UK attractive a more attractive location for IPOs,” said Britain’s financial services minister John Glen, adding that a separate review on listings rules would be published shortly.

“Those findings, along with Ron’s report today, should provide an excellent evidence base for further reform.”

SCALING UP

Britain pioneered “sandboxes” to allow fintechs to test products on real consumers under supervision, and the review says regulators should move to the next stage and set up “scale-boxes” to help fintechs navigate red tape to grow.

“It’s a question of knowing who to call when there’s a problem,” said Kay Swinburne, vice chair of financial services at consultants KPMG and a contributor to the review.

A UK fintech wanting to serve EU clients would have to open a hub in the bloc, an expensive undertaking for a start-up.

“Leaving the EU and access to the single market going away is a big deal, so the UK has to do something significant to make fintechs stay here,” Swinburne said.

The review seeks to join the dots on fintech policy across government departments and regulators, and marshal private sector efforts under a new Centre for Finance, Innovation and Technology (CFIT).

“There is no framework but bits of individual policies, and nowhere does it come together,” said Rachel Kent, a lawyer at Hogan Lovells and contributor to the review.

($1 = 0.7064 pounds)

(Reporting by Huw Jones; editing by Jane Merriman and John Stonestreet)

 

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G20 to show united front on support for global economic recovery, cash for IMF

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G20 to show united front on support for global economic recovery, cash for IMF 3

By Michael Nienaber and Andrea Shalal

BERLIN/WASHINGTON/ROME (Reuters) – The world’s financial leaders are expected on Friday to agree to continue supportive measures for the global economy and look to boost the International Monetary Fund’s resources so it can help poorer countries fight off the effects of the pandemic.

Finance ministers and central bank governors of the world’s top 20 economies, called the G20, held a video-conference on Friday. The global response to the economic havoc wreaked by the coronavirus was at top of the agenda.

In the first comments by a participating policymaker, the European Union’s economics commissioner Paolo Gentiloni said the meeting had been “good”, with consensus on the need for a common effort on global COVID vaccinations.

“Avoid premature withdrawal of supportive fiscal policy” and “progress towards agreement on digital and minimal taxation” he said in a Tweet, signalling other areas of apparent accord.

A news conference by Italy, which holds the annual G20 presidency, is scheduled for 17.15 (1615 GMT)

The meeting comes as the United States is readying $1.9 trillion in fiscal stimulus and the European Union has already put together more than 3 trillion euros ($3.63 trillion) to keep its economies going despite COVID-19 lockdowns.

But despite the large sums, problems with the global rollout of vaccines and the emergence of new variants of the coronavirus mean the future of the recovery remains uncertain.

German Finance Minister Olaf Scholz warned earlier on Friday that recovery was taking longer than expected and it was too early to roll back support.

“Contrary to what had been hoped for, we cannot speak of a full recovery yet. For us in the G20 talks, the central task remains to lead our countries through the severe crisis,” Scholz told reporters ahead of the virtual meeting.

“We must not scale back the support programmes too early and too quickly. That’s what I’m also going to campaign for among my G20 colleagues today,” he said.

BIDEN DEBUT

Hopes for constructive discussions at the meeting are high among G20 countries because it is the first since Joe Biden, who vowed to rebuild cooperation in international bodies, became U.S. president.

While the IMF sees the U.S. economy returning to pre-crisis levels at the end of this year, it may take Europe until the middle of 2022 to reach that point.

The recovery is fragile elsewhere too – factory activity in China grew at the slowest pace in five months in January, hit by a wave of domestic coronavirus infections, and in Japan fourth quarter growth slowed from the previous quarter with new lockdowns clouding the outlook.

“The initially hoped-for V-shaped recovery is now increasingly looking rather more like a long U-shaped recovery. That is why the stabilization measures in almost all G20 states have to be maintained in order to continue supporting the economy,” a G20 official said.

But while the richest economies can afford to stimulate an economic recovery by borrowing more on the market, poorer ones would benefit from being able to tap credit lines from the IMF — the global lender of last resort.

To give itself more firepower, the Fund proposed last year to increase its war chest by $500 billion in the IMF’s own currency called the Special Drawing Rights (SDR), but the idea was blocked by then U.S. President Donald Trump.

Scholz said the change of administration in Washington on Jan. 20 improved the prospects for more IMF resources. He pointed to a letter sent by U.S. Treasury Secretary Janet Yellen to G20 colleagues on Thursday, which he described as a positive sign also for efforts to reform global tax rules.

Civil society groups, religious leaders and some Democratic lawmakers in the U.S. Congress have called for a much larger allocation of IMF resources, of $3 trillion, but sources familiar with the matter said they viewed such a large move as unlikely for now.

The G20 may also agree to extend a suspension of debt servicing for poorest countries by another six months.

($1 = 0.8254 euros)

(Reporting by Michael Nienaber in Berlin, Jan Strupczewski in Brussels and Gavin Jones in Rome; Andrea Shalal and David Lawder in Washington; Editing by Daniel Wallis, Susan Fenton and Crispian Balmer)

 

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