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The financial world continues to be buffeted with uncertainty and turbulence, yet through it all the FinTech community perseveres — and even thrives. In this year's FinTech 100, leading technology providers increased their revenues from financial institutions to $58.1 billion, up nearly 10% in a very difficult economy.
October 12
CHICAGO – Halfway through a presentation on the state of the banking industry, IDC Financial Insights' Marc DeCastro showed a slide detailing Bank of America Corp.'s
"There's been a lack of investment in IT infrastructure, similar to what's impacting the U.S. with issues with highways and other [physical] infrastructure," DeCastro said during an event at the BAI show honoring the FinTech 100, an American Banker/Bank Technology News/IDC Financial Insights joint ranking of the largest tech firms based on revenue earned in the financial services sector.
The top-earning company for 2010 was Fidelity National Information Services Inc., which supplanted Fiserv Inc., the top earner in 2009's ranking. FIS was third in 2009.
Reliability and access to financial services will be among the major issues facing banks today and in the future, along with providing innovation that allows financial institutions to unlock new revenue opportunities in a regulation-heavy, economically challenging environment, DeCastro said.
That's the opening for FIS and other companies in the rankings, such as top-10 firms Tata Consultancy Services, Fiserv, SunGard Data Systems, NCR Corp., Diebold Inc., Lender Processing Services, First Data Corp., Nomura Research Institute and Infosys.
That means the popular plays in the year ahead will include new customer efficiencies, such as easier account-openings and access to funds and transaction information.
Ensuring reliable access to channels such as websites, mobile apps and contact centers is of particular importance considering the public mood surrounding banking amid national protests.
"Bankers are like the Chicago Cubs of industry right now, it seems like people are upset at the bankers," DeCastro said, joking that a cab driver in Chicago who told him "not to wear a suit." "It's not a good time to start having issues."
There are still plenty of economic issues affecting the banking industry, DeCastro said, such as a failure rate that, while improving, is still a problem.
While the number of bank failures easily surpassed triple-digit levels in 2009 and 2010, this year's pace should lead to fewer than 100 failures, DeCastro said.
Still, he said there are more than 800 struggling institutions, so the pipeline of possible failures is still high – leaving fewer clients for tech vendors in the future. "We feel the [struggles] are not over yet," DeCastro says.
The top firm in the FinTech ranking, FIS,
"The regulatory environment is very challenging, and we are looking for ways to help banks meet those challenges," said Frank Martire, FIS' president and chief executive, after the award ceremony.
The news is better for large tech providers, which are mostly outperforming the bank tech industry averages.
Revenue for the 125 ranked tech firms hit $107.6 billion in 2010, up from $99.5 billion in 2009 (The FinTech project also ranks the top 25 enterprise companies, or firms that earn less than 33% of their revenue from the financial services sector – IBM was the top earner on this list). And 25 of the 125 companies had yearly revenue growth of more than 20%, as opposed to only four that had losses of more than 20%. And many of the companies in the ranking had double-digit growth.
This growth comes amid stagnant overall bank technology spending, where yearly spending growth in North America, for example, has been less than 3% for four years in a row. The FinTech-ranked firms "seem to be doing very well in an economy that's still a challenge," DeCastro said.
The tech firm rankings were calculated after requests for financial information from thousands of technology companies that serve the financial services industry. Public data from Hoover's, Edgar, company filings and websites were also used.
