-
Bankers, investors and analysts stop short of declaring a bubble. But the fintech startup and investor fields are getting crowded, and there's bound to be a culling of the herd.
September 28 -
The term has gone from a common brand name to a catch-all for innovative technologies in financial services to a somewhat patronizing plural noun to describe startups and their founders.
October 5
The Fintech Forward ranking for 2015 has a new number one: Tata Consultancy Services. The Mumbai-based company is now the largest fintech vendor that derives more than a third of its revenue from financial services. FIS and Fiserv are a close second and third, respectively.
TCS had 17% growth in year-over-year in financial services revenue. The company achieved this by increasing their engagement rates and gaining a greater share of clients' wallets. It expanded its business process outsourcing services for capital markets firms to manage their margin, regulatory and risk considerations.
There are nine new companies on the list. The flood of fintech investment seems to be raising all the boats in the water: this year's No. 100 comes in at $22 million in revenue, whereas last year's was $12 million. Higher revenue companies with new ideas in lending, BPO, project management, and omni-channel banking made this year's list; some smaller payments, infrastructure, and card processing companies were nudged off.
An August 2015 BAI study asked "Around which of the following objectives are you building your mobile banking efforts?" The answers — added convenience, customer retention, lowered costs, and increased share of wallet — exemplify one portion of the growth of fintech revenue.
New entrants that support that trend are ARCA, Backbase, Cassiopae, CPI Card Group (which acquired EFT Source), Mphasis Ltd., DCI (Data Center Inc.), Efron Consulting, and SourceHOV.
The fastest-growing fintech companies hail from the U.S. to Europe to India to address the global business of financial services. We see fintech providers offering regional solutions to meet specific regulatory or cultural requirements, such as Path Solutions (Islamic banking).
Only a few large acquisitions resulted in familiar names leaving our rankings. Clear2Pay was purchased by FIS and SourceHOV acquired BancTec.
This may signal a slowdown in fintech vendor acquisition and a greater focus on organic growth — TCS as an example.
Enterprise Companies
In the Enterprise rankings of the largest diversified technology providers to banks, there is little movement from last year with the greatest change a drop of four places (Hitachi from 18 to 14 due to a smaller financial services revenue percentage). Most of the Enterprise list stayed the same or moved a spot or two up or down.
Microsoft moved to number three, swapping spots with Dell. Those vendors that offer cloud-based services, big data, and support of mobile offerings are staying the course and maintaining their positions.
Companies to Watch
At the other end of the spectrum from the Enterprise list are the Companies to Watch. The advisory group of industry experts reviewed over 100 companies to determine the ones to present as the Companies to Watch for 2015. Several criteria were considered in picking the list.
First, we looked for fintech providers who already have success in the industry. There are lots of new entrants with big ideas, but a much shorter list of new entrants that have successfully sold and implemented their solutions. Tech buyers in our industry are looking for innovation, but it has to be balanced with financial soundness and an understanding of what it takes to support the requirements of a financial institution.
The second thing we looked for were firms offering solutions that can solve today's problems. For example, Ripple Labs settles funds in real-time, ZenBanx offers branded multi-currency accounts, Feedzai predicts and prevents payment loss, and AcceptEmail presents customers' bills on mobile devices.
The mobile customer experience seemed to be in most product descriptions and rightfully so. Customer acquisition and retention is critical. Other vendors are promising to capture more of their customers' wallets.
No news there; however, with omnichannel and mobile as the tools and the millennials as the market, these companies will be fun to watch.
Ray Graber is a consultant based in Burlington, Mass.
