The financial services industry is facing challenges like never before.
Competition is increasing as traditional players battle for market share with new, non-traditional financial institutions in a world that is increasingly digital and mobile. The problem is the majority of organisations have outdated IT systems when they are desperately in need of a digital edge to meet these challenges. As a result we are seeing an increase in technology investments by financial institutions.
Analyst firm Celent predicts total spending on IT by banks across North America, Europe, and Asia-Pacific will grow to US$188 billion in 2014, an increase of approximately 4.4% over 2013.
According to research we unveiled last week reinforces this view. The technology market for financial services is truly big business with multi-million dollar contracts regularly being made available for tender.
The report 'How to influence Fintech buyers' was conducted by independent research agency MRops. Senior decision makers were interviewed about what influences their selection of technology vendor at different stages of the purchasing process. 50% of respondents were from companies employing at least 25,000 people, and 34% of those interviewed were a Board Member, President or a C-level executive.
The results show just how lucrative the market is:
• One in five financial institutions makes a single investment of $10m+ in technology annually
• Financial institutions make at least one major technology investment of $100,000+ every six months
• The average of the highest investments made in the last 12 months was $7,273,000 USD
The challenge for vendors looking to capitalise is how to influence the sales process. This has become increasingly difficult as there is rarely a single decision maker.
According to respondents 75% of all IT investment decisions in financial institutions involve up to 20 people, with 15% involving 50 people or more. This is because individuals that have a direct influence on the technology purchase are disparate across the business - marketing, security, compliance, operations, etc. And as technology investments grow in size and deals take on company-wide and often global significance, the number of decision makers involved in a purchase has dramatically increased.
With so many people involved in the decision making process, selling to a large financial institution has become a 'consensus sale'. Whether it's marketing, payments, compliance, security or investment related technology, a vendor will need to demonstrate value to a diverse and demanding buying audience.
Marketing has a critical role to play in helping vendors stand out from the crowd. Unfortunately, most marketers and agencies are working 'blind' and missing quantitative data on how decision makers at financial institutions identify and select technology vendors.
The research fills this information gap.
We know which channels influence longlisting (influencer networks including analysts, consultants and peers), what's important when whittling down to a shortlist (industry reputation and providing unique insights) and what vendors need to do to seal the deal (demonstrate value for money and exceptional service support).
We also know what information FinTech buyers are looking for but don't current receive (hard evidence and proof points to support marketing messages).
The FinTech market is lucrative but the sales process is complex. Vendors need to gain every edge they can if they are to navigate it successfully.