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FinTech in the Commercial Banking Sector: From Mass Market to Custom Processing Efficiency
Dec 14, 2016, by Andy EfstathiouMost FinTech engagements to date, with the exception of Blockchain, have been focused on consumer banking, a business characterized by high volume, high standardization, and low value transactions. By contrast, commercial banking is characterized by low volume, high customization, and high value transactions. And from an operational perspective, commercial banking uses higher value e[...]
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Gen 2.0 Customer Analytics in Banking: IBM Operationalizes its Capabilities
Sep 23, 2016, by Andy EfstathiouNelsonHall attended the IBM Forum for Financial Services event in New York this past week, which focused on how bank customers are using IBM’s cognitive offerings. IBM has been investing heavily in services and technologies to enable deeper insight into financial institutions’ customers, starting 18 months ago with the development of Watson-based analytic assets. IBM’s the[...]
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Infosys Places Big Bets on its Vision for Transforming Financial Services Operations Delivery
May 06, 2016, by Andy EfstathiouAt its recent Confluence client and stakeholder event, Infosys outlined its overall business strategy, based on the belief that BPO as it is delivered currently will be replaced by business process as a service (BPaaS) delivered on virtual stacks within a few years. Here I take a quick look at the Infosys vision and its application within financial services. Infosys described the transition to [...]
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How Retail Banks Prioritize Business Processes for Outsourcing
Mar 30, 2016, by Andy EfstathiouIn the retail banking BPS market assessment I am currently undertaking, several key trends are emerging regarding which processes are being outsourced and why. Banks do not outsource all processes at once, and selecting the highest priority processes to outsource can be reduced to an analysis of two key dimensions: Margin: where profit margins are highest, usually with new processes or produ[...]
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How Banks are Driving Down the Cost of Operations by Deepening Capital Infrastructure
Mar 16, 2016, by Andy EfstathiouFinancial institutions are seeking to deepen their operational capital in order to drive down cost of operations, increasing fixed cost and reducing variable cost (non-linear cost reduction). Here we look at two examples of how institutions are achieving this by partnering with third party operations vendors. Capital Markets Client with Broadridge In this example, Broadridge is providing a p[...]
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How Banks Can Develop a FinTech Roadmap to Drive Performance Improvement
Feb 11, 2016, by Andy EfstathiouMuch has been written about FinTech in banking. However, the focus has been on functionality enablement and consumer experience, with little insight into what the limits of FinTech benefits might be (and how that would shape an implementation strategy) or how banks can enable a roadmap that drives process improvement. Here I address both of these questions. What are the reasonable goals of FinT[...]
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Wealth Management Regulations Will Drive U.S. BPS Service Changes
Dec 03, 2015, by Andy EfstathiouIn Q2 2015, the U.S. Department of Labor issued a notice of proposed rulemaking, changing the definition of who can be considered a fiduciary to a retirement account or plan. The rule, which is currently in a comment period and should be implemented by Q2 2016, extends fiduciary responsibility to advisors, many of whom are currently under a less strict suitability standard of care. The U.S. govern[...]
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Worldline's Equens Acquisition Set to Change the Face of European Payments Market
Nov 17, 2015, by Andy EfstathiouPayments processor Worldline has agreed to acquire Equens for cash and stock in a multi-part transaction expected to close in Q2 2016, with both parties claiming this to be a transformational deal. Here we take a look at the details of the deal and assess the impact it will have on the European payments market. Criteria for success in payments processing The payment processing industry is a [...]
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Trans-Pacific Partnership Will Drive Next BPS Wave in U.S. Banking in the Decade Ahead
Oct 14, 2015, by Andy EfstathiouThe most important development in U.S. banking BPS in the last five years has just been announced (it may still not pass the U.S. Congress, but this analyst believes that too much pressure will be applied by industry for Congress to block it). The announcement is that the signatories to the Trans-Pacific Partnership (TPP) have reached an agreement on the terms of the trade agreement and will no[...]
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Analytics & Reporting BPS in Financial Services: Leveraging Complexity for Competitive Advantage
Oct 14, 2015, by Andy EfstathiouNelsonHall has just published a market assessment on Analytics and Reporting (A&R) BPS in banking and capital markets (BFS). This is an emerging BPS market with few significant competitors, and adoption from only a few institutions who are tier 1 banks in mature markets. There are many vendors of point A&R solutions, but no standard or dominant vendor has emerged to manage the process valu[...]
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The New Genpact Focuses on Pain Points in Banking Sector, Creating Utilities & Differentiating Services with Systems of Engagement
Jul 14, 2015, by Andy EfstathiouI recently attended Genpact’s industry analyst and advisor conference, at which the vendor described its approach to success in a time of rapid change for enterprise operations delivery. It believes that most enterprises are ‘cemented’ in the wrong place due to challenges with legacy processes underpinned by legacy technology, and that enterprises unable to adapt quickly will die[...]
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Capital Markets Firms Must Turn to Managed Services to Tackle Trading Cost Pressure
May 13, 2015, by Andy EfstathiouToday’s capital markets industry is severely capital constrained, and this is likely to get worse over the next few years. Internal deployments of new or improved solutions will become harder to resource (both in terms of cash and manpower), and managed services will be the preferred way to improve operations. Furthermore, managed services that offer to improve process and/or vendor manageme[...]
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HCL’s ISV Investments to Drive Legacy Modernization at Global Banks Over Next Ten Years
Nov 29, 2016, by Andy EfstathiouAt HCL’s recent adviser and analyst event, #HCLBigLeap, I spoke with their banking industry executives about HCL’s strategy and activities designed to drive application maintenance and modernization services, and specifically about the key ISV partnerships that are enabling this. Background HCL was founded in 1976, and had a strong focus on manufacturing during its [...]
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TCS Moves KYC Compliance Beyond Remediation to Customer Insight
Oct 07, 2016, by Andy EfstathiouOver the last five years, banks have been focusing their operational investments and executive mindshare on compliance, and in this time the cost of compliance activities has increased ten-fold. Also, in the last three years, the focus for compliance has been on customer profile activities that utilize reference data – e.g. Know Your Customer (KYC), Anti-Money Laundering (AML),[...]
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Adventures in Blockchain Technology in the Banking Industry: Cognizant’s Experience
Sep 05, 2016, by Andy EfstathiouI attended Cognizant’s biannual analyst event in New York recently and spoke with their head of blockchain consulting. Cognizant has been investing heavily in services and technologies to enable the digital enterprise, including the blockchain technology stack. Eighteen months ago, Cognizant began developing blockchain assets based on various open source frameworks, and today they have o[...]
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How RPA is Helping Banks to Enter New Markets & Diversify Offerings
Jul 22, 2016, by Andy EfstathiouThe media, and vendor marketing departments, have described RPA as a compelling technology for enterprises, based on its perceived ability to reduce operational cost. However, our review of case studies and BPS vendor offerings reveals a more complex set of drivers at work. Here I take a brief look at examples of the application of RPA in the banking sector. The banking industry has been ch[...]
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Platform-Based BPS: Driving Process Efficiency & New Business Model Adoption in Retail Banks
Jul 07, 2016, by Andy EfstathiouHere I take a look at how platform-based business process services (BPS) is yielding benefits for retail banks – specifically, delivering manual processes with greater efficiency, increasing automation, and delivering transaction products at scale. Delivering manual processes with greater efficiency Retail banking (RB) BPS is a large-scale, mature business with high adop[...]
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Payment Vendors' Growth Slows As They Face Two-Year Battle to Preserve Market Share
May 07, 2015, by Andy EfstathiouOver the past few weeks the major payment processing vendors have reported first quarter 2015 financial results, and they show a noticeable slowdown n y/y growth from 2014 (refer to NelsonHall Tracking Service articles for detailed analysis of the quarterly results). Summary results for Q1 2015 (in USD unless stated otherwise) are as follows: Card networks: Mastercard: +2.7%&nbs[...]
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Capgemini's iGATE Deal Capitalizes on Key Market Drivers in Operations Services and Financial Services
Apr 28, 2015, by Andy EfstathiouCapgemini announced today its intention to acquire IGATE. Capgemini is offering $48 per share, or $4.04bn, a premium of ~5% over current IGATE share price. IGATE had debt at end 2014 of $686m and cash on hand of $192m. This offer gives IGATE an enterprise value of ~$4.53bn. Capgemini is thus paying a massive 15.5 x 2014 earnings ($292m) and nearly 3.6 x 2014 revenues. The acquisition [...]
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How New Banking Regulations Will Impact Banks, Customers, and Vendors in 2015/2016
Mar 26, 2015, by Andy EfstathiouBanks have been struggling to adapt to changing, expensive regulations, and 2015 and 2016 will see further implementation requirements requiring large investments to achieve compliance. Here is a review of some of the more important ones and a look at the implications for bank operations strategy. Key regulations taking effect over the coming months are: EMV (Chip-based payment cards) for[...]
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Worldline Outlines its Path to Growth
Feb 19, 2015, by Andy EfstathiouWorldline, which IPOd in May 2014, has announced results for full year 2014 and has presented its views on the payments market, its business roadmap, and its successes to date. The results, below, are subject to adjustment when Worldline files its financial reporting statements in late March: Revenues were €1,149m, up 2.8% y/y Operating margin be[...]
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Securities Services Vendors Face Strong Headwinds as Downward Revenue Pressure Set to Accelerate in 2015
Feb 05, 2015, by Andy EfstathiouQ4 2014 results from the top five U.S. headquartered securities services firms indicate that revenue growth for securities and custody services is slowing down. The two largest global custodians, BNY Mellon and State Street, along with Citibank, reported revenue decline in calendar year Q4 2014. The figures below show change in securities services revenue versus the prior quarter (q/q[...]
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Tech Mahindra’s SOFGEN Acquisition Enhances Core Banking SI Capabilities and Drives Presence in Wealth Management
Jan 16, 2015, by Andy EfstathiouTech Mahindra has agreed to acquire SOFGEN to enhance its core banking systems integration (build, run, operate) capabilities. The acquisition is expected to close by the end of March. Swiss-headquartered SOFGEN is a specialist in Avaloq and Temenos platforms and also has capabilities in TCS BaNCS and Misys. SOFGEN has 450 employees, including >70[...]
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Payments Processing Services Market Heats Up: Financial Results of Six Key Vendors Show What it Takes to Win
Nov 06, 2014, by Andy EfstathiouChanges in banks’ regulatory capital requirements for businesses are leading banks to exit or downsize lines of business and increase the focus on other lines of business. Payments is an area where banks and non-banks are significantly increasing their commitments. Over the next five years the payments industry will change its entire shape, structure, and offerings. In the past, the complexi[...]
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Accenture’s New Strategy: Implications for Scalability in Banking BPO
Oct 16, 2014, by Andy EfstathiouNelsonHall recently attended Accenture’s annual analyst meet in New York City. We had the opportunity to discuss operations (BPO and IT infrastructure management) market initiatives, a major focus area for Accenture, representing $6bn in revenues (~20% of total revenues), with Accenture executives. Accenture and is betting heavily on “Digital” to create the “new Accentur[...]