Author: Ronak D

In the Age of Ubiquitous Payments: Convergence of Technologies | Sherpas in Blue Shirts

Payments has continuously evolved from physical currency through mobile-based payments and further improving the experience with contactless payments through technologies like NFC.

The next stage of the payment evolution has already started, with payments from social media messenger applications, smart watches, voice-enabled devices (e.g., Amazon’s Alexa and Apple’s Siri), and Internet-connected home appliances.

Indeed, we are evolving to the age of ubiquitous payments – where consumers can pay through any Internet-connected device present anywhere. These devices are programmable to automate several transactions, and help create an ecosystem of value-add services. And as payments technology evolves, digital currency may almost replace physical currency, becoming the most preferred mode of payment.



The fundamental tenets of a superior payment experience are invisibility and completely integration into the consumer’s buying process.


ubiquitous payments evoulution

Let us take a look at the components of the ubiquitous payment ecosystem:

  • Payments infrastructure: The payments infrastructure is the backbone. It includes the entire payments network, including the issuers, acquirers, processors, inter-bank network, card manufacturers, and providers.
  • Internet-connected devices: One of the keys to improving the payments experience is making it frictionless. The consumer should only have to focus on buying the product or service, and the actual payment should simply be a background task. Internet- connected devices – including mobile phones, smart home appliances, smart watches, smart utility meters, and connected vehicles – are being built with payment capabilities.
  • Cloud: Infrastructure scalability, predictability, and agility are top drivers for making ubiquitous payments a reality. The Cloud provides the critical infrastructure necessary to enable storage and processing of data arriving from various Internet-connected devices.
  • APIs: Application Programming Interfaces (APIs) are the key to unlocking the financial services digital ecosystem. They are a set of tools that expose the payments capabilities of underlying financial institutions to a broader ecosystem of providers.
  • AI, ML, and analytics: The payments process can be made more efficient, smarter, and automated by leveraging digital technologies such as artificial intelligence, machine learning, and analytics. For example, bots used for payments on Facebook Messenger enable several value-added services created around the payments ecosystem.
  • Identity management: The ability to make secure payments through any desired device, regardless of location, requires a digital identity and authorization process.

As we move toward ubiquitous payments, banks, payments firms, and other enterprises will need to evolve their strategy to address all the above components in a holistic manner. Industry standards will need to evolve to ensure secured payments between devices, as will regulations, such as the Payments Services Directive 2 (PSD2), which is an example of an encouraging step in this direction.

Make no mistake about it…changes in customer payment behavior to align with new payment methods, and the pervasiveness of technology, will drive the industry to the stage of ubiquitous payments.

What has your experience been with the evolution of the payments ecosystem?

Google acquires APIGEE – APIs to Overhaul Enterprise Technology | Sherpas in Blue Shirts

APIs have been around for a long time; however, the hyper-connected convergence of digital technologies and the increasing maturity of the digital ecosystem as a business model have made APIs a priority across industries. They have become the keys to unlocking a digital ecosystem (also commonly known as an API economy) that includes digital value chain, digital manufacturing, digital marketplaces, and an ecosystem of connected devices as adoption and advancement of technologies such as cloud, IoT, mobile, and analytics continue to increase.

The chart below explains a basic API value chain

Google acquires APIGEE

API management plays a critical role to help enterprises get maximum value out of their API strategy, hence we are witnessing an increase in activity in the API management space.

As enterprises accelerate their journey to build a digital ecosystem, technology companies like AWS, Dell, IBM, and Microsoft among others are helping enterprises on their digital transformation journey with tools and technology platforms. APIs and API management play a critical role here, with examples of investment that include IBM API Connect, Azure API Management, Oracle API manager, CA API management, and Amazon API Gateway among others. Recently Google announced its plan to acquire APIGEE, an API management company. The deal, for US$17.40 per Apigee share in cash for a total of US$625 million, is subject to shareholder and regulatory approvals. This is a significant acquisition for Google as it looks to enhance its enterprise cloud offerings. Adding APIGEE’s technology to its Cloud Platform provides Google with a more compelling value proposition for enterprise customers looking to move IT to the cloud.

Key benefits for Google:

  • API management as a differentiator/value-add for its enterprise cloud offerings
  • APIGEE acquisition brings tools that will help Google better manage its own set of APIs
  • Enhance experience for developers on its platforms
  • Enhance Google’s play in the container market, with its planned Integration of Apigee tools with Kubernetes

In the API management space, several specialist API management firms have been acquired by bigger technology firms looking to offer integrated (value add) services to their customers.

  • In June 2016, Red Hat acquired 3Scale, an API management firm
  • In January 2016, Axway acquired Appcelerator, which provides a framework for building and running APIs called Arrow
  • In April 2013, Intel acquired Mashery, a firm specializing in API management. However, Intel sold Mashery to Tibco in August 2015

We wonder what would happen to other API management specialists such as Akana, Cloud-Elements, Pokitdok, and WSO2 among others – will these also be scooped up by larger technology companies?

API management platforms are used by enterprises to manage their burgeoning need to open up their systems and expose functionality to the outside world due to digital transformation and the need to leverage innovation outside enterprise boundaries. Some implications of the increased activity in the API management space are listed below:

  • Consumer technology firms are pivoting their offerings to target the enterprise market
  • Enterprises need to look at API management as a separate stack in their IT systems
  • A key differentiator for enterprises in the age of connected digital ecosystem is the ability to offer high availability, security, and scalability of its APIs
  • Enterprise technology teams with modern infrastructure and strong API culture are able to attract better talent
  • Increased competition among technology firms that promise to play the role of efficient enablers in the enterprise digital transformation journey – leading to a wave of acquisitions and consolidation as technology firms look to become one-stop shops for all the technology requirements
  • Containers take API design, deployment, management, and integration to the next phase
  • Enterprises can accelerate their DevOps journey with APIs – API management embodies core DevOps principles of continuous delivery by modeling and governing the lifecycle of an API and provide developers and administrators with the needed tools and transparency

Are there other implications you believe should be considered? How do you see the API management landscape shaping up?Google acquires APIGEE

Open APIs – Building A Digital Ecosystem For The Financial Services Industry | Sherpas in Blue Shirts

Customer expectations and buying behaviors for banking products and services have dramatically shifted. Banks are realizing that they need to move beyond providing deposit, payments, and loan services, and reinvent themselves to help customers buy homes and cars, send money to family and friends, manage monthly finances, make more informed investment decisions, and buy products from online or retail stores with complete ease. Digital technologies are helping banks do all of this and even more. Banks now have the potential to create an ecosystem of value-add services that constitutes the “bank of the future.”

The travel, retail, and media industries have already begun to build a digital ecosystem around their core offerings, powered by a vast community of third party application/content providers that offer customers convenience and a superior customer experience across the channels of their choice. Indeed, companies such as Amazon, Apple, and Facebook have become highly successful in part by the presence of Open APIs through which third party developers can access technologies and services developed by these firms, along with customer-authorized data.

In their quest to become the bank of the future – a one-stop destination for all financial transactions and services, with a seamless user experience accessible via any Internet-connected device – financial institutions are starting to jump on the Open API bandwagon. Doing so will not only allow them to offer a better customer experience, and give customers more choices and control, but also to create new business models for growth. For example:

  • Open APIs can help create a coherent digital ecosystem for financial services firms by putting the customer at the center of all development
  • Open APIs will allow FinTech startups to develop applications for one bank and port it to others with minimal effort and costs, thus driving innovation and scale
  • Financial services firms will be able to augment their internal data with external data from other third-party applications on its platform to deliver enhanced customer value
  • Technologies such as Internet of Things (IoT) demand Open APIs to explore various use cases and to reach scale to become a viable investment

Of course, standardization, security of customer data, compliance, and integration with legacy systems are certain roadblocks on the way to wider adoption of Open APIs, and the industry will need to evolve and adopt standards for high interoperability.

Yet, we are witnessing early signs of an API revolution in the banking industry. Several leading banks, FinTech firms, and open source projects have started experimenting with and embracing the new platform-based economy. Regulatory developments in the form of PSD-2 have further given steam to the development and use of Open APIs in payments.

Consider these examples: U.K.-based digital challenger bank Monzo (formerly Mondo) has launched its own API for Alpha users. Visa has launched the Visa developer platform, which allows developers to tap into its full suite of products and services, and gain open access to its underlying payment capabilities. Bank of America, BBVA Compass, Capital One, and Citigroup have allowed external developers access to their applications through APIs as part of hackathon events or partnerships with technology firms.

Moreover, the Open Bank Project and the Open Banking Working Group (OBWG) are developing standards for an open source API for banks to promote adoption. And Solaris Bank in Germany is looking to provide banking as-a-service to FinTech companies through its APIs, enabling mobile and web-based startups to plug directly into its core banking platform through its API infrastructure.

Needless to say, these investments drive innovation, and allow financial services firms to deliver more, better customer experiences.

Tech Mahindra Significantly Expands European BFSI Capabilities with Target Group Acquisition | Sherpas in Blue Shirts

On May 27, 2016, Tech Mahindra announced it is acquiring U.K.-based Target Group – a financial technology and business process-as-a-service (BPaaS) provider – for US$164 million. The acquisition will significantly expand Tech Mahindra’s BFSI (Banking, Financial Services, and Insurance) footprint in the U.K. and Europe, by adding more than 700 employees in the U.K. to its talent pool. Target Group will continue to operate as a stand-alone entity with full operational responsibility.

Estimated impact of target group on Tech Mahindra's FY2016 BFSI performance

Following is Everest Group’s take on how Tech Mahindra’s BFSI business will benefit from this acquisition:

1. Revenue growth: One of the key objectives stated by Tech Mahindra’s leadership for this acquisition is to drive BFSI revenue growth, which it wants to double by 2020. The Target Group acquisition is expected to increase Tech Mahindra’s BFSI revenue by over 20 percent in FY 2016. With over 70 percent of Target Group’s revenues coming from BPO and value added professional services, (the balance comes from its software business), this acquisition will more than double Tech Mahindra’s BFSI BPO revenues – to more than US$ 500 million – and the added BPaaS capabilities will help Tech Mahindra win larger integrated outsourcing deals.

2. New clients: Tech Mahindra will obtain access to Target Group’s 50+ BFSI clients, which include leading financial institutions such as Credit Suisse, Goldman Sachs, and Morgan Stanley, specialist lenders including Shawbrook, and mutual organizations such as Yorkshire Building Society. The client list also includes public sector companies such as DLVA in the U.K. Tech Mahindra can drive more value from existing Target Group clients by cross selling IT services to them.

3. BPaaS capabilities: Target Group is a BPaaS provider to financial services firms, and owns a platform and IP that automates complex and critical processing, servicing, and administration of loans, investments, and insurance. This is a key demand among BFSI clients, and will help Tech Mahindra win new contracts as clients increasingly adopt BPaaS.

4. Talent and professional services capabilities: The acquisition brings domain consultants to Tech Mahindra in areas including lending and insurance. The U.K. lending market is expanding and evolving, with the alternative finance market seeing growth due to financial technology players in areas such as P2P lending, and Target Group has proven capabilities to serve this market. For example, Ratesetter, a leading U.K.-based P2P lending provider, selected Target Group in April 2016 to provide standby servicing.

Everest Group believes this acquisition improves Tech Mahindra’s footprint in the European BFSI market, and reduces its dependence on North America. This is a step in the right direction. The augmentation of its BPaaS capabilities with Target Group’s platform/IP and BPO capabilities, coupled with its existing BPO and IT services offerings, create a compelling integrated offering for BFSI clients.

However, Tech Mahindra will need to address several challenges to fully benefit from this acquisition:

  • Aggressive sales pushes to drive synergy in Target Group’s accounts may lead to client frustration
  • Execution difficulties in taking Target Group’s proprietary solutions and platforms to other geographies
  • Ability to retain key Target Group domain experts
  • Offshoring work to its delivery centers in low cost locations to drive synergies from the acquisition

What’s your reaction to this acquisition?


Blockchain in BFSI: Beyond the Hype | Sherpas in Blue Shirts

Disclaimer: the following work of fiction has no relation to anybody living, dead, or yet to be born.

In the year 2248, the crash of the global economy quickly turned into an apocalyptic situation, with a complete breakdown of any form of order, leading to chaos and extinction-level events. At the same time, two brilliant scientists – a computer genius and an astrophysicist fascinated by the laws of space and time – were working on ways to prevent the crash from ever occurring. They were able to isolate the core reason for the crisis as extreme dependence on central clearinghouses and central banks of the world, which had become too powerful and systemic. The two scientists, determined to stop the end of the world, realized that it was possible to transfer data in any point of time as a base to create an intelligent digital personality that was just a combination of a series of billions of 1’s and 0’s. This digital personality was designed to ensure that the world’s central clearinghouses and central banks would not become too big to fail, per several key attributes: proposal of a virtual currency over a distributed ledger system; help building the system; and an auto self-destruct sequence to the digital identity once the currency found supporters globally (this to ensure the identity of the creator of this virtual currency remained mystery.) They sent this intelligent digital personality back in time to 2008 – when the world experienced a major economic crisis – and the rest, as we know, is another timeline that we live in!

Now, away from fiction and into facts about Blockchain – the distributed ledger technology – and the resultant wave of disruption in the financial services domain and beyond.

In 2015, no industry conference or trends forecast in the BFSI sector was complete without the mention of Blockchain technology and its potential benefits of reduced transactions and infrastructure costs, efficiencies, and financial inclusion.

In the last two years, we have witnessed major banks, financial institutions, technology companies, and even governments and international bodies presenting their views on whether they consider this technology revolutionary, and on their investment plans about adopting it.

Several firms have invested in Blockchain technology research to answer the questions on whether it will really transform the BFSI ecosystem and ultimately optimize middle- and back-office functions. And, if so, how they can prepare for that future.

Others are asking a broad range of questions about this distributed ledger technology, including:

• Will it reduce the time and costs of transactions and settlements to a fraction of what the current systems have to offer?
• Will it drive transparency and ease of global compliance?
• Will it break big banks?
• Can smart contracts automate transactions and create trust without central clearing parties?
• Can a combination of different forms of smart contracts, IoT, and Blockchain technology create a self-governing Decentralized Autonomous Organization (DAO) that makes the need for human intervention redundant?

There is no doubt that Blockchain has a lot of potential. But it currently faces a lot of uncertainty and challenges. There are several different versions of the shared ledger technology, and they will evolve as rapidly as the technology itself. The future of these different Blockchains is uncertain, as is the final shape they will take, and whether they will work or not.

Everest Group’s just published report, “Blockchain in BFSI: Beyond the Hype,” removes the hype from all the facts, tells the story of key investments made to date, how Blockchain has evolved and predicts the trends that we will witness in the next 12 to 18 months, and the key implications it will have on enterprises and service providers.

What are your experiences with, or thoughts on, Blockchain?

2015 Was Blockchain’s Buzz Year: Will 2017 Be the Year of Blockchain in Action?| Sherpas in Blue Shirts

Though cryptocurrencies such as Bitcoin have received mixed responses from the financial services industry, the underlying distributed ledger technology, blockchain, received a lot of positive buzz in 2015. If it lives up to the hype, blockchain has the potential to deliver significant transaction cost savings – including for inter-bank transactions, foreign exchange trading, maintaining digital records of diamonds, digital transfer for ownership of assets, and near real time securities settlement – and the ability to make secure, efficient, near real-time settlements. Further, the decentralized nature of the ledger backed by multiple miners make the transactions immutable.

Here are some examples of why I call 2015 blockchain’s buzz year.

Consortiums of banks, technology companies, and start-ups came together to work on blockchain’s proof of concepts (PoCs) for the financial services industry. The level of collaboration being witnessed in the industry points to the simple fact that the blockchain technology cannot gain widespread adoption and faster time-to-market without common technology and process standards:

  • The resource-pooling participants in the recently announced Open Ledger project include premiere technology and financial services players such as Accenture, ANZ Bank, Cisco, Digital Asset Holdings, IBM, IC3, Intel, JPMorgan Chase, the Linux Foundation, London Stock Exchange Group, Mitsubishi UFJ Financial Group, R3, State Street, Swift, VMware, and Wells Fargo
  • R3, the bank-led consortium developing the use of distributed ledger technology in financial services, has 42 global banks as members, and is now looking to extend its activities to work with buy-side and non-bank institutions in 2016
  • Kynetix, a post-trade technology company has launched a blockchain consortium focused on using distributed ledger technology in commodities markets.

Financial services enterprises not only doing R&D internally, but also partnering with Fintech startups to develop blockchain’s PoCs to explore use cases for this new technology. In 2015, banks and banking firms (such as Bank of America and Goldman Sachs) have filed patents in the blockchain technology space:

  • Barclays has two blockchain labs in London, and is also working with several startups, such as Wave
  • Citi has multiple prototypes for internal testing, and has also created its own cryptocurrency called Citicoin
  • Japan’s SBI Sumishin Net Bank recently announced that it will develop a PoC aimed at exploring blockchain banking
  • Visa Europe’s innovation hub partnered with Epiphyte to develop a PoC for using blockchain for international remittances
  • Nasdaq launched its blockchain product, Nasdaq Linq, in October to trial blockchain technology.

Fintech startups are changing the game

  • Fintech startups are playing a key role in the blockchain technology ecosystem by demonstrating the advantages of the technology and by evaluating the limitations of the technology at its current maturity level
  • Fintech startups have invested themselves in exploring different use cases for the technology, highlighting the fact that the technology has widespread application but also that it has a long way to go before it matures.


In the IT service provider space:

  • IBM is the front-runner in blockchain R&D investments
  • Capgemini has introduced its own digital cryptocurrency, called SRTCoin, to experiment, test, and learn about the technology behind cryptocurrencies
  • Deloitte’s Rubix provides a use case development offering that includes ideation to implementation services. It also has a blockchain as-a-service offering, which has the technology infrastructure and blockchain architecture to enable quick adoption
  • Indian service providers such as HCL, Infosys, TCS, and Wipro have demonstrated limited capabilities to enable their financial services clients to experiment/adopt blockchain technology. Their contribution includes research papers on this topic.

Blockchain as a service:

  • Microsoft has been steadily building its blockchain-as-a-service offering on the Azure cloud. It has roped in partners such as Ethereum, Factom, and Ripple
  • Deloitte also has a blockchain as-a-service offering
  • The as-a-service model can enable enterprises to reduce the failure risks with blockchain experiments, while simultaneously abstracting the complexities of the technology to enable faster adoption.

What can we expect from the Blockchain technology space in 2016?

  • A major barrier to mainstream adoption of Blockchain by financial services enterprises is IT service providers’ lack of capability in this space. In 2016, we should see vendors accelerating their investments in building capabilities around implementation of blockchain technology – those that don’t may risk losing out on a key opportunity
  • Collaboration in the industry between financial services enterprises, technology service providers, and technology startups to drive mainstream adoption of blockchain technology
  • Increased focus and concerns on security as industry moves from PoCs to ready products
  • An increase in collaboration among the financial services players to drive common standards, and in the number of blockchain innovation challenges, workshops, and startup incubators by leading financial services firms
  • Market consolidation, regulations, and an increase in use cases of the blockchain application.

What do you think? Will blockchain pass the 2016 litmus test, making 2017 the year of Blockchain in action?

Trekking New PEAKs in the BFSI Sector | Sherpas in Blue Shirts

With no rest for the weary, a wave of regulatory overhaul and technological disruptions made the first half of 2015 very busy for enterprises in the banking, financial services, and insurance (BFSI) sector. Indeed, rather than being an enabler of efficiencies and operations, technology is now the fundamental differentiator for banks to grow their revenue and increase market share.

To keep up with all the activity, Everest Group in the past six months published a number of research reports examining the health of the market, the service provider landscape, and the digital effectiveness of BFSI organizations.

Following are some key insights and highlights from our research.

  • Overall BFSI ITO sector
    • The global BFSI ITO market size was estimated to be US$110-130 billion in 2014
    • Increasing regulatory scrutiny placed higher cost pressures on BFSI buyers, leading to a reduction in the total ITO spend. This in turn resulted in a decline of 5 percent in the number of transactions, and a 43 percent decrease in total value of BFSI ITO contracts signed in 2014
  • Banking
    • Banking organizations globally are focusing on a triple mandate: run, manage, and change. This focus translates into efficiency, compliance, and transformation initiatives
    • Our ITO in Banking Annual Report: Riding the Digital Wave report found that investment in digital channels (mobile, online, and social), disruption in the payments landscape, and the emergence of small and medium enterprises (SMEs) as a focus segment have raised demand in retail banking, cards and payments, and the lending lines of business. Against the backdrop of banking market characteristics, the report also identifies key initiatives banks are undertaking to address the industry headwinds
    • Dell Services, HCL, IGATE, Infosys, and Virtusa were the 2015 Banking AO Market Star Performers in our ITO in Global Banking PEAK Matrix™ report: Rise of the Challengers, based on their Year-on-Year (YoY) movement in our annual assessmentBanking ITO PEAK Matrix 2015
    • Retail banks are making significant investments to stay relevant to digital natives and the millennial generation. A seamless transaction experience, stronger customer engagement through higher penetration of digital channels, posting of richer content, and larger breadth of value-added services are some of the key attributes of digital leaders in the retail banking space, per our first-ever APEX Matrix™ that assesses leading retail banks in the United States and United Kingdom on their digital functionality and the business impact it generates

So what is in store for the next few months? Lots! Our upcoming reports through the end of 2015 include:

  • Insurance – We’ll be exploring industry trends in our upcoming ITO annual report on the global insurance market (Life, P&C, and Re-insurance), and evaluating global insurance service providers in our global Insurance AO PEAK Matrix report
    • BFSI in Europe – Europe is driving the financial services market in terms of new deal signings. Our upcoming Europe-focused PEAK Matrix assessments on Banking and Capital markets in Europe and Insurance in Europe will explore the European service provider landscape
  • Digital PEAK Matrix assessments – Service providers’ offerings within the digital technologies umbrella are rapidly maturing. To cover the evolving excitement in the industry, we are significantly expanding our portfolio of published PEAK Matrix evaluations in 2015. New reports we will be publishing before the end of year are:
    • Mobility in banking
    • Mobility in insurance
    • Big data analytics in banking
    • Big data analytics in insurance

Everest Group’s goal is to help ensure enterprises and service providers achieve maximum success from their sourcing initiatives. Thus, we encourage you to reach out to us directly with your questions and comments.

Jimit Arora, VP and Global Head of IT Services Practice, [email protected]

Aaditya Jain, Senior Analyst, [email protected]

Archit Mishra, Senior Analyst, [email protected]

Ronak Doshi, Senior Analyst, [email protected]

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