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Jan 24

Four Key Themes from J.P. Morgan’s 2020 Healthcare Conference | Blog

By | Blog, Healthcare & Life Sciences

A couple of weeks ago in San Francisco, J.P. Morgan’s 38th annual Healthcare Conference brought together leading pharmaceutical, healthcare, and medical devices firms, global service providers, technology vendors, emerging start-ups, and members of the investment community. Because this conference happens so early every year, it usually sets the tone for the healthcare ecosystem each year.

Here’s our take on the top themes addressed during the 2020 conference.

Patient affordability – at front and center

Because 2020 is a US presidential election year, it’s no surprise that rising medication costs was a contentious topic of discussion at the conference, particularly because several candidates are promising lower prescription drug costs, spending on drugs constitutes ~10 percent of the national health expenditure in the US, 25-30 percent of US patients find it difficult to afford the cost of their prescription medications, and drug/device efficacy and health outcomes haven’t been improving in line with increasing prices. A recent Kaiser Family Foundation survey found bipartisan support for government action to lower prescription drug costs. And the government, healthcare payers, and patient groups alike are pressuring life sciences firms to take on more financial accountability and reconsider how they price their products.

From a services delivery perspective, we believe all this is creating a perfect environment for adoption of innovative value-based payment models in the pharma industry. To support value-based contracts and orchestrate an integrated technology ecosystem to enable collaboration and transparency among patients, life sciences firms, and healthcare payers and providers, IT service providers will have to build capabilities like solutions for risk analysis, value analysis, and reward analysis, blockchain-based smart contracts, and IoT-based patient data capture.

Consumers continue to be the biggest disrupter in healthcare

With consumerism gaining ground in healthcare, health insurance program members and patients are demanding increased engagement, control, convenience, quality, and affordability. Thus, there were multiple discussions at the conference on digital health and wellness apps that operate on the fringes of the medical sector, and how better curation of these apps will help doctors know when to recommend these new technologies to their patients. There were also numerous sessions on why challenges such as outdated reimbursement and payment models, inadequate technological infrastructures, restrictive policies, resistance to change, and a lack of financial incentives have to be solved in order for telemedicine and telehealth options to be truly viable.

Although there are many obstacles, we’ve already seen some positive results from the implementation of telemedicine/telehealth in the form of cost savings and a vision for expanded care in the long term. At the same time, we believe the ecosystem is struggling to evolve a truly sustainable business model in consumer and digital health. Examples of these struggles include players like 23andMe – which laid off 14 percent of its staff in the wake of declining DNA test sales and is tightening its focus on the direct-to-consumer business and its therapeutics arm – and Proteus Digital Health – which is winding down its $88 million deal with Otsuka Pharmaceutical as it pivots toward oncology and infectious disease treatment adherence.

Data monetization – the new fuel for growth in healthcare?

The healthcare industry’s ever-growing repository of untapped data both from clinical and non-clinical sources may finally be a part of monetization use cases in the near future. Some conference participants referred to this unexploited data as “the oil of healthcare.”

The real question is if organizations will have the right resources to make data liquid, available, and accessible to the right stakeholders at the right time. In our view, the emergence of data exchange platforms (such as one announced by Amazon – AWS Data Exchange) can spur revenue generation for companies holding data assets; but that can only happen once the challenges around defining data integration, managing heterogeneous data, and extracting value from data are solved. At the same time, healthcare companies, researchers, and innovators may begin to realize improved innovation with requisite data up for purchase through data exchange platforms.

BigTechs marching into the healthcare sector

 BigTechs Like Amazon, Apple, Facebook, and Google already have a track record of disrupting major industries such as retail and telecommunications. And because patient-/member-centric solutions are in high demand by resource-strained enterprises, these technology giants are now invading the lucrative healthcare industry, and many have already made and announced significant investments for transforming the industry.

At this point in time, the BigTechs aren’t competing with incumbents. Rather, their current market share lies largely outside the traditional scope of the healthcare industry (payer, provider, pharmacy benefits manager, etc.), in areas such as data and analytics, consumer devices, and transportation services. However, partnerships – like Google’s recently announced relationship with Ascension – can expand their role.

Here’s an illustration from our recent BigTechs in Healthcare: Reimagining the Ecosystem study that analyzed 11 large technology firm’s (Amazon, Apple, Facebook, Google, IBM, Lyft, Microsoft, Oracle, Salesforce, SAP, and Uber) investments in the healthcare industry. The study objectively looked at the many different types of impact BigTechs are creating in healthcare.

JP Morgan HC Event Blog Illustration

 

Please contact us at [email protected], [email protected], and [email protected] if you’d like to hear more about these themes from J.P. Morgan’s Healthcare Conference or learn more about our “BigTechs in Healthcare: Reimagining the Ecosystem” study.

Jan 24

The Many Languages of Asia, and the Delivery Locations Best Positioned to Service Them | Blog

By | Blog, Outsourcing

Asia has long been an important business destination, as it’s home to more than 60 percent of the world’s population and accounts for a major share of world consumption. In fact, forecasts suggest that – with increasing access to credit, low inflation, rising income levels, and a favorable regulatory environment – Asia alone will account for 40 percent of the world’s consumption by 2040. The region also accounts for approximately half (about 2.2 billion) of the world’s internet users, which constitutes an enormous pool of digital consumers.

So, it’s no surprise that many businesses have set up facilities closer to the region and that many indigenous organizations have emerged as well. Indeed, about 40 percent of the world’s 5,000 largest companies are based in Asia.

However, to truly succeed in this market, enterprises need a crucial weapon: a multilingual workforce proficient in Asian languages.

Although English is still widely accepted as the universal language for business, a workforce proficient in Asian languages brings additional value to the table. It acts as a conduit between the organization and the region by helping develop a deeper cultural connection with customers, revealing their concerns and preferences, which might not be understood otherwise.

Major Asian business languages include Mandarin, Korean, Thai, Bahasa Indonesian, and Malay, and each one provides access to a different consumer market. Thus, one key strategic consideration for enterprises selecting an Asian service delivery location is the language capabilities of the talent in the destination.

Let’s take a quick look at some of the major multilingual destinations in Asia and the value proposition they offer.

Malaysia

Malaysia ranks among the top service delivery locations for Asian languages, primarily because it lies close to source markets and is a mature destination that supports a wide range of services and languages. The country supports scaled delivery of Mandarin and Bahasa Indonesian and, to a lesser extent, Korean, Japanese, and Thai. The only challenge is the relatively high cost of operations compared to other Asian service delivery locations.

The Philippines

Another attractive location for service delivery in Asian languages, the Philippines offers moderate cost savings, breadth and depth of services, and scalable language delivery. However, the country struggles with achieving scaled service delivery in Thai.

Vietnam

Vietnam is a moderately attractive location for Asian language delivery, driven by the significant cost arbitrage it offers compared to other prominent locations. Organizations can achieve scaled delivery of services in Japanese and Mandarin but will experience challenges in scaling up service delivery in other Asian languages.

India

Although India is a key global services destination, the country falls behind its competitors in multilingual service delivery in Asian languages. India struggles to scale up service delivery in almost all major Asian languages, and compensation for multilingual service delivery approximately costs 50 percent more than service delivery in English.

With India out of the race, what’s the best service delivery location for your organization’s Asian language needs? If cost is an important consideration in setting up your multilingual team, the Philippines and Vietnam are attractive locations. But if you are looking for market maturity, scaled language delivery, and proximity to source markets, Malaysia is the clear winner. The country can comfortably cater to Indonesia, Korea, Japan, China, and Thailand – a huge belt within Asia – which combined house a population of nearly 1.6 billion.

To learn more about key locations for language-based service delivery and the primary drivers – including infrastructure, talent potential, business environment, adoption maturity, competitive intensity, and financial feasibility – that impact location attractiveness, please read our recently published report, Handbook for Language Skills, or reach out to the report authors: Parul Jain, Kunal Anand, and Pagalam Rajeshwaran.

Jan 23

Dark Horses Challenging Mexico City’s Status as Top Mexican Services Delivery Location | Blog

By | Blog, Outsourcing

Mexico continues to be the destination of choice for global services delivery across Latin America. Indeed, our  research for our “Global Locations Annual Report 2019: Demand for Next-Gen Services Defining Locations Strategies” report found that 26 percent of LATAM’s new set-ups established during 2017 to 2019 were in Mexico, including those by Atento, Continental, Harman International, Hexaware Technologies, Neoris, Tech Mahindra, and Zensar.

There are multiple reasons that Mexico is the top LATAM global services delivery destination. First, while voice and non-voice business process services continue to grow moderately, the country is the leader in digital due to an increase in support for services including analytics, cloud, mobility, big data, IoT, and artificial intelligence. Second, very few locations offer a better cost-talent proposition to North American enterprises than does Mexico. And third, the fact that it’s a nearshore location makes it highly attractive to North America-based companies.

So, what are the top delivery destinations in Mexico?

Mexico City has the largest share of the Mexican market and is the most mature location in terms of breadth and depth of IT and business process services delivered, including IT consulting, digital, accounting, tax, and actuarial services.

However, despite being the country’s capital city and biggest business hub, Mexico City lags behind most of its Mexican counterparts in quality of life aspects including crime rates, traffic congestion, and air pollution. And, it ranks second to last of 32 cities assessed across Mexico on “ease of doing business.” All of this, coupled with the fact that clients care most about the talent capabilities in the destination, is opening the door for several other Mexican cities to carve out greater portions of the Mexico services delivery pie.

Let’s take a quick look at these dark horses.

Guadalajara

Guadalajara, often referred to as the “Silicon Valley of Mexico,” continues to grow due to its availability of IT-related talent and delivery of key skills such as IT-ADM, cyber security, and IT consulting. Large pools of talent from adjoining areas have been migrating to the city. Today, Guadalajara is home to some of the top service providers, including HCL Technologies, IBM, and TCS.

Monterrey

Monterrey continues to grow in the finance and accounting space and is one of the country’s most mature locations after Mexico City. The city also delivers some of the more complex functions including tax and accounting. Given its proximity to the U.S. border, the English language proficiency and scalability potential of its global services workers is the highest in the country. The city also offers the best overall business environment, primarily due to better quality of life, infrastructure, and connectivity.

Queretaro

With its proximity to Mexico City, Queretaro has grown steadily as a delivery location across functions over the past several years. The city has had maximum percentage growth in graduates across Mexico since 2015, albeit on a smaller base. However, its development is still nascent, so it’s largely being leveraged as a smaller spoke to a larger hub within the region. From a cost standpoint, most global companies view it as a low-cost alternative, primarily driven by lower people- and non-people costs.

 

To learn more about the dynamics shaping the global services locations landscape, please read our recently published report, “Global Locations Annual Report 2019: Demand for Next-Gen Services Defining Locations Strategies.” We developed the report based on deep-dive discussions with regional investment promotion bodies, leading shared services centers, service providers, recruitment agencies, and other market participants.

For more information on Mexico as a global services delivery location, please contact us at [email protected], [email protected], or [email protected].

Jan 21

Companies Waste Or Overpay Service Vendors At Least 10% | Blog

By | Blog, Digital Transformation, Outsourcing, Pricing

Organizations buy services from a wide variety of service providers — ranging from managed services for IT applications and infrastructure, contingent labor to supplement gaps in skills and availability, cloud services, business process services, and more. We at Everest Group looked at the administration of these contractual relationships and discovered that most organizations leave tens of millions of dollars on the table. Why does this happen and what is the answer to this dilemma?

Read my blog on Forbes

Jan 16

Cloud IaaS Versus SaaS: The Fight for Industry Cloud | Blog

By | Blog, Cloud & Infrastructure

A blog I wrote last year discussed the ugly market share war among the three top cloud infrastructure providers – Amazon Web Services (AWS), Microsoft Azure (Azure), and Google Cloud Platform (GCP.) Now we need to talk about how Independent Software Vendors (ISVs) like Oracle, Salesforce, and SAP are changing the battle with their industry-specific clouds.

Cloud IaaS vendors don’t have an industry cloud

The fact is that AWS, Azure, and GCP don’t really have industry clouds. These cloud IaaS vendors enable clients to run business applications and services on top of their cloud platforms, but haven’t built industry-specific application or process capabilities. They acknowledge that their clients want to focus more on building applications than infrastructure, which defeats their positioning in the industry cloud market. The core of what they offer is compute, data, ML/AI, business continuity, and security, and they rely on technology and service partners to build industry-relevant solutions. For example, GCP partnered with Deloitte for cloud-based retail forecasting, and AWS joined with Merck and Accenture for a medicine platform. They are also partnering with core business application vendors such as Cerner and Temenos.

Cloud SaaS providers have an edge

ISVs have continued to expand their industry cloud offerings over the past few years. For example, in 2016 Oracle acquired Textura, a leading provider of construction contracts and payment management cloud services, SAP introduced its manufacturing cloud in 2018, and in 2019 Salesforce launched its CPG and manufacturing clouds. Further, Oracle and SAP have built solutions for specific industries such as retail, healthcare, and banking by focusing on their core capability of ERP, supply chain management, data analytics, and customer experience. And while SFDC is still largely an experience-centric firm, it is now building customer experience, marketing, and services offerings tailored to specific industries.

So, what will happen going forward?

  • Industry cloud will change: Today’s industry clouds are one more way of running a client’s business; however, they are still not business platforms. Going forward, industry clouds will become something like a big IT park where clients, partners, and other third parties come to a common platform to serve customers. It will be as much about data exchange among ecosystem players as it is about closed wall operations. Enterprises in that industry can take advantage of specific features they deem appropriate rather than building their own. And, they will become a “tenant” of the industry cloud vendor’s or ISV’s platform.
  • Cloud vendors will heavily push industry cloud: AWS, Azure, and GCP will push their versions of industry cloud in 2020 and beyond, with strong marketing and commercial campaigns. They’ll likely be tweaking their existing offerings and creating wrappers around their existing services to give them an industry flavor. But, of course, the leading ISVs have already launched their industry clouds and will expand them going forward.
  • Channel push will increase: Both the cloud infrastructure service providers and the ISVs will aggressively push their service partners – especially consulting firms like Accenture, Capgemini, Deloitte, and PwC. The cloud vendors will also push their technology partners to build solutions or “exclusively” migrate applications onto their clouds.
  • Mega acquisitions: Historically, there hasn’t been any major acquisition activity between infrastructure providers and large software companies. But one of the top infrastructure providers might acquire a “horizontal” ISV that’s making inroads into industry clouds, like Salesforce or Workday, rather than buying a vertical industry ISV. Disclaimer: I am not at all suggesting than any such acquisition is in the cards!

So, what should enterprises do?

  • Be flexible: Enterprises need to closely monitor this rapidly evolving market. Though the paths IaaS providers and ISVs take may not meaningfully conflict in the near future, there may be stranger partnerships on the horizon, and enterprises need to be flexible to take advantage of them.
  • Be cautious: Because the cloud vendors’ channel partners are being pushed to sell their industry cloud offerings, enterprises need to fully evaluate them and their relevance to their businesses. Their evaluation should include not only business, technical, and functional, but also licensing rationalization, discount discussions, and talent availability for these platforms.
  • Be open: As the market disrupts and newer leaders and offerings emerge, enterprises need to be open to reevaluating their technology landscape to adopt the best-in-class solution for their businesses. This is as much about an open mindset as it is about internal processes around application development, delivery, and operations. Enterprise processes and people need to be open enough to incorporate newer industry solutions.

What do you think about industry clouds? Please share with me at [email protected].

Jan 14

How To Get Innovation From Service Providers and Vendors | Blog

By | Blog, Digital Transformation

Companies today hold all business functions to a mandate for innovation. Innovation should create business value (a better experience for employees, customers, and partners). It should create agility and speed. It should make business functions more easily adaptable, easier to change. And it should also lower the cost of the functions over time. The benefits are clear and obvious. But the truth is innovation is illusive and hard to get.

Read more in my blog on Forbes

Jan 10

Appian’s Jidoka Acquisition Sets the Scene for the RPA Market in 2020 | Blog

By | Automation/RPA/AI, Blog

Appian announced its intent to acquire the Spanish vendor Novayre Solutions SL and its Jidoka RPA platform on January 7. With this acquisition, Appian, best known for its low-code process management and orchestration software, will be able to offer extensive automation capabilities natively, while it did so previously with partners’ software such as Blue Prism and UIPath.

So, what does the acquisition mean for the market?

Why the acquisition?

Our estimates show that the RPA third-party software market is expected to grow by 80 percent to reach $2.5 billion this year. With this phenomenal growth rate, it’s not surprising that non-RPA companies want a slice of the pie.

Appian has been active in this market for a while and has benefitted from many new clients thanks to its partnerships with RPA vendors. It is also a reseller for Blue Prism and has experienced growing demand for RPA first-hand through that channel.

In addition, technology giants are increasing their activities in this market. SAP acquired Contextor back in 2018. And most recently, Microsoft announced UI flows to add RPA capabilities to Microsoft Power Automate (previously Microsoft Flow). It combines digital process automation (DPA) via APIs with UI-based automation. Pega is another competitor that has also invested in this market; it took over OpenSpan back in 2016.

Why Jidoka, and what about the partners?

We have assessed Jidoka as part of our RPA Technologies PEAK Matrix for a number of years and most recently positioned it as a major contender in our 2019 assessment. Jidoka is a Java-based platform where robots are designed and managed by a web-based console. There is a design studio for workflow and orchestration of robot operations. A console centralizes monitoring, audit, and exception handling features along with secure user permission and authorization capabilities. It has proprietary image recognition technology, Hawk Eye, to support Citrix automation. The platform offers capabilities such as auto-scaling of robots, a secure credentials vault, roles-based access controls, execution logs, audit trail, robot performance analytics, and ROI calculator. It also offers a chatbot capability that is available from the console. Real-time human-robot collaboration is provided via chat interface from the console (and Google Home,) the Jidoka mobile app (voice and chat,) and via IoT devices.

Appian intends to rebrand the product as Appian RPA. It will turn it into a low-code environment and integrate it with its own solutions to be offered on the cloud on a competitively priced subscription basis. While growing in Spain and Latin America, Jidoka has limited presence in other geographies. This is something that Appian can address with its presence in major tech markets.

As for its partnerships, Appian is keen to keep them going and offer clients choices. It remains to be seen how partners such as Blue Prism and UiPath will react to this news. It is not unusual for partners to go for co-opetition. For example, last year Blue Prism announced an Intelligent Document Processing (IDP) solution called Decipher, but has maintained its partnerships in the IDP segment, e.g., with Abbyy.

What does it mean for the market?

We have been expecting M&A activity in this sector to increase with market maturity and as RPA becomes a key tool for process efficiency and productivity. RPA is also commoditizing, and the fact that Appian is acquiring a very small vendor shows that entry into the market is not expensive. The news of this acquisition could encourage other tech companies, particularly those in the process management and orchestration space, to act too. There are many small RPA vendors with good offerings. The big RPA players with their current large valuations could suffer if a wave of acquisitions materialized and bypassed them; but at the same time, they have an awful lot of customers and a huge global footprint among them. Furthermore, private equity investors continue to invest in the market, as evidenced by Automation Anywhere’s last round of funding. This market remains buoyant and dynamic.

With Microsoft getting into the RPA business, all vendors have to up their game to remain competitive.  As for the RPA scale challenge that many enterprises are facing, vendors are working on this with new, improved offerings in the areas of robot management and controls, ease of use, and increased robot resiliency. With its existing and new capabilities, Appian will be well placed to address the scale challenge to make RPA adoption and operations smoother and, in so doing, edge ahead of the competition.

Jan 09

Retailers’ Evolving Sourcing Strategy Industry | Blog

By | Blog, Shared Services/Global In-house Centers

The National Retail Federation, industry analysts, and economists alike have debunked the idea that the retail industry is struggling, dying, or on the verge of an apocalypse. While some retailers and CPG manufacturers have sung their last swan song, many are dramatically transforming their businesses to effectively compete – and indeed, thrive – in the dynamically changing marketplace.

As part of this transformation, retail and CPG firms are evolving their sourcing strategy for: industry-specific processes including sourcing and procurement, merchandising and inventory management operations, sales and marketing, and customer experience; and horizontal processes like IT services, digital services, compliance and quality, and corporate functions such as F&A, contact center, and HR.

Our recently released Industry Insights – Retail and CPG report looks at the changing shape and flavor of sourcing in the industry.

Here are the four key takeaways from the report.

The in-house model is gaining ground

Historically, retail and CPG firms leveraged third-party service providers to deliver a broad range of services such as IT, F&A, and HR. However, in the past several years, many have invested in building what we call Global In-house Centers, or GICs. These in-house shared services centers (SSCs) give them more flexibility and control over the quality of work and reduce their costs. And they’re not only delivering standard back-office processes; they’re also building strong capabilities in areas such as store layout management, pricing optimization, custom application development, financial planning and analysis, customer sentiment analysis, predictive threat monitoring, and other digital services. For example, a US-based retail SSC in Bangalore, India, is developing a new order management system to scrape competitors’ websites for pricing data.

Service providers are moving up the value chain

Just like SSCs, third-party service providers in the retail and CPG stage are also upping their game. They’re not only delivering rules-based and transactional tasks, but also much more advanced services like cybersecurity, blockchain, ERP implementation and maintenance, and legal services.

Delivery destinations are similar to other industries

Retail and CPG firms choose their sourcing delivery destinations based on their competencies, just as enterprises in other industries do. They typically leverage locations in Central and Eastern Europe (CEE), such as Poland, for marketing and analytics, and India for business process services – including those specific to the retail industry – IT and digital services. The Philippines and other APAC countries offer capabilities such as customer service (both voice and non-voice) and regional language delivery of accounting services, while LATAM primarily supports the U.S. market.

As is the case with most industries, India has emerged as the most popular offshore location for retail companies’ SSC setups, delivering both business process services and IT/digital services (product analytics, application design and development, R&D, etc.) to North America and Europe. In fact, a U.S.-based retailer’s GIC in Bangalore, India, provides it a full suite of solutions including technology, marketing, HR, finance, merchandizing, supply chain, property development, and analytics and reporting services.

GICs and providers are building deep domain and digital skills

To help make sure their digital strategies are up-to-date, CPG and retail firms are opening dedicated R&D and innovation labs in offshore locations with the help of third-party providers and GICs to support them in automation, analytics, cloud, and social media services. And with the spread of e-commerce and mounting competition, some retailers have started employing engineering talent in India to build pricing systems that determine how demand would respond to a change in price.

As part of the broader digital agenda, some centers have also started exploring the use of AI for certain activities within operations and sales/marketing, such as store layout and pricing optimization, as well as RPA solutions for automating rule-based processes. For instance, Tech Mahindra signed a contract with a Nordic retailer for end-to-end managed services, wherein it will automate and consolidate the retailer’s existing IT infrastructure and enhance the end-customer experience through digital solutions.

Going forward, we expect both service providers and GICs in the retail space to evolve their capabilities with an increased focus on the use of digital technologies such as analytics, automation, blockchain, augmented and virtual reality, and IoT. These advanced capabilities will help retailers stake their claim in the highly competitive marketplace.

To learn more about sourcing in the retail and CPG space, please read our recently published Industry Insights – Retail and CPG report, or connect directly with the authors Bharath M and Sana Jamal.

 

Dec 17

The Google, Citigroup Partnership: Another Sign that the Banking Ecosystem is Evolving | Blog

By | Banking, Financial Services & Insurance, Blog

On November 13, Google announced that it will partner with Citigroup and a credit union at Stanford University to launch a checking account that will be linked to Google Pay.

Citi and the credit union will be taking care of the financial and compliance aspects, while Google will ensure that customers can access their accounts via the Google Pay app. This partnership is similar to others – like Apple’s co-branded credit cards with Goldman Sachs, and Uber and BBVA joining hands to launch banking accounts on the Uber app for drivers – wherein big technology companies make inroads into the financial services sector by front-ending the program while the bank manages the finer aspects of regulations and compliance.

This partnership is yet another sign that the future of banking is slowly changing as BigTechs enter into the financial services industry. Indeed, tech firms’ ability to consume the APIs that are exposed from the banks’ core systems is rendering banking a plug-and-play service. Banks are now providing an as-a-service platform to help third parties integrate with them. The focus is on enhancing the customer experience and bringing in a single view of the customer. This is turning banks into ecosystem enablers, while the technology companies are entering and embedding themselves in this ecosystem.

The value of these partnerships for banks: gain/retain their customer base

Even though banks are rich data houses, they struggle with analyzing and gaining insights from data. Because of their demand for digital experiences, customers are increasingly embracing the financial services offered by technology companies. Banks understand the need to partner with these companies to remain in the ecosystem and retain their customers. Indeed, the Stanford credit union defined its recent partnership with Google as “critical to remaining relevant and meeting consumer expectations.”

The value of these partnerships for tech firms: access to customers’ financial data

By their very nature and design, the BigTechs have built a comprehensive ecosystem that gives them access to data on their customers’ behavior, choices, and habits. However, the data on customers’ finances still eludes them. As strict regulations and managing compliance prove to be barriers, collaboration is the only way they can get a foot in the door.

What will happen next?

The partnership trend will continue, because both the banks and the tech firms stand to gain so much from them. But the tech firm side of things is a bit troubling. Getting access to the goldmine of banking customers’ financial data will make them nearly invincible. They’ve targeted the front-end of banks’ target operating model, where customer-facing applications, and thus customer stickiness, live.

Further, what is stopping technology players from offering other allied banking services like issuing loans and providing interest payments? Even though lawmakers and regulatory bodies would meticulously scrutinize such models, we are fast-moving to a world where alliances between technology firms and banks will become more frequent.

Of course, it remains to be seen how customers adapt to this new way of working. We are already seeing privacy concerns arise over the financial data in such partnerships. This will lead to the emergence of a data exchange platform to control data access and set terms of use.

The next wave of change in the banking ecosystem will be when banks move to an as-a-lifestyle model. In that model, banks will define an IT strategy with customers at the center, and integrate with allied businesses. But to be successful, banks would need to ensure that they are able to influence the customer experience over all channels…theirs and third parties’. With technology players entering the financial services space, the banking IT landscape is already undergoing a shift. To remain relevant, banks will have to move upstream and coordinate the entire ecosystem while getting integrated into everyday transactions.