Impact of T+1 Settlement Transition on Various Functions of the Trade Life Cycle | Market Insights™
November 6, 2023
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According to Aaditya Jain, Vice President-BFSI tech services practice at Everest Group, “High-interest rates and margin pressures have pushed BFSI firms to focus on portfolio profitability and drive drastic rationalization efforts – vendor rationalization, workforce rationalization, product rationalization, IT application and infrastructure estate rationalization, etc.”
Therefore, BFSI firms are likely to take a cautious approach to technology spending, resulting in another quarter of softness in demand, but the structural demand outlook remains strong.
FinTech Partners
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Two of the leading IT companies in the nation recently struck partnerships in agriculture to diversify their income streams as they face challenges in most sectors, including BFSI (banking, financial services, and insurance), IT, and telecom.
According to Peter Bendor-Samuel, CEO of Everest Group, the uncertainties and increasing geopolitical risk are having a similar impact on agriculture firms as COVID did when it highlighted the flaws in old systems and people-driven processes.
Facing headwinds in most verticals like BFSI, tech, and telecom, two of the country’s top IT firms recently signed deals in agribusiness, thus diversifying their revenue stream.
Peter Bendor-Samuel, CEO at Everest Group, said that the uncertainty and increased geopolitical risk is influencing agribusiness companies in much the same way that COVID exposed the weakness in legacy systems and people-driven process.
The banking operations market has become relatively consolidated at the top, with the leading participants capturing a larger share of the market. Additionally, specialists have entered specific banking segments. Lines of business such as cards and payments and retail banking are growing significantly. Enterprises are focusing on becoming future-ready, agile, and resilient to manage volume fluctuations and staff shortages.
Providers are differentiating themselves by offering as-a-service models and focusing on digital transformation solutions by leveraging analytics, automation, and AI, combined with industry expertise and an advisory-led approach. Additionally, they are leveraging the partnership ecosystem and making new acquisitions to enhance their capabilities and improve the time-to-market of their offerings. Buyers are increasingly partnering with participants capable of providing holistic support in the form of proactive guidance on industry best practices, customer experience design, and faster, cheaper, and better transformative models.
In this report, we analyze 34 banking operations service providers and position them on Everest Group’s PEAK Matrix® as Leaders, Major Contenders, and Aspirants based on their capabilities and offerings. The report will assist key stakeholders, such as banks, financial institutions, and providers, in understanding the current banking service provider landscape and make informed sourcing and partnership decisions.
This report features 34 banking operations service provider profiles and includes:
Scope:
The PEAK Matrix® provides an objective, data-driven assessment of service and technology providers based on their overall capability and market impact across different global services markets, classifying them into three categories: Leaders, Major Contenders, and Aspirants.
The Banking, Financial Services, and Insurance (BFSI) industry faces various challenges in today’s evolving environment, from inflation and cybersecurity to increased competition from fintechs, and changing customer expectations. Desktop Infrastructure Transformation (DIT) has emerged as an attractive solution to combat these market disruptions because of its ability to optimize costs, empower users, and enhance IT efficiency. In this blog, we’ll explore how DIT can help the BFSI industry tackle pressing issues.
Contact us directly to discuss this topic further.
Benjamin Franklin’s wise words, “When you’re finished changing, you’re finished,” still hold true today, particularly in the rapidly evolving world of BFSI. Recent events such as the collapse of Silicon Valley Bank and UBS Bank’s acquisition of Credit Suisse show that those who fail to adapt will be left behind even quicker than they can Google “subprime mortgage crisis.”
Facing various internal and external disruptions, BFSI enterprises struggle with difficult questions. However, a recent Everest Group survey of 500 senior stakeholders supports that “fortune favors the bold.” The survey found 59% of respondents identify digital transformation maturity as a critical priority to withstand disruptions.
Considering these findings, the following framework provides an overview of disruptions BFSI enterprises face and outlines the actions to offset them:
BFSI enterprises need to act swiftly and effectively to mitigate the impact of these disruptions. As highlighted in the framework above, DIT and its two sub-components – as part of an overall mature digital transformation approach – can provide a strong buttress against disruptions.
These sub-components can be broadly defined as follows:
In the following section, we examine the most pressing disruptions BFSI enterprises face and explore how DIT can provide a solution to address them:
| Disruption | Evidence | Complication | Question | DIT to Rescue |
| Compounding impact of concurrent inflation and recession | Inflation is at a 40-year high in most developed countries such as the US and UK | – Reduction in banking payments and transactions
– Dip in insurance investments and higher payout expenses – Deterrence of new bond issuances and Initial Public Offerings |
How can enterprises offset the impact of inflation and be prepared for a recession? | Cost effective and pay-as-you consume model through DaaS or VDI |
| Embracing Banking 4.0 and seizing new business opportunities | The customer acquisition cost for a physical branch is approximately 50 times higher than for digital banking | – BFSI companies are under pressure to digitize their platforms/services immediately
– Automation and data-driven decision-making has become pertinent |
How can BFSI enterprises effectively leverage the Banking 4.0 approach and seamlessly launch related businesses and products? | Cloud-based desktop infrastructure for agility and to ensure faster time-to-market for digitized products/services |
| Increasing prevalence of cybersecurity attacks | More than 60% of global financial institutions with at least $5 billion in assets were hit by cyberattacks in 2022 | – Higher risks of financial losses and reputational damage
– Increased regulations and compliances, creating operational complexities |
How can BFSI companies manage cybersecurity threats while maintaining productivity and profitability? | Embedded security over bolt-on security through centralized security controls and Artificial Intelligence (AI)-based threat analytics within VDI |
| Encroaching fintech startups, reshaping traditional BFSI | Venmo’s users increased by 11% year over year in 2022, while the traditional bank growth on average is about 2-5% | – Increased pressure for collaborations between fintech startups and traditional banks
– M&As leading to business process changes |
How can enterprises seamlessly transition to new business models and strengthen collaborations? | On-demand desktop infrastructure scalability and seamless integration across enterprises through VDI and DaaS |
Source: Everest Group 2023
To better understand the composition of VDI and full-stack DaaS in a typical enterprise environment, the below framework provides more detail of the two previously defined key DIT components and their enablers:
Note: The above framework is not an exhaustive representation of all the components within DaaS and VDI.
Source: Everest Group 2023
Now, let’s take a look at the benefits of this transformation initiative by exploring some applications of DIT that ideally align with the needs of the BFSI sector:
Let’s walk through the following use cases of DIT in various BFSI segments to demonstrate its value for employees ranging from investment traders to data scientists and knowledge workers:
| Use case 1: Ensure zero downtime in a trading environment | Scope: DaaS | ||||
| Industry: BFSI | Sub-segment: Investment banking | Category: Emerging | Persona: Power worker (traders) | ||
The business need:
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DaaS Benefits:
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| Use case 2: Facilitate data-driven, rapid decision-making | Scope: VDI, DaaS | |||
| Industry: BFSI | Sub-segment: All | Category: Emerging | Personas: Data scientists, business analysts | |
The business need:
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Benefits:
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| Use case 3: Realize synergies from M&A activities sooner | Scope: VDI, DaaS | |||
| Industry: BFSI | Sub-segment: All | Category: Prevalent | Personas: Knowledge workers and power workers | |
The business need:
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Benefits:
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These use cases demonstrate the substantial value DIT offers in addressing the vital requirements of the BFSI sector and mitigating market disruptions. Several key benefits of DIT include cost optimization, operational excellence, user empowerment, and enhanced IT efficiency.
Yet, it is essential to recognize and thoroughly assess the associated risks of this technology, such as user acceptance and training challenges, as well as potential dependencies on network infrastructure. By carefully evaluating these factors, enterprises can make informed decisions about investments like DIT aimed at enhancing the IT infrastructure and diminishing market disruptions.
Ultimately, however, understanding the risk of inaction is critical. As Tony Robbins, life coach and author, aptly notes, “Risk comes in many forms, but the most common one is simply not investing.”
To discuss Desktop Infrastructure Transformation, contact Prabhneet Kaur and Udit Singh.
The Asset and Wealth Management (AWM) industry is seeing the democratization of finance, growing demand for personalized digital experiences, and the emergence of new products such as digital assets and ESG-compliant investments. To adapt to evolving customer preferences and meet regulatory requirements, AWM managers are increasingly turning to Digital Experience Platforms (DXPs) to revamp their operations, streamline costs, enhance data management capabilities, and deliver tailored client experiences. By leveraging DXPs, AWM firms aim to provide advisors with a comprehensive, real-time view of data through intuitive dashboards, enabling them to deliver better service.
The integration of DXPs empowers asset and wealth managers to optimize their processes, personalize client interactions, and create an enhanced advisor experience. DXP providers are plugging the gaps in functionality coverage through build, buy, and partnership investments, along with the infusion of emerging technologies in their current product offerings. They are also establishing a robust partnership ecosystem comprising FinTech point solutions, technology providers, WealthTechs, and consulting and implementation partners to drive commercial and GTM innovations.
In this report, we assess 12 leading DXP providers for AWM products and categorize them as Leaders, Major Contenders, and Aspirants. The research will help buyers select the right-fit technology providers for their needs, while technology providers will be able to benchmark themselves against the competition.
Contents:
Scope:
The PEAK Matrix® provides an objective, data-driven assessment of service and technology providers based on their overall capability and market impact across different global services markets, classifying them into three categories: Leaders, Major Contenders, and Aspirants.
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