Mortgage Servicers
Although macroeconomic factors are having a dampening effect on venture capital investments across the fintech space, the amount of funding going to enterprise and business-focused startups has increased in recent months compared to consumer-centric counterparts, a recent Pitchbook report shows.
Since the failure of Silicon Valley Bank in mid-March, financial institutions have looked at investing more in risk management technology. Ronak Doshi, Partner at Everest Group, said in March that he expects banks to increase their annual spends on risk technology by 8% to 12% in the next year.
Indian IT companies are trying to broad-base their businesses across verticals to reduce their dependence on a few select areas. For example, the revenue contribution for HCL Tech from the US has increased from 62.5% in FY18 to 64.1% in FY23. But in the same period, it brought down its BFSI exposure to 20.7% in FY23 from 24.9% in FY18.
Peter Bendor-Samuel, CEO at Everest group, said, “There is clearly concentration risk for TCS, Infosys, and Wipro in the BFSI which is the largest vertical for each of these firms. This BFSI concentration also carries geographic concentration as this work is largely out of the US and the UK with some exposure in Hong Kong and Singapore.”
HSBC has hired more than 40 former Silicon Valley Bank (SVB) employees to create its own practice focused on healthcare startups and venture capital funds in the US, hitting the gas on its entrance to a sector that experts say is challenging for banks.
Ronak Doshi, Partner at Everest Group specializing in digital transformation and banking, said in an interview in mid-March that startups want to bank with institutions that focus on specific industries, such as life sciences and healthcare.
Regional banks are likely to upgrade their risk management technology as the recent problems in the industry raise concerns about all elements of their risk positions, experts say.
Most regional and super-regional banks previously sought to spend as little as possible on risk management technology to meet minimum regulatory and compliance requirements, said Ronak Doshi, Partner at Everest Group. However, over the past six weeks, banks have felt pressure from their boards, employees, and other stakeholders to prioritize risk assessment.
“Banks are suddenly saying, ‘Risk management is a key component of who we are as a bank,'” Doshi said. “It’s not just the cost of doing business. That’s business.”
Finance and Accounting
Indian IT firms are expected to submit lackluster report cards for the fourth quarter and warn about demand in the year ahead as their clients curtail spending amid global economic uncertainties, inflationary pressures, and a banking crisis.
“There is definitely a slowdown from the torrid post-pandemic levels. Discretionary spending has come down and the market is in a pause waiting to see what will happen regarding the recession,” said Peter Bendor-Samuel, CEO at Everest Group.
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