Tag: ITS

The Capital One Merger with Discover Potentially Signals a Shift in the US Banking Landscape | Blog

Capital One’s planned US$35.3 billion acquisition of Discover Financial Services would combine two of the largest credit card companies, creating the most dominant US credit card firm. This deal holds the potential to significantly impact the banking and financial services (BFS) IT services market and providers. Read on to learn the looming risks and what to pay attention to.

Contact us to discuss the topic further.

Acquiring Discover would give Capital One access to a credit card network of more than 300 million cardholders. If the Capital One merger clears antitrust regulations, the combined entity would become the sixth-largest US bank by assets and a leading card issuer and network provider for the US payments market.

Let’s explore the following four implications of the Capital One merger on the BFS technology and IT services sectors.

  1. Increased deal activity will help banks sharpen their focus on core operations

Macroeconomic uncertainty and rising interest rates slowed financial services dealmaking in 2023. However, S&P predicts regional and community banks will be interested in mergers of equals this year. In these challenging times, banks want to understand the potential synergies of the merged entities clearly. They also require deeper due diligence than in the past, as exemplified by the failed merger of TD Bank Group and First Horizon.

Traditionally, acquisitions were an opportunity to enter new product lines and geographies, gain new capabilities, and achieve cost savings and operational efficiencies through technology modernization and streamlining processes and systems.

Recent banking sector acquisitions underscore a clear strategic focus on directing resources to targeted areas. Banks are divesting or seeking partners for non-core or insufficiently scaled units that lack a distinct competitive edge and demand substantial investment.

  1. Investments in data and Artificial Intelligence (AI)/Machine Learning (ML) will rise

Our analysis indicates that merger and acquisition (M&A) activity among regional and community banks will increase, driven by the need to achieve greater scale. This strategic move is essential for these financial institutions to compete effectively with larger players, particularly as customer engagement transitions from physical to digital platforms.

By joining forces, these banks will be better positioned to develop new competencies in data management, AI/ML, open application programming interfaces (APIs), and advanced analytics, aligning with the growing digitalization of banking services. The merged entities will benefit from larger resource pools, facilitating improved alignment between skills and talent.

  1. Service provider portfolios will likely reshuffle

Discover and Capital One have traditionally relied heavily on outsourcing to two or three major service providers. In mergers, providers with significant contracts with both entities typically stand to lose revenue because spending by the merged entity will not be as large as it was under the separate relationships unless they gain wallet share from competitors.

Capital 1 Discover 1

 

Suppliers that solely provide services to Discover are at risk of having their portfolio consolidated and moved to Capital One. However, providers who bring intellectual property or a niche capability may maintain the business through the consolidation.

Discussions about increased regulatory scrutiny are emerging, as even the regional banking market is at the cusp of such transactions. Moreover, this transaction can potentially increase competition for giants Mastercard and Visa.

  1. Banks will require substantial consulting and system integration support

M&As spur increased short-term spending on post-merger integration and consulting services. By rationalizing vendor portfolios and IT infrastructures, merged entities can substantially cut costs by eliminating redundant applications and platforms. BFS firms will need partners to devise modernization roadmaps to create long-term value.

Merged entities must swiftly adapt their operational models, delivery strategies, and sourcing decisions to excel in the evolving landscape. Investing in specific technologies and tools is essential to foster growth and ensure operational continuity. Emphasizing core operations becomes a prerequisite as firms assess the appropriate valuation before crafting their integration strategy.

The road ahead for the Capital One merger

Richard Fairbank, founder, chairman, and CEO of Capital One, has emphasized that the merger with Discover presents a unique opportunity to unite two highly successful companies with complementary strengths and franchises.

The Capital One merger aims to establish a payments network capable of rivaling the industry’s most extensive networks and companies. However, the potential impact of increased market concentration from this combination will face regulatory scrutiny.

Providers should closely monitor system integration opportunities, as Capital One plans to expand its 11-year technology transformation initiative to encompass all of Discover’s operations and network.

The new entity will invest in growth initiatives, including faster time-to-market, innovative products and experiences, and personalized real-time marketing efforts. Operationally, underwriting, efficiency, risk management, and compliance enhancements will drive data and technology investments.

We are closely watching the market and regulatory actions. To discuss the Capital One merger and its impact on the US banking landscape, reach out to Ronak Doshi, [email protected], Kriti Gupta, [email protected], or Pranati Dave, [email protected].

Join this webinar to hear our analysts discuss Global Services Lessons Learned in 2023 and Top Trends to Know for 2024.

Navigating the New Landscape: How DORA Regulations Will Reshape the Future of Financial Services | Blog

With the deadline for the European Union’s Digital Operational Resilience Act (DORA) less than a year away, financial entities and service providers need to begin acting to reach compliance. Learn the steps organizations should take to prepare now and discover how the new DORA regulations will strengthen digital operational resilience.

Financial institutions’ reliance on information and communication technologies (ICT) for core operations brings immense opportunities in today’s digital world but also exposes banks, investment firms, insurers, and other financial entities to significant cyber threats and operational risks. To address these growing vulnerabilities, the EU has enacted DORA.

The DORA regulations are expected to significantly enhance the digital resiliency of the EU’s financial sector and foster greater stability, consumer protection, and trust. Financial institutions and authorities are working toward meeting the implementation deadline of January 17, 2025. Let’s explore this further.

DORA addresses two critical concerns:

  • Rising cyber threats: DORA mandates robust cybersecurity measures to protect financial systems from increasingly sophisticated and frequent cyberattacks that steal sensitive data, disrupt operations, and erode trust
  • Potential financial instability: DORA aims to prevent ICT incidents from cascading through the financial system, jeopardizing its stability and impacting consumers and businesses. The regulations ensure financial institutions can withstand, respond to, and recover from ICT-related incidents

Who will be impacted by DORA regulations?

DORA will impact all financial institutions and ICT third-party service providers. This includes banks and credit institutions, investment firms, trading platforms, and providers delivering critical services like cloud computing, data centers, credit ratings, and data analytics. It applies to over 22,000 financial entities in the EU and ICT infrastructure support outside the EU.

DORA framework

DORA establishes a comprehensive framework for managing digital operational resilience across the financial sector. Some key provisions include:

  • Enhanced ICT risk management: Financial institutions must implement robust ICT risk management practices, including threat identification, vulnerability assessments, and incident response plans
  • Mandatory incident reporting: Major ICT-related incidents and significant cyber threats must be reported to authorities, enabling faster response and improved threat intelligence sharing
  • Regular digital operational resilience testing: Financial institutions must conduct regular ICT systems testing to identify and address vulnerabilities
  • Strict oversight of ICT third-party providers: Financial institutions are accountable for the resilience of their third-party ICT service providers, with DORA outlining clear oversight and risk management requirements

DORA requires third-party providers to maintain robust cybersecurity measures and operational resilience capabilities to mitigate risks from potential vulnerabilities and disruptions. Moreover, financial institutions must ensure their current and future contracts with providers are compliant.

DORA focuses on five strategic pillars centered around data: risk management, third-party risk management, incident reporting, information sharing, and digital operational resilience testing. However, financial institutions still have many technology legacy systems that could create obstacles to data management.

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How can financial institutions comply with DORA regulations?

Immediate next steps financial institutions should take to prepare for the January 2025 deadline include:

  • Conduct a gap analysis and develop an operational resilience framework, business continuity plans, and governance policies
  • Assess risks with third-party providers in the sourcing portfolio and review existing contracts that may be at risk of termination by authorities
  • Ensure risk and compliance leaders are represented on management boards, as the board will have full accountability for ICT risk management
  • Establish systems for managing, logging, and reporting ICT incidents to regulators

How can providers help financial institutions achieve compliance?

By leveraging their deep understanding of enterprise technology footprints, providers should proactively assist enterprises in meeting the regulatory deadline. We recommend providers take the following actions:

  • Develop a perspective on how DORA will impact financial institutions to ease clients’ worries and gain mindshare with new customers
  • Identify accounts needing support to determine current and future states, business continuity plans, risk management frameworks, etc.
  • Evaluate incumbency status and competitive landscape threats. Acknowledge financial institutions will need to reduce their reliance on a single or small group of providers and have open discussions with clients to ensure transparency and collaboration
  • Develop effective rules, procedures, mechanisms, and arrangements to manage ICT risks to financial entities
  • Review contracts and proactively identify clauses needing changes to incorporate DORA compliance
  • Prepare to undergo threat-led penetration testing with financial institutions if deemed critical by regulators

In the near term, we foresee the banking, financial services, and insurance (BFSI) industry in the EU being impacted in the following ways:

  • Spiked demand for security services as financial institutions run security services maturity assessments to review the current state of DORA compliance
  • Revamped sourcing portfolios as financial institutions assess concentration risk of functions deemed critical under DORA
  • Increased demand for a qualified talent pool to conduct vulnerability assessments, performance testing, penetration testing, etc.

With the deadline fast approaching, enterprises and providers cannot afford to wait for the regulatory process to conclude and must begin to take these recommended steps to reach compliance by 2025.

To learn more about the Digital Operational Resilience Act and how to achieve compliance with the DORA regulations, contact Kriti Gupta, [email protected], Pranati Dave, [email protected], and Laqshay Gupta, [email protected].

To learn about Global Services Lessons Learned in 2023 and Top Trends to Know for 2024, don’t miss this webinar.

Key Insights into APAC’s Global Services Landscape: The 2024 Trajectory | LinkedIn Live

LinkedIn live

Key Insights into APAC's Global Services Landscape: The 2024 Trajectory

View the event on LinkedIn, which was delivered live on Wednesday, January 24, 2024.

As macroeconomic uncertainty continues to reign, the APAC market is becoming steadily more desirable for global services. 🌏 With unique talent availability and growth potential, the APAC market could be key for both buyers and providers in 2024. 🚀

Watch this LinkedIn Live session to hear how our analysts explored the demand drivers, challenges, and requirements to succeed in the APAC market.

During this event, our speakers unveiled the key issues that determined the trajectory of the APAC global services market and shared insights gathered from senior leaders across enterprises, shared services, and third-party providers in the APAC region.

During this event, we explored:

✅ What is the business outlook for 2024 in the APAC global services market? 📈
✅ What are the likely changes in sourcing patterns, investment themes, and challenges for enterprises? 💡
✅ How will generative AI impact the IT-BP services industry in APAC?
✅ What does it take to succeed in this market?

Meet The Presenters

Mittal Alisha
Vice President
Everest Group
Sengupta Chirajeet
Partner
Everest Group

Lending IT Services PEAK Matrix® Assessment 2023

Lending IT Services 

The lending industry is currently undergoing a significant transformation, propelled by the increasing demand for technological integration to enhance operational efficiency, user experience, and cost-effectiveness. This shift is largely driven by the widespread adoption of advanced cognitive tools, such as AI and predictive analytics, enabling lenders to improve automated approval rates and gain deeper insights into customer behavior. Additionally, the rise in delinquencies, stemming from a growing disparity between wage growth and expenses, is prompting lenders to embrace more user-friendly online tools for flexible payments.

In response to these challenges, lenders are leveraging cloud computing and alternative data to revolutionize underwriting and data management processes. The introduction of innovative products, such as green mortgages and Buy Now Pay Later (BNPL) options, addresses modern consumer demands within a framework aimed at consolidating products for improved efficiency. Moreover, the lending ecosystem is increasingly becoming API-driven, facilitating real-time integrations with third parties and offering flexible customer experiences without the need for costly in-house functionalities. This trend is evident across various sectors, with mortgage lending investing in technology and alternative products and auto financing transitioning toward subscription and shared ownership models. Particularly in commercial and SME lending, there is a noticeable shift toward streamlined online financing experiences and platform modernization.

Lending IT Services

What is in this PEAK Matrix® Report

In this report, we analyze 28 lending IT service providers and position them on Everest Group’s proprietary PEAK Matrix® framework as Leaders, Major Contenders, and Aspirants.
 

In this report, we: 

  • Examine key trends in the lending IT services industry
  • Classify 28 lending IT service providers as Leaders, Major Contenders, and Aspirants on Everest Group’s proprietary PEAK Matrix® framework
  • Discuss the IT service providers’ competitive landscape for lending IT services in BFS
  • Assess providers’ key strengths and limitations

Scope

  • Industry: Banking and Financial Services (BFS)
  • Geography: global
  • The assessment is based on Everest Group’s annual RFI process for the calendar year 2023, interactions with leading technology and IT services providers, client reference checks, and an ongoing analysis of the lending IT services market

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What is the PEAK Matrix®?

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.

LEARN MORE ABOUT Top Service Providers

Building a Sustainable Future: Reflections on COP28 and Insights for 2024 | LinkedIn Live

LINKEDIN LIVE

Building a Sustainable Future: Reflections on COP28 and Insights for 2024

View the event on LinkedIn, which was delivered live on Thursday, December 14, 2023.

Watch this LinkedIn Live event to hear from Everest Group analysts Rita N. Soni and Nitish Mittal, and Sustainability and Climate Change Expert Babiche Veenendaal-Westerbrink. 🎙️

The speakers reflected on the progress made in 2023 to build a more sustainable future, the key takeaways from the COP28 conference – the 28th annual meeting of the international community to discuss and implement ways to combat climate change – and the outlook for 2024.

During the event, we explored:

✅ Key takeaways from COP28
✅ The 2024 sustainability outlook with a focus on technology, data, and operations implications
✅ How Everest Group is helping businesses plan and adopt strategies for a more viable future 🌱

Watch this session to gain profound insights into the challenges and opportunities ahead! 🔍

Meet the Presenters

Mittal Nitish
Partner
Everest Group
Soni Rita B
Principal Analyst
Everest Group
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Sustainability and Climate Change Expert

From CRM to CXP in Life Sciences: Next-gen Capabilities to Drive CX | LinkedIn Live

LinkedIn Live

From CRM to CXP in Life Sciences: Next-gen Capabilities to Drive CX

View the event on LinkedIn, which was delivered live on Thursday, October 26, 2023.

As life sciences enterprises focus more closely on delivering exceptional customer experiences, Customer Experience Platforms (CXPs), which help build personalized customer journeys 🗺️, are replacing the traditional CRM, which has served as a system of records. Niche platform providers have now emerged to ease this transition from CRM to CXP with next-gen customer engagement capabilities.

📢📢 Watch this LinkedIn Live to hear our expert analysts explore how the rise of niche providers – and the recent announcement of Veeva and Salesforce parting ways 👋 – has created opportunities for all types of platform providers. They also share the top next-gen customer engagement functionalities and the leading customer engagement platform providers. ✨

You’ll want to join the discussion to share your experiences and ask clarifying questions.

During the event, our analysts talk about:

✅ The top opportunities for platform providers, as Veeva and Salesforce part ways
✅ The top next-gen customer engagement functionalities that enterprises are looking to invest in as they bridge the gap from CRM to CXP
✅ The top next-gen customer engagement platform providers

Meet The Presenters

Ambati Durga
Practice Director
Everest Group
Screenshot 2023 10 04 130023
Senior Analyst
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Satija Chunky
Vice President
Everest Group

Digital Twin Services PEAK Matrix® Assessment 2023

Digital Twin Services

Digital twins, virtual replicas of physical products, processes, and systems, are playing an instrumental role in aiding enterprises to reduce downtime, improve product tracking and tracing, and closely monitor asset conditions by simulating diverse scenarios. The demand-driven digital transformations spurred by the pandemic have propelled digital twins to the forefront of innovation, even in industries with lower digital maturity. Enterprises have eagerly embraced these virtual counterparts to revolutionize their operations. Over the past year, a remarkable surge in adoption has broken down barriers across various sectors, propelling digital twins into the heart of transformation strategies. As organizations ramp up their investments, the benefits of this technology are becoming increasingly evident.

Enterprises are increasingly collaborating with providers due to the demand for swift digital twin deployment, seamless integration of IT/OT systems, enhanced data and infrastructure security, and the shortage of skilled professionals in the enabling technologies domain. Organizations leveraging the potential of digital twins would do well to carefully assess the capabilities of these providers before choosing their technology partner.

digitaltwins 1

What is in this PEAK Matrix® Report

In this report, we assess 21 leading digital twin service providers and position them as Leaders, Major Contenders, Aspirants, and Star Performers based on their capabilities, vision, and market impact. These providers have been instrumental in empowering enterprises to unlock new levels of efficiency, insight, and success. The research will help buyers select the right-fit provider for their transformation goals, while providers will be able to benchmark themselves against their peers.

In this PEAK Matrix® report, we provide:

  • Everest Group’s Digital Twin Services PEAK Matrix® evaluation of 21 digital twin service providers
  • Characteristics of Leaders, Major Contenders, and Aspirants in the digital twin services landscape
  • Providers’ key strengths and limitations

Scope:

  • All industries and geographies
  • The assessment is based on Everest Group’s annual RFI process for the calendar year 2022, interactions with leading digital twin service providers, client reference checks, and an ongoing analysis of the digital twin services market

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Life Sciences Smart Manufacturing Services PEAK Matrix® Assessment 2023

Life Sciences Smart Manufacturing Services

In the past, the manufacturing industry primarily focused on designing standardized manufacturing procedures and managing labor and mechanical systems. However, the advent of Industry 4.0 has led to the widespread adoption of technology across various sectors, unlocking numerous benefits. Nevertheless, the life sciences industry has been slow in embracing technology to modernize its manufacturing setups. The pandemic, regulatory frameworks, and the drive for operational excellence are now propelling the adoption of smart manufacturing services.

Life sciences enterprises are striving to unlock benefits such as cost optimization, increased productivity, visibility, and efficiency through investments in vital use cases such as digital twins and predictive maintenance. They are also exploring high-growth opportunities such as sustainable manufacturing, batch-to-continuous manufacturing, and personalized medicine production. As the industry receives investments in smart manufacturing, providers are assuming the role of end-to-end digital transformation partners by collaboratively developing solutions to assist enterprises in their digital journeys.

Life Sciences Smart Manufacturing Services PEAK Matrix

What is in this PEAK Matrix® Report

In this report, we assess 16 life sciences smart manufacturing service providers featured on Everest Group’s Life Sciences Smart Manufacturing Services PEAK Matrix® 2023. Each provider profile offers a comprehensive picture of its service focus, key IP/solutions, domain investments, and case studies. The study will enable buyers to make the right sourcing decisions based on their requirements, while providers will be able to benchmark themselves against their competitors. 

This report features 16 life sciences smart manufacturing service provider profiles and includes:

  • The provider landscape for life sciences smart manufacturing services
  • The providers’ assessment on several capability and market success-related dimensions

Scope:

  • Industry: life sciences
  • Geography: global
  • The assessment is based on Everest Group’s annual RFI process for the calendar year 2023, interactions with leading life sciences service providers, client reference checks, and an ongoing analysis of the IT services market

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What is the PEAK Matrix®?

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.

LEARN MORE ABOUT Top Service Providers

TCS Is a Steady Business, New CEO K Krithivasan Will See a Smooth Transition, Say Industry Experts | In the News

Tata Consultancy Services (TCS) CEO Rajesh Gopinathan was leading an already stable and steady company and transitioning to a new CEO won’t change much for the company or its business, said industry experts and analysts, while still coming to terms with the biggest top-level exit at the country’s largest IT services firm.

Chirajeet Sengupta, Partner at Everest Group, said that TCS has a very strong leadership bench and Krithivasan is a very credible leader. “What will be interesting to see is how he shapes TCS in his own vision or whether he simply continues what Rajesh and team have been doing. But overall, we are very bullish on Krithi’s appointment.”

Read more in Money Control.

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