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Service providers shouldn’t put all their eggs in the BFS basket
The banking and financial services (BFS) market is big. The Banker’s Top 1000 World Banks Ranking for 2018 reports that total assets reached $124 trillion; the BFS industry’s extensive use of IT positions it as a large part of the IT services market. However, the BFS industry’s previous success could also prove to be its downfall, as some IT service providers rely heavily on BFS revenues to drive their own growth. Take Cognizant, for example: Since 2015, its financial services vertical has contributed an average of 38.4% of total revenue, and the firm’s total growth is closely correlated to the vertical’s growth (see Exhibit 1).
Cognizant isn’t the only firm with this precarious reliance on BFS; many other service providers must change things up quickly, or they also risk leaving themselves at the mercy of a single industry. A dip in performance, a major shift in the banking industry driven by current fintech and a digital wave, or even another financial crisis could cause a large portion of BFS service providers’ revenue to disappear overnight.
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