Data Viewpoint

Service providers vie to become software ecosystem orchestrators to transform BFS

September 29, 2021

  • In our recent Top 10 study Banking and Financial Services – The Best of the Best Service Providers 2021 and its companion report Banking and Financial Services Formidable Challengers 2021, we asked the leading service providers catering to the global financial services sector to identify their three most critical ecosystem partners in support of their 10,000+ BFS clients.
  • The responses were an apples-and-oranges mixed-bag of industry-specific solutions and hyperscalers.
  • For industry solutions, service providers identified Temenos as their most strategic BFS partner, with its solution capabilities around core banking, retail, and payments. Finastra’s payments, lending, and strong fintech partnership ecosystem helped it make the list. And Calypso rose to the top as the preferred partner for service providers working with the cross-asset needs of sell-side capital markets firms. FIS, Murex, Avaloq, nCino, and Mambu almost made the top partners chart.
  • The real story here is the rise of the hyperscalers. They have become an indispensable element of services and solutions delivered to BFS enterprises. And the rise has been rapid. When we examine similar BFS studies from 2018 and 2019, we certainly see hyperscaler representation in the BFS partner ecosystem, but it was more single-thread with one preferred or strategic partner. In 2021, hyperscaler representation is both broader, with all major players represented, and more strategic.
  • While all hyperscalers have identifiable offerings for their financial services clients (all seemingly called some variation of “Financial Services Cloud,” which is not doing much for differentiation, but I digress), it raises the question for BFS enterprises of who they should work with for their critical modernization and transformation initiatives. As the ERP era proved out, the answer is never a single vendor. The answer is ecosystems.
  • Ecosystems are fundamentally the collaboration of multiple organizations with common objectives around driving value. The point of ecosystems is value creation, not who has the most partners or the antiquated concept of who owns the customer. Today’s BFS enterprises will often have relationships with all involved parties in their transformation ecosystems. However, it’s typically the IT and business process service providers that plan, build, and run the solutions. What we used to call prime contractors has become ecosystem orchestrators for the digital age, bringing together service provider + industry-specific platform + hyperscaler, etc.
The Bottom Line: BFS enterprises need to add “ecosystem orchestrator” to their shortlist of critical capabilities for selecting their strategic IT and business services partners.

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