The FINANCIAL — Now in its 12th year, IDC Financial Insights’ FinTech Rankings measure the health of the global technology market for all financial services sectors. In a new report, Business Strategy: 2015 FinTech Rankings – Measuring the Health & Direction of IT Spending in Global Financial Services, IDC looks into the details of the FinTech Rankings analysis and proposes explanations for some major shifts happening in FinTech revenues. Technology buyers can use this information to direct and support their own investment strategies, while IT providers will gain insight into the world’s technology markets and how those markets are moving today.
The 2015 IDC Financial Insights FinTech Rankings are based primarily on calendar year 2014 IT provider revenues derived from the banking, insurance, and capital markets sectors of financial services. Those organizations that receive more than a third of their calendar year revenue from financial services are tracked in the FinTech Top 100. Companies who gain significant revenues from financial services, yet do not meet the one third criteria, are tracked in the FinTech Enterprise 25.
For 2014, the 125 global companies that comprise the FinTech Rankings index brought in almost $172 billion in revenues – essentially flat over 2013. Meanwhile, IDC estimates that total addressable spending in financial services – that is, spending on hardware, software, and services – actually rose by 3.9% from 2013 to 2014. IDC’s analysis shows that a gap has emerged in the growth of spending versus the revenues experienced by the top IT vendors worldwide as measured in the FinTech Rankings.
In addition, the analysis indicates that revenues at the larger firms that appear on the FinTech Enterprise Top 25 index are actually in decline, again, despite the continued growth in spending by the institutions. Meanwhile the revenue growth experienced by the vendors tracked in the FinTech Top 100, with a greater focus on financial institutions, actually grew more than overall spending in the market.
Additional key highlights from the report include the following:
There is a movement away from dependence on hardware and a definite focus on software solutions – a trend that is in line with the virtualization and convergence initiatives seen at many top tier institutions worldwide.
The strength of the companies on the FinTech Rankings Top 100, particularly the largest of the independent software vendors (ISVs), demonstrates a stability in that market as well as an indicator that more and more institutions are relying on the expertise and technology solutions from large ISVs that are specifically focused on financial services, and possibly starting to move away from the mega-generalist firms that serve multiple industries.
Increasing revenues from smaller IT vendors points to an industry more willing to look for innovation from outside of the typical technology partners.
Given the increase in revenues seen by smaller IT vendors in 2014, it’s also a safe bet that the acquisition market will be strong in 2016.
“The 2015 FinTech Rankings demonstrate that this is a dynamic market, even among the technology giants that dominate the Rankings from year to year. The 2014 revenue for IT vendors is a story of small and large with the largest technology companies in the world experiencing revenue declines, while the smaller vendors gained significant market share,” said Jerry Silva, Global Banking Research Director for IDC Financial Insights.