A study by business-to-business technology PR consultancy CCgroup has revealed that in the last 12 months, the majority (63 per cent) of fintech projects in capital markets have required investments of $500,000 or less.
Almost half of projects are below $250,000
Of these, 45 per cent required investments of below $250,000, and only a tiny minority required investments greater than one million dollars.
New stage in fintech evolution
According to CCgroup, this predominantly low level of investments per project signals a new stage in the evolution of the fintech sector: a move towards smaller, shorter-term endeavors, rather than large-scale tech overhauls and transformations.
Lower costs, faster implementation
One reason for this change is that larger-scale projects are more time-consuming and labor-intensive. Another is that everyone is cutting costs in the financial services field, so many players prefer to move some of their operations to the cloud, which requires less capital expenditure. In this respect, CCgroup cites data from Aite Group showing that spending on cloud services from capital market participants will grow to $3.2 billion in two years, from $2.5 billion in 2014.
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Another question that the survey sought to answer was, from among 30 capital market companies (of which 55 per cent were buy-side and 45 per cent were sell-side), how are the buyers of fintech services selecting the suppliers.
According to Imran Majid, Deputy Head of Fintech at CCgroup, the process of deciding which vendor of fintech services to choose was complex, involving a variety of factors, leading among which was the vendors’ reputation.
Traditional values meet need for disruption
“The buying and influencer landscape in capital markets is a dichotomy. Capital markets firms are forward thinking in terms of eschewing major technology investments, to focus on CAPEX-light projects. In contrast, traditional influencing factors such as relationships, reputation and profile make the difference when a buyer is selecting a vendor,” says Majid.
“This contrast highlights the need for insight to inform the strategy of sales and marketing teams. With better intelligence, FinTech companies can stand out from the pack and gain a bigger slice of the market.”