Financial services distribution channel vendors must reposition themselves as enterprise CRM players or risk being squeezed out of the market, according to a new report from Datamonitor.
The report, "Global eFinancial Services and distribution channel vendors: approaching the end-game" reveals emerging players such as S1, Eontec, AIT and Financial Fusion are pushing smaller niche vendors out of the marketplace. These include companies focusing on account aggregation, m-banking and online advice.
According to the study, the economic slowdown is prohibiting short-term growth in e-banking technology expenditure, with growth in Europe over 2001-2002 slowing to six per cent from 36 per cent in 2000-2001. Instead, banks are looking to derive value from an integrated multi-channel distribution strategy. Opportunities are likely to dry up for technology vendors that cannot move beyond a single-channel sell, warns Datamonitor.
The research firm urges distribution channel vendors to reposition themselves as enterprise CRM players, with expertise across the branch, call centre and Internet channels. Additionally, vendors focused on retail e-banking need to branch out into higher-growth lines of business, such as e-SME banking and e-capital markets, says the report.
The research suggests increasing consolidation in the e-financial services/distribution channel vendor market will take place as vendors seek to round out their application portfolios through strategic acquisitions, and take advantage of major branch renewal opportunities. Datamonitor forecasts 13.4 per cent growth in IT spend in this area from 2001-2004.
Siân Jones, eFinancial Services analyst at Datamonitor, cites US-based S1 as a good example of a vendor executing an aggresive diversification strategy. "Look at their acquisition of Point - a niche player in the call centre/CRM market -which they announced very recently. This will complement its acquisition of Software Dynamics last year, which has given it much-needed branch capability and has already had a positive effect on its deal flow," she says.
"At the end of the day, distribution channel technology vendors will have to demonstrate best-of-breed capability and as broad an offering as possible in order to survive what is likely to be a significant shakeout in the vendor market," concludes Jones.