Despite the challenging economic climate, nearly three quarters of European banks and fintechs plan to invest in financial services technology this year, according to an optimistic report by a leading sector marketing firm.
CCgroup's
How to influence fintech buyers paper contains findings from a wide-ranging survey of more than 250 c-suite figures with businesses specialising in payments, banking, lending, KYC, insurtech, wealthtech and DeFi and blockchain.
An incredible 70% of respondents said that over the next 18 months they intended to invest in insurance (25%), credit (22%), core banking (21%), artificial intelligence & machine learning (20%) and payments (19%). And average spend was €290,000 to €570,000.
To learn more about the trends behind the numbers Marqeta spoke to one of the report’s authors, Alexandra Santos, who is also Head of Emerging Fintech at CCgroup.
Raising awareness: what buyers look for from tech vendors
She told us that the chief reason businesses were investing in tech was to boost revenue and profitability. This was followed, she said, by the opportunities that technology created to integrate with complementary third-party services.
Surprisingly the research, which consulted companies in the UK, France, Germany, Spain and Italy, found that driving efficiencies and reducing costs were of less importance to buyers.
In terms of the procurement process itself, Alexandra described how due diligence was absolutely critical, adding that suppliers who had plenty to say about themselves were enjoying a competitive edge.
“The businesses we spoke to were proactive in reviewing what prospective vendors were saying about themselves online. We learnt that being active on social media, appearing in trade media and publishing white papers all played a key role in the buying process. If you’re not doing this and a competitor is, then you risk being overlooked,” she said.
She added that online activity didn’t just get vendors noticed by buyers. Industry analysts were watching too, and often these figures play an increasingly pivotal role in influencing purchase decisions.
Other obstacles to making a purchase included struggling to achieve consensus across the business about a vendor’s suitability, as well as a lack of data or evidence about their performance. Of the top five obstacles, cost was last.
From Marqeta’s perspective, the findings reinforce the need to take an open API approach to delivering fintech solutions.
It’s also clear that buyers appreciate being able to kick the tyres of any offering. That’s why it’s so important to offer a public sandbox where prospective partners can make sure your capabilities meet their needs.
Ethically speaking: why values matter more than ever
Elsewhere in the 'How to influence fintech buyers' report, which aims to uncover “what influences technology purchasing decisions in major banks and fintechs”, the focus turned to factors that might influence decision making.
ESG sustainability was number one among the top five pieces of information that could deter a potential buyer, if missing from a prospective vendor’s website. This was followed by culture, ethics and integrity, reliability and capacity and technical specifications.
“Businesses nowadays are placing a greater emphasis on things like values and ethics in their purchasing decisions at the expense of metrics like cost or whether the tech offering is bang up to date,” Alexandra said.
And on that note, it was interesting to see that many financial services businesses are developing solutions to help alleviate the cost of living crisis for their customers.
For example, the top five influences cited by respondents were: helping customers to save and get a better return on savings; helping customers to access credit products; helping customers to access loans and capital more easily; reducing or eliminating the fees charged to customers where possible; and helping customers access financial education.
Interestingly, a good number of these influences are supported in many of the use cases enabled by modern issuer processor platforms.
Indeed, throughout the cost of living crisis, card programmes have demonstrated an ability to add immense value for end users.
Springing to mind are propositions such as accelerated wage access, which can help employees better manage their money, and short-term lending, which provides a low interest alternative to credit cards,
If CCgroup’s research tells one thing, it’s that problem-solving financial tools offered by innovators in a transparent way will win out among discerning buyers in the coming years.
Because as the How to influence fintech buyers report found, while plenty of businesses are planning to invest in fintech, it’s likely that customers will take “much more measured approaches, forcing tech vendors to bring their A game on all fronts.”
It’s a challenge we at Marqeta relish.
