Published on the 05/05/2016 | Written by Beverley Head
Legacy financial software vendors – the likes of SAP, Oracle and CSC – have been slapped by Gartner for their sluggish approach to innovation…
The financial sector has always proved a lucrative market for the major software vendors, especially of late as most banks have moved off batch based legacy platforms onto more transaction focused core systems. However Gartner this week warned that “most legacy vendors that offer bank channel applications for both consumer and business customers have been slow to react to new customer requirements and demands of digital banking.”
That sluggishness will cost them. Gartner predicts that by 2019 one in four retail banks will be using fintech companies that are currently startups to replace legacy online and mobile banking systems.
It poses a challenge for CIOs. Stessa Cohen, Gartner research director acknowledges; “CIOs must prepare to manage the challenges of evaluating and selecting new vendors that may not have proven track records in the financial services vertical or may simply be new and untried without an extensive customer base. It can be difficult for CIOs to justify investment in their solutions to their boards and regulatory agencies, but don’t use that as a reason to exclude new vendors.”
Frost & Sullivan’s study, Fintech in Australia – Trends, Forecasts and Analysis 2015 – 2020 survey which was released this week has identified three main areas of fintech activity locally, digital payments, personal and business finance, and financial infrastructure and data analysis.
The fintech sector was a focus of this week’s Federal Budget – as was blockchain, the distributed ledger technology now getting a workout at the Australian Stock Exchange, Commonwealth Bank and Westpac.
Frost & Sullivan forecasts blockchain technologies will achieve revenues of $843 million in Australia by 2020.
Although the Budget allocated just $200,000 for a marketing campaign to alert the world to Australia’s prowess in fintech, the Government has agree to fund a nine-month study into the potential and implications of blockchain for industry and the nation. It has also signalled that the Australian Securities and Investment Commission will use its “regulatory sandbox” to allow for testing of emerging financial platforms, which may include allowing up to six months’ market testing of certain systems without the need for a licence.
