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Some of the biggest traditional players in the financial services sector are being forced to re-evaluate their business models in order to keep up with a new generation of tech-fuelled providers.
In its latest Market Trends & Forecasts report, published on Monday, TechMarketView says it expects the market for software and IT services to grow at a CAGR of 2.4% over the next three years. This figure, although reduced from an earlier prediction, is higher than the forecasted market growth in general, and signals a time of significant change in an industry that has historically been slow to evolve.
The pressure mounting on some of the sector’s biggest names is being applied mostly by new entrants to the industry that, with the help of faster and more agile IT systems, are better positioned to capitalise on changes in consumer and client behaviour – most notably a shift towards mobile technology.
It comes at a time when many established firms in the finance industry are having to consider new regulations, with the increased use of big data and analytics forcing governments and other governing bodies to impose tighter controls on the industry.
The anticipated growth of the software and IT market within the Financial Sector is spread across four main areas, with Business Process Services expected to continue growing at the fastest rate, ahead of Software, Application Services and Infrastructure Services. All areas of the market are currently growing faster within the financial services industry than they are in general, though.
The cloud’s influence is most noticeable when it comes to the renewal of critical infrastructure. An increasing number of companies are considering themselves ready for change as it becomes easier and much more cost-effective to replace dated systems. This will impact smaller firms as much as their larger counterparts, and is likely to generate more competition.
Beyond this, the greater use of cloud services will lead to noticeable change in other areas of the industry, the report claims. It talks of faster and bigger transformation in software and applications, and a move towards the next generation of business process services, such as advanced automation.
It’ll be interesting to see where things go from, here. The rapid growth of technology in the sector is clearly down to the countless opportunities it provides firms of all types and sizes, but it will also come with implications, especially for those outside that will be looking to facilitate and capitalise on the evolution.
IT and software suppliers must now adapt if they’re to make the most of the anticipated growth. They should, as TechMarketView points out in the report, offer real solutions to the challenges faced by service providers in the finance sector. These could come in the form of agility-enhancing cloud systems, automation software that improves cost-efficiency or applications that meet consumers’ growing mobile demands. Customer relationships will be just as important, as suppliers look to better understand their audience’s most pressing needs.