BFSI Firms Need to Refine Their Fintech Programs to Focus on Outcomes Rather Than Partner Identification

BFSI firms need to refine their FinTech programs to focus on outcomes rather than partner identification

APRIL 2021

Elena Christopher, Senior Vice President, Research Ramanan Rajagopalan, Consulting Director

Topic Page no.

• Executive summary 3

• The fintech enablement ecosystem 4

• BFSI emerging tech demand 2020+: Cybersecurity, automation, and cloud are among the top investment priorities for BFSI enterprises 6

• The BFSI perspective on fintech partnerships 7

• Incubators and accelerators fill the matchmaker role for BFSI firms and fintechs 11

• Among consultants, advisors, and service providers, a few stand out for their differentiated approaches to fintech enablement 12

• HFS Research authors 18

Going beyond partner identification is a “have-to-have” for BFSI firms’ fintech program success

As we slogged through the first year of a collaborate with fintechs. new decade under the shadow of a 2. Cybersecurity, automation, and cloud global pandemic, the banking, financial are among the top technology services, and insurance (BFSI) sector is investment priorities for BFSI firms. weathering this latest storm. 3. BFSI firms are keen to embrace The pandemic has re-contextualized emerging technologies, but they digital, and BFSI firms have an even need to focus on partner viability. greater urgency to consume emerging 4. Incubators and accelerators play the technologies to accelerate their digital role of matchmakers between BFSI journeys and usher in effective, firms and fintechs. increasingly virtual ways of working and 5. Among the consultants, advisors, and transacting. With this backdrop in mind, service providers, a few stand out for HFS, with support from Capgemini, their differentiated approaches to investigated how BFSI firms are fintech enablement. approaching partnerships with emerging partners, particularly fintech start-ups The Bottom Line: The magic mix for and scale-ups that often offer bleeding- fintech scale-up success is the right edge innovation but are not big enough partner, the right use case, and the right to pass muster with standard risk and marketing timing – all aligned to sourcing protocols. achieving a focused outcome. Clear articulation of ideas by potential fintech HFS conducted qualitative interviews with partners is just the starting point in the leaders of fintech programs and fintech program. Though BFSI firms are innovation labs in BFSI enterprises to keen on embracing innovation, they do understand the evolving wants and not always know what they want or need. needs for emerging technology solutions, Refined functional requirements and appetite for co-innovation and models clear objectives help ensure alignment. aligning to it, and any impact from BFSI firms can better leverage the COVID-19. Following are the critical expertise from third-party resources that findings: offer data-based approaches to 1. The fintech enablement ecosystem assessing fintech qualifications and help comprises four main categories of refine use cases, assess market players: venture capital firms, readiness potential, and implement incubators and accelerators, IT fintech partnerships with an eye toward services and business` process tangible outcomes. service providers, and consultants and advisors that help BFSI firms

What emerged from our research was a firms just getting established. Scale- view of the fintech enablement ups are generally funded firms with ecosystem. We have intentionally established customers and growing couched it as fintech enablement rather revenue. Established firms are than BFSI enablement as the various financially stable firms with strong ecosystem participants largely focus on balance sheets, established enabling fintechs to fulfill their purpose of customers, and proven BFSI track delivering meaningful innovation within records. Scale-ups and start-ups are BFSI firms. As Exhibit 1 shows, the center of often too small to be adequately the ecosystem consists of addressed by BFSI procurement standards, whereas established firms • BFSI firms: Ecosystem BFSI firms are often already approved partners include those banking and financial or meet procurement thresholds. Our services and insurance firms that research primarily focuses on start- focus on consuming emerging tech ups and scale-ups that are more innovation to help drive digital challenged to craft relationships with transformation and better employee BFSI firms due to their size. and customer experiences.

• Fintechs: We recognize three tiers of fintechs. Start-ups are the very small

Exhibit 1 The fintech enablement ecosystem

Incubators and Service Accelerators partners

Established

Venture Scale-ups Consultants Capitalist BFSI firms and Advisors firms Start-ups

Fintechs

Fintech enablement ecosystem

Source: HFS Research, 2021

© 2021, HFS Research 4 Beyond the core of fintechs and BFSI inclusive of fintechs. Partnerships with firms, there is a robust ecosystem of start-ups or scale-up fintechs often enablers that help fintechs build their involve collaboration on developing business and align emerging fintechs client solutions and can lead to with BFSI firms. These enablers may work inclusion in live deals. In these cases, directly with the fintech, the BFSI firm, or the service partner is almost serving sometimes both, depending on the as the sponsor of the fintech, context. The fintech enablers include assuming risk and oversight for the • Venture capital (VC) firms and funds: partner. In this context, services firms These firms are dedicated to funding can serve as a bridge between and enabling fintech growth. Their fintechs and BFSI firms, but the intent is focus is on capital infusion in not matchmaking for the benefit of exchange for equity, but it can also the fintech–it’s more closely aligned to include incubation and facilitating best meeting the needs of their BFSI connections, including BFSI firm clients. introduction. There is interesting • Consultants and advisors: Firms with overlap; BFSI firms often have a VC formal emerging technology advisory arm, so they can take advantage of or consulting practices like the Big 4 “in-the-family” insight and access. (Deloitte, EY, KPMG, PwC), McKinsey, Similarly, some service and technology Bain, or Accenture fit here. These firms firms, such as Capgemini, Deloitte, and are often called on to recommend Accenture, have venture funds to fintech partners for BFSI clients, largely cultivate fintechs they may use in their informed by other advisory solutions when serving BFSI firms. engagements and their own IT and • Incubators and accelerators: business process outsourcing (BPO) Incubators and accelerators are businesses, innovation hubs, and specialist firms that offer access to accelerators. There are also some resources such as facilities, specialty firms, such as the UK-based infrastructure, and ecosystem The Disruption House, which offers a connections, often with a program- data-based approach to helping BFSI based approach to cultivating a proof firms identify their optimal fintech of concept (POC) or use case with a partner. sponsoring BFSI partner. Examples Despite the existence of a decently include Plug and Play, the FinTech robust ecosystem for fintech Sandbox, and Elevator Lab. These firms enablement, we were struck by just how are often matchmakers between much of the ecosystem’s focus is on fintechs and BFSI firms. achieving the grand crescendo of • IT and business process service making a match between a fintech and providers: The BFSI market spends the a BFSI firm. In reality, this is when the most on external IT and business actual work of innovation starts. We process services with a range of believe there should be an enhanced partners from small regional firms to focus on showcasing the value the large global providers. These services fintech enables and the benefit the BFSI firms have elaborate networks of firm realizes. third-party technology partners,

The pandemic accelerated technology help automate processes that made no investments in BFSI firms as they strove to sense in a remote work context and to stay competitive and relevant to their help rapidly cycle through customers, employees, and partners. As unprecedented work volume, such as the Exhibit 2 shows, the reaction from BFSI small business loan applications enterprises planned to increase generated as part of The Coronavirus investments in various emerging Aid, Relief, and Economic Security technologies. At the top of the stack was (CARES) Act and similar efforts around the obvious need for enhanced the world. The cloud rounded out the top cybersecurity to accommodate mass three, with cloud-based apps and virtualization. Process automation took infrastructure enabling pockets of the second spot, with many firms resiliency around the world. reporting increased use of technologies like robotic process automation (RPA) to

Exhibit 2 The COVID effect on emerging technology investments in BFSI enterprises

How do you expect COVID-19 to impact your spending for any of the following?

Cybersecurity 69%

Process automation, including RPA 59%

Hybrid cloud or multi cloud 53%

Smart analytics 35% Increase

Artificial intelligence (AI) 24%

5G 19%

Blockchain 18%

Internet of things (IoT) 13%

Edge computing 13%

Augmented or Virtual reality 13%

Sample: Coping with COVID-19 study, BFSI = 165 out of overall 631 major enterprises Source: HFS Research 2020

BFSI firms are keen to embrace emerging technologies, but they need to focus on partner viability

As part of this study, we conducted fintech solutions internally through their qualitative interviews with senior leaders labs. They have dedicated leaders for in BFSI firms whose roles spanned their fintech programs with roles innovation labs, emerging technology, spanning innovation labs, emerging fintech partner intake mechanisms, and technology, and fintech partner intake fintech initiatives. This section provides a mechanisms and fintech initiatives. deep dive view of what we learned about As “fintech” no longer implies start-ups their fintech focus. (e.g., PayPal is a fintech), BFSI companies BFSI firms have myriad ways of segmented the fintech landscape into identifying fintech partners start-ups, scale-ups, and the established technology companies in terms of BFSI enterprises have formal start- revenue, vision, and market availability up/scale-up accelerator programs to for their solution. constantly scout for fintech firms through multiple channels, such as internal Following are thoughts on fintech innovation lab networks, internal venture programs from a large international capitalist arms, and incubators. Some of bank and a large European bank: them also fund the development of

We do have an Accelerator program to work with the start-ups. We have a network of innovation labs that works in this program. We also have a hackathon program. Fintechs pitch themselves to us. We also separately work with investment groups internally.

- Head of innovations and productivity of a leading bank

We work with the fintech firms for tech ideas. We have a way of working with start-ups through accelerator programs in Brussels and Paris.

- Head of fintech initiatives of a large European bank

© 2021, HFS Research 7 BFSI companies have structured • Ability to scale-up (often informed by evaluation frameworks to assess performance to date) fintechs, but there is still a lot of gut feel • Staff experience level (e.g., young involved employees with fresh insights, experienced leaders, serial BFSI firms have developed formal entrepreneurs) evaluation frameworks – an “index card” rating approach of sorts to assess • Technology focus that displays a clear fintechs. A set of consistently mentioned fit with an identified need business (but not always easily measured) need or an interesting technology with elements emerged: potential use in the short to medium term • Simple and transparent articulation of technology and business idea or In our expert interviews, respondents purpose almost always coupled logical and • Sincerity in a relationship tangible assessment measures with • Strong business case more esoteric measures such as “honest • Size of company by its annual revenue dialog” and “passion.” • A clear three-to-five-year plan for the company

Key criteria for evaluation are three to five years of roadmap, revenue, and having an open, honest dialog. - Head of automation, robotics, and fintech intake mechanism of a large international bank

An additional facet a respondent raised We consistently heard from our BFSI was the need to assess customer experts that they are absolutely readiness. The bank and tech might be besieged by emerging tech players that ready, but that does not mean the want to deliver a pitch on why they are market is. A good example is a European the next big thing. The evaluation criteria bank that launched the first pan- also serve as an essential filtering European digital bank 10 years ago. It still process to help winnow down the has fewer customers than competitors potential candidates. Fintech partner who launched solutions much later. identification ideally should be bi- Being first does not matter if the market directional (e.g., inbound and outbound) is not ready. to balance supply and demand. When we queried respondents about how they BFSI firms will happily leverage expert managed this balance, all indicated that external assistance for fintech partner they used various forms of external identification, but the benefit realization assistance for partner identification. The emphasizes speed, not quality approaches vary for the firms:

© 2021, HFS Research 8 • Some use relationships with external in existence) with external IT and incubator or accelerator programs to business process service providers; help identify the right technology Accenture, Deloitte, and Capgemini partners, often with a regional flavor; were mentioned as examples. some firms identified include Elevator • Others utilize specialized consulting Lab, Finastra, FinTech Sandbox, and and analytics firms, such as The Plug and Play. Disruption House. • Some use relationships (often already

We work with The Disruption House, a niche benchmarking and data analytics firm. This firm assesses the business viability of start-ups. Working with them saves time for us.

- Head of innovation and productivity of a large international bank

I get lots of information from external forums and events. They help in understanding if we miss out something related to adopting technologies.

- Head of automation, robotics, and fintech intake mechanism of a large international bank

External forums and events help the BFSI despite the existence of formal firms stay on top of technology trends. evaluation mechanisms

While these myriad approaches offer BFSI Fintech leaders from BFSI firms look for firms ways to jumpstart their searches for sincere relationships from fintech optimal emerging technology partners, company leaders. BFSI firms want fintech HFS understands that the primary benefit leaders to clearly articulate the business that BFSI firms realize from external case with transparency on the strengths partners is time savings. While time is and limitations of solutions. certainly valuable, partners have more to Additionally, people-related factors, such offer in the vein of supporting partnership as resistance to adopting new viability and success. There must be technologies, are key blockers to the more emphasis on achieving results than success of fintech programs in BFSI on making a match. enterprises. Firms are taking steps to The success of fintech partnerships address this issue internally. A large depends on people and relationships international bank began conducting

© 2021, HFS Research 9 internal workshops and seminars to problems they face and suggest address the people’s resistance to effective solutions. Leaders offered their adopting new technologies. The firm asks thoughts on this approach: its employees to present the key

The hardest thing in the last three years was changing the hearts and minds of people to make them understand that fintech is not going to take their jobs but help them. It is about a horse and buggy vs. a car. Either we can be ahead of the curve or behind it.

- Head of automation, robotics, and fintech intake mechanism of a large international bank

Most of the time, the shutdown happens due to people. It is more about adapting to the needs of the bank. If they are not able to adapt, they should be stopped.

- Head of fintech initiatives for commercial and private banking in a large European bank

Fintech leaders in BFSI companies also through license pushes to get business, feel that lack of execution capability which annoys the BFSI companies. leads to the failure of fintech programs, We have observed that BFSI firms are resulting in the program not going often willing to let their existing advisory beyond the proof-of-concept stage. and IT services firms provide emerging Fintech programs also fail due to the tech partners. Firms view this as a benefit lengthy onboarding processes in BFSI of the relationship rather than fintech companies. Other causes of failure are partners being objectively identified and technology misalignments and cost- qualified because of specific criteria. related items. Lastly, the larger technology firms drive their agenda

To supplement what we heard from BFSI platform. The Disruption House is a niche firm leaders, we performed research to firm that analyzes the fintech market and identify the companies that play the technology. Plug and Play offers roles of incubators and accelerators. accelerator programs twice a year to Finastra was the company that leaders connect start-ups with BFSI firms. Elevator most frequently identified. The company Lab has a strong focus on Central and has partnerships with Accenture, Eastern Europe (CEE). Exhibit 3 shows the Capgemini, Wipro, Infosys, and others. services that key incubators and Finastra fuels innovation in the fintech accelerators provide in the fintech ecosystem through its open banking ecosystem.

Exhibit 3 A view of the key incubators and accelerators in the BFSI fintech ecosystem

Firm Overview of services Elevator Lab • Elevator Lab helps fintechs develop solutions for banks in CEE. • Raiffeisen Bank International (RBI) works with Elevator Lab to drive fintech adoption across its network of banks. • Elevator Lab has a strong footprint in CEE (14 markets including Austria, 16.8 million customers). Finastra • Finastra drives innovation through FusionFabric.cloud, an open development platform that connects fintech solutions with a range of financial institutions through open APIs. • Key partners include Accenture, Capgemini, Wipro, and Infosys. FinTech • The Boston-based nonprofit organization was founded in 2014 by a group of fintech Sandbox entrepreneurs and investors. • FinTech Sandbox facilitates innovation by making data and infrastructure available to fintech start-ups free of cost. • The company works with 90 of the top 100 banks globally. • Accenture’s FinTech Innovation Lab is a key accelerator partner. • Ernst & Young is a lead partner in promoting innovation in financial services. Plug and Play • Plug and Play offers a 12-week accelerator program twice a year, connecting the best early-to-growth-stage start-ups to the world’s largest financial institutions. • The company launched in 2015 and has accelerated 200+ fintech start-ups and invested in 50+ firms. • It operates in New York City, Paris, Abu Dhabi, Frankfurt, Tokyo, Singapore, and China, and it works with leading banks worldwide, including BNPP. • Accenture and Deloitte partner with Plug and Play.

The Disruption • The Disruption House was established in 2017, and its headquarters are in the UK. House • The firm provides an objective analysis of fintechs’ business models and technical capabilities. • It helps banks evaluate technology firms for fintech partnerships, saving BFSI firm leaders time. • CITIBANK works with this company to understand fintechs’ market viability.

Source: HFS Research, 2021

We complemented our interviews with opportunities for fintechs as part of IT or senior BFSI leaders with detailed business process services portfolio (e.g., competitive assessments of consulting TCS, Infosys, Wipro, Accenture, and advisory firms and IT and business Capgemini, and Cognizant), and process services firms to assess their role financial support for fintechs through VC within the fintech enablement funds. Our research also identified a few ecosystem. As we suggested in Exhibit 1, providers that offer a differentiated many of these firms straddle multiple approach to supporting the fintech categories—offering consulting or ecosystem, going above and beyond advisory services on fintech use (e.g., traditional approaches. Exhibit 4 provides McKinsey, Accenture, Capgemini, Deloitte, a concise view of how consulting PwC, EY, and KPMG), partnership providers support fintech initiatives.

Exhibit 4 A view of the role of consulting firms in driving fintech initiatives

Consulting service providers Execution Innovation Voice of the customer

Accenture • Formal 12-week • Co-innovation • Good reputation in qualification program models with Finastra the BFSI industry through FinTech and FinTech Sandbox • Brand perception of Innovation Labs • Holistic approach to FinTech Innovation • Strong partnership change Labs network • Dedicated leadership

Capgemini • Formal qualification • Multiple innovation • Good reputation for program with structured streams: Applied consulting-led fintech evaluation Innovation Exchange services mechanism is the key one • Awareness of the • Strong partnership fintech program network among existing • Dedicated leadership clients • Investments in venture programs to drive fintech innovation

Deloitte • Formal accelerator • Focus on building • Good rapport with program technology advocacy BFSI firms for end-to- • Partnership with Plug and in niche areas such end strategy Play and global FinTech as blockchain and consulting in niche Federation Hub artificial intelligence areas • Strong digital consulting among the gamut of arm technologies for the • Dedicated leadership BFSI industry

Consulting service providers Execution Innovation Voice of the customer

EY • Drives adoption through • Conducts scaling • EY comes across as partnerships with experiments to a pure-play strategy governments and FinTech determine the consulting firm that Sandbox business viability helps the • Leverages its internal • Thought leadership government bodies FinTech Hub to provide focus and BFSI firms in strategy consulting fintech adoption service

KPMG • Partnerships through • Conducts innovation • KPMG is known as a Matchi platform challenger program pure-play strategy • VC focus through High across the globe consulting firm Growth Ventures though it has an • Dedicated leadership information technology arm

McKinsey • Panorama FinTech • Innovation focus is • McKinsey is known for program and database mainly through high-end strategy that connect BFSI firms thought leaderships consulting with a huge set of fintech companies • VC focus through Fuel, an acquisition • Dedicated leadership

PwC • Formal scale program to • Open banking • Good reputation in drive innovation through innovation through financial services partnerships partnerships consulting • Start-up and ventures • Conducts training in program educational • Dedicated leadership institutions

Accenture focuses on the fintech and banking and capital markets business emerging tech spaces through its operations is complemented by strong FinTech Innovation Lab and strong relationship management and partnerships exemplified by its track record of enduring relationships of 10 or more Accenture’s FinTech Innovation Lab offers years. Accenture has strong partnerships a three-month program for tech start- with Finastra and FinTech Sandbox to ups to work with financial services firms, drive innovative product development validate propositions, gain valuable for BFSI firms. Finastra rated Accenture as insights into the financial services its best partner in 2020. Accenture has industry, and develop strong more than 300 Finastra-certified relationships with senior industry consultants. executives. Additionally, Accenture has a dedicated leader for fintech initiatives. Accenture’s domain knowledge in

© 2021, HFS Research 13 Capgemini’s emerging tech scale-up Deloitte runs a good fintech program, program is unique among IT service but it lacks the rigor of Capgemini and providers and consulting firms Accenture

Capgemini has developed a Deloitte comes closer to Accenture and qualification mechanism to evaluate Capgemini among the other service emerging tech companies on good providers when it comes to evaluating collaboration fit and sustained business fintech programs. It leverages the success. As part of its emerging tech combination of its co-innovation model scale-up program, Capgemini offers and end-to-end consulting expertise for innovation-as-a-service with scale-ups fintech business. Deloitte’s Accelerator to drive effective collaboration in the program offers institutions the fintech ecosystem. While this program is opportunity to create the competencies not specific to BFSI emerging tech firms, needed for growing their innovation Capgemini has qualified nine firms from capability and working with pre-vetted the initially identified list of twenty-five start-ups to design and deliver a proof of companies to work with a bank in digital concept. The company works through its onboarding, digital payment, and Advisor labs and consulting arm as part of its 3.0. The company used a phased fintech program. Deloitte works with approach to diagnose the bank’s pain Global Fintech Hubs Federation and Plug points, identify the potential partners, and Play to drive fintech adoption orchestrate the partnership model, and worldwide. One of Deloitte’s key strengths handhold the industrialization of the is its consulting arm, which helps clients partnership. with technology implementation. Among its key fintech- and emerging-tech- Capgemini works with 50+ emerging- related activities, Deloitte focuses on tech partners and additional external driving the adoption of emerging vendors for innovation and deployment technologies such as blockchain and AI. models as part of its fintech program. For example, Deloitte has invested in Capgemini drives innovation through the Fractal labs for AI-driven platform to Applied Innovation Exchange, which make financial risk decisions and has provides access to a unique ecosystem helped Saga, a company that offers of start-ups, accelerators, incubators, blockchain-based currency for strategic technology, and business international exchange select the partner partners. The company works with Efma, for SaaS solution to manage its treasury which provides access to 1,200+ fintechs unit’s back office and its reserves). and 3,300 financial institutions worldwide. Though Deloitte has a good fintech Capgemini also focuses on deployment program, it focuses primarily on the through a partnership with FinTechOS, adoption of emerging technologies in which has 50+ partners and 40 clients financial services firms worldwide, and it across 20+ markets globally. Lastly, does not execute rigorous scientific Capgemini participates in open evaluations of fintech start-ups and innovation, and it is a key Finastra scale-ups. partner.

© 2021, HFS Research 14 Consulting firms such as PwC, EY, KPMG, Traditional IT service providers such as and McKinsey depend on their thought Cognizant, Infosys, and TCS leverage leadership, databases, and partnership their BFSI partnerships for their fintech networks to focus on fintech programs programs; none of them have a robust fintech evaluation framework Among PwC, EY, KPMG and McKinsey, PwC leverages its VC arm and co-innovation Among the IT service providers, Infosys model to offer strategic advisory services leverages its Finacle to drive partnership in the fintech ecosystem. EY works closely programs with the fintech community. with government bodies to identify and Combined with the strong go-to-market help start-ups through its consulting approach in BFSI, this helps Infosys in expertise, but it does not offer a robust working on digital banking solutions. evaluation framework to help BFSI firms Infosys is one of the key partners for identify and work with the right fintech Finastra in driving open innovation. The partners. The company also focuses on company has invested heavily in driving adoption worldwide with its localized innovation hubs. Though thought leadership. KPMG leverages its Cognizant has a strong BFSI focus fueled Matchi platform and geo-specific VC by investments in digital engineering partnerships in fintech businesses. capabilities, partnerships, and broad Though the company uses its technology coverage in digital operations, it does not consulting arm for downstream have a strong fintech program. The implementation, KPMG mainly depends company depends on its broader on its Matchi platform. McKinsey focuses venture capital program and lacks an on pure-play high-end strategy evaluation mechanism to identify consulting, which is not as detailed as fintechs. TCS leverages its BaNCS and the services offered by Accenture and COIN network for fintech business. The Capgemini in the fintech ecosystem. The company also conducts a boot camp company leverages its partnership program with start-ups. Wipro leverages network and comprehensive database its BFSI partnerships and the company- to help fintechs. It also offers expert wide Wipro Ventures program for its support through tailored deep-dives, fintech business. Exhibit 5 provides a view partnership market scans, and of how traditional service providers drive workshops. fintech adoption.

IT service providers Execution Innovation Voice of the customer

Cognizant • Venture capital focus • Pairs consulting • Cognizant has a through its accelerator with solution better reputation program families that with North • Leverages its portfolio of address specific American digital systems and business needs customer base as technology, digital (e.g., digital a software service operations for banking lending, digital provider and capital markets, advice) and though there is no offering platform- dedicated fintech focus based solutions Infosys • Strong focus on Finacle • Works closely with • Infosys is known as and partnerships innovation a good IT services • Strategic focus on BFSI partners execution partner in the BFSI industry • Partnership with Finastra • Organic focus on building innovation culture through localized innovation hubs TCS • Focus on driving • Leverages its • Like Infosys, TCS is partnerships through TCS technical expertise also known as a COIN and BANCs and Business 4.0 good execution • Offers FinTech training framework to drive partner programs through its innovations with • The company has senior practitioners BFSI clients a very good focus • Leverages its depth in BFSI on relationships value chain to drive fintech adoption Wipro • Leverages its partner • No specific • Wipro has a network in BFSI and the VC innovation stream reputation for its program for fintech space strong engineering • Leverages its BPS business apart from Finastra services among to digital change agents partnership for customers such as AI and open innovation automation in BFSI firms

BFSI firms have developed structured important for the success of the internal programs run by dedicated fintech program. leaders for working with fintechs and • Right use case: BFSI firms are keen on emerging techs. By and large, they innovation, but they do not always identify an internal need and then know what they want or need. Refined identify fintechs through multiple functional requirements and clear streams such as innovation labs, objectives help ensure alignment. corporate venture, and external vendors. Some of them work with regional • Right market timing: Market readiness incubator programs to identify the right is the real wild card. It is always hard fintech partners. BFSI firms have internal to get uptake precisely right, but mechanisms to evaluate fintechs. BFSI aligning use cases with growth firms expend significant effort on finding strategy can help. a partner, but, in reality, the hard work of BFSI firms can better leverage the innovation starts after the partner is expertise of third-party resources to approved. The key to a fintech scale-up select optimal fintech partners, program’s success is finding the right particularly those with programs with partner, the right use case, and the right data-based approaches to qualifying market timing and aligning them with fintechs, refining use cases, assessing clear objectives: market readiness, and helping • Right partner: Clear articulation of implement the fintech partnership technology ideas and functional program. technology that is proven enough is

Elena Christopher | Senior Vice President—Research Elena Christopher is Senior Vice President—Research at HFS. Elena leads HFS’ coverage of the Triple-A Trifecta change agents—AI, automation, and smart analytics. She is also responsible for driving the industry-specific research agenda for HFS, digging into the major trends impacting each in- scope industry and the implications for business process and IT services. Her industry coverage specialization is Banking and Financial Services. Elena brings more than 25 years of IT and business process services expertise to HFS.

Ramanan Rajagopalan | Consulting Director Ramanan Rajagopalan is the Consulting Director at HFS. Ram works on custom research studies across various technologies and industries in HFS. He has over 19 years of experience in the industry, spanning strategy consulting, business development, and market research. Ram has worked with leading IT service providers worldwide.

A special thanks to the Capgemini team for their valuable inputs and feedback throughout the research and publication of this report.

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