Despite the gloomy environment, tech providers looking to sell to banks and fintechs have reasons to be optimistic. According to CCgroup’s recent study of European major banks and fintech executives, 70% of institutions across Europe expect to increase their investment in financial technology over the next 18 months.
The outlook is positive but providers need to bring their A game as buyers are becoming more discerning in what they are looking to get from providers. The need to increase revenues – profitability is the word of the moment – meet regulatory requirements and keep up with demands from clients and the competition amid the current economic downturn and cost-of-living crisis, is leading buyers to raise the bar when it comes to the tech vendors they work with.
It’s a (crowded) buyer’s market
While the technology market is lucrative, it is also crowded with thousands of suppliers vying for the attention of hundreds of financial institutions. Interestingly, institutions are waiting later in the sales cycle to directly engage with the technology provider. Over 45% of institutions only engage with a provider at shortlist and even purchase stage. This shows that a significant number of buyers are selecting a provider based on their market presence, rather than direct conversations, and this means the “shop window” has become critical for financial technology providers. A technology provider’s market presence—whether this is in the media, online or social, at events or coverage by analysts—is a major influence on shortlisting by buyers. To influence the major banks and fintechs that buy financial technology insight is critical.
Getting on buyers’ radar
There is a clear shift in focus to products and services that help both the institution and its customers navigate macroeconomic turbulence and, specifically, the cost-of-living crisis. For example, the top five areas in which buyers are looking to make tech purchases are insurance, credit, core banking, artificial intelligence & machine learning and payments, according to recent surveying. This isn’t surprising. With the focus on supporting customers through the cost-of-living crisis, buyers are looking for products that will help enhance their savings, credit and loans tech offering. The average ticket price for tech investment today sits at €290,000 – €570,000, a 300%+ increase on 2020 data, which shows they’re willing to spend more on financial services technology too.
Buyers are also looking for solutions that will boost revenue, allow them to integrate third-party services more easily, and conversely, allow third-party services to be more easily integrated into their propositions. Tech providers should keep front of mind to increase their chances of getting on buyers’ radar.
As buyers look for depth of information to decide whether to take a provider through to the shortlisting stage, the channels and content available matters. When it comes to initial influence, the most important channels are trade media, advertising, and internal business analysts, and the most important content is analyst reports, news articles, and industry debates.
Influencing fintech buyers
Ensuring that you’re in the same sphere as buyers and can get their attention is the first step, influencing and securing a purchase is another thing. The channels and content types for influence shift as buyers move through the process toward making a final decision. For example, once past the shortlisting phase and onto selection, the avenues of influence narrow. Buyers will want a deeper dive into the businesses they’re assessing, and so channels such as social media, search and events, and content such as analyst reports, whitepapers and opinion articles are the most influential.
When it comes to the type of attributes that buyers value most, decision-makers said that they prioritised value and ethics, governance and oversight, and supplier reputation as the top three that were likely to influence their decision to purchase. Buyers today want technology providers that can demonstrate that they are resilient, well run, and have a track record they can be proud of. The biggest obstacle to getting a deal over the finish line is due diligence on the supplier, getting consensus across the business, and lack of performance data and evidence from the supplier, so it’s important for tech providers to be conscious of those potential roadblocks.
Lack of awareness among industry analysts, lack of news from the supplier, and lack of information about the supplier online are the biggest reasons a buyer wouldn’t select a provider. Again, this reinforces that a shop window and having a solid, overt presence in the market is incredibly important.
The buying landscape is changing
The purchasing landscape is evolving. Gone are the days of tech buyers purchasing new solutions without access to full and informed sources.
To get on a buyer’s radar, tech providers should consider using a mix of content and channels that are broad and have enough depth, enabling decision-makers to access enough information and determine which vendors to shortlist. At the selection point, in-depth and narrow content is crucial. Buyers research for detailed information around tech vendors through trade media and native content such as reports, case studies and social content. But over and above tech providers striking a balance between the right mix of channels and content, conveying the right messages and demonstrating the right credentials is what will determine their success.
Banks and fintech buyers are increasingly looking for technology providers that put a major focus on values and ethics, governance and oversight, and supplier reputation over the more traditional metrics like cost, flexibility, and cutting-edge tech. Buyers want to work with providers that have market momentum, that can evidence performance with company and technology information and are reputable among media and industry analysts. Purpose-driven firms with strong reputations and track records that can evidence their performance are best placed to win. This is why driving awareness and building reputation through a combination of effective communications strategies is what will determine success for tech providers.
(Authors: Alexandra Santos & CCGroup Fintech Team)
