_Logo.jpg){kind=logo}
LONDON–(BUSINESS WIRE)–According to a new report released today by Information Services Group (ISG) (Nasdaq: III), a leading global technology research and consulting company.
The 2021 ISG Provider Lens™ report on digital banking for the UK reveals that the country’s big banks are facing a significant drop in revenue and market share, the “big four” leading banks – HSBC, Barclays, RBS and Lloyds – collectively closing unprofitable branch accounts at over 60 per month in 2021.
To compete with FinTechs and other financial services organizations, banks are turning to app-based services and embracing other technological advancements, although there is still little evidence that digital transformation efforts have increased banks’ profitability, the report says.
While the majority of IT service provider revenue will continue to come from the big four, banking competition is intensifying in the UK, with 89,000 finance companies operating in the country. The Bank of England has also opened up the country’s interbank payments system to increase competition from FinTechs, the report notes.
In addition, around 98% of UK households have internet access, the report says. “After several years of relatively modest consumer uptake, there now appears to be substantial potential for open banking to really take off in the UK,” said Owen Wheatley, Senior Partner for Banking and Financial Services at ISG. . “New entrants generate a third of the country’s new banking revenue, and traditional banks are struggling to fend off a relentless onslaught.”
The report sees the UK at the forefront of FinTech and open banking revolutions. The UK is the first country in the world to deploy a regulatory FinTech sandbox to run new products and services. More than nine out of 10 FinTechs use open banking for current services and 81% to enable new services.
The report sees UK banks looking to modernize their core platforms, often running on mainframes, to meet customer and regulator expectations and to add digital capabilities. Banks are moving from mainframes to software-as-a-service platforms and the cloud. Cloud-native platforms support real-time processing and are very cost effective as they are offered on a pay-as-you-go subscription model.
Additionally, demand for third-party integration services is on the rise, the report adds. UK banks are looking for IT service providers who offer off-the-shelf commercial products through tailored engagements. Banks have a high demand for artificial intelligence, blockchain and related technologies, and they are looking for vendors with skills in agile methodologies and DevOps to integrate these technologies.
The report sees vendors coming up with new approaches to core modernization. Low-code platforms are gaining traction because they can perform complex tasks and integrations by allowing employees to point and click rather than write code. Low-code platforms are also integrated with AI and machine learning capabilities.
Additionally, improved mining technologies make it easier to extract business logic so that legacy code can be refactored, removed, or replaced with a microservices architecture, the report adds.
Meanwhile, rising regulatory controls and compliance costs in the UK are driving the growth of RegTech companies, the report says. The demand for RegTechs is increasing in the post-COVID world, where economic risks are driving businesses to close and increasing credit risk and the number of non-performing assets (NPAs) held by banks. High-growth areas include data privacy, enterprise risk, cybersecurity, financial crime, and risk management.
The 2021 ISG Provider Lens™ report on digital banking services for the UK assesses the capabilities of 23 providers in four quadrants: core modernization and integration services; banking governance, risk management and compliance services; Transformational and digital banking, and payment and card processing services.
The report names Accenture, Cognizant, HCL, Infosys and TCS as leaders in all four quadrants and Capgemini and Wipro as leaders in three quadrants.
Additionally, LTI was named a Rising Star – a company with a “promising portfolio” and “high future potential” as defined by ISG – in three quadrants. CGI was named a Rising Star in a quadrant.
Custom versions of the report are available at Capgemini and Infosys.
The 2022 ISG Provider Lens™ Digital Banking Report for the UK is available for subscribers or for a one-time purchase on this Web page.
About ISG Provider Lens™ Research
The ISG Provider Lens™ Quadrant research series is the only service provider assessment of its kind to combine data-driven empirical research and market analysis with the real-world experience and insights of the global advisory team. from ISG. Companies will find a wealth of detailed data and market analysis to help them select appropriate sourcing partners, while ISG advisors will use the reports to validate their own market knowledge and make recommendations to client companies. from ISG. The search currently covers providers offering their services worldwide, across Europe, as well as in the US, Canada, Brazil, UK, France, Benelux, Germany, Switzerland , Nordics, Australia and Singapore/Malaysia, with additional markets to be added. in the future. For more information on the ISG Provider Lens research, please visit this Web page.
A complementary research series, the ISG Provider Lens Archetype Reports, offers an initial assessment of providers from the perspective of specific buyer types.
About ISG
ISG (Information Services Group) (Nasdaq: III) is a leading global technology research and consulting company. A trusted business partner to more than 700 customers, including more than 75 of the world’s 100 largest enterprises, ISG is committed to helping enterprises, public sector organizations, and service and technology providers achieve operational excellence and faster growth. The company specializes in digital transformation services, including automation, cloud, and data analytics; procurement advice; governance and risk management managed services; network operator services; design of strategy and operations; change management; business intelligence and technology research and analysis. Founded in 2006 and headquartered in Stamford, Connecticut, ISG employs more than 1,300 digital-ready professionals operating in more than 20 countries – a global team known for its innovative thinking, market influence, deep expertise in industry and technology and its world-class expertise. research and analysis capabilities based on the most comprehensive market data in the industry. For more information, visit www.isg-one.com.