23/06/2024 8:57 PM


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Issuing tops the list of services FinTech outsource to specialists

A new report reveals FinTechs who outsource to specialist partners generate nearly £1 million in additional revenue.

The report Specialists vs. generalists: How do fintechs fuel growth? explores why and how FinTechs outsource to third parties, the importance of outsourcing for FinTech growth, and the impact of working with specialists or generalists on FinTech businesses.

To understand why and how FinTechs outsource, Moorwand commissioned an independent study of 75 senior decision makers at FinTech firms across France, Germany, Ireland, Lithuania and the United Kingdom.

In particular, the report sought to understand whether FinTechs outsource to specialist partners that provide a specific service, or generalist partners that provide a range of services. The study features contributions from leading technology providers and consulting firms including FN1X, GPS, Pannovate, Polymath Consulting, Ozone API and W2.

With the rise of Open Banking, Banking-as-a-Service and Embedded Finance, nearly half of FinTechs (49%) now spend 10-20% of their annual revenues on outsourced services according to the report.

Overall, FinTechs are relying on specialist partners (55%) over generalists (45%) for their outsourcing needs.

Reasons for fintechs to outsource

Key findings include:

FinTechs outsource to fuel growth

FinTechs outsource to build out their capabilities quickly and efficiently as well as expand into new markets and new customer sectors. Interestingly, user experience is one area that nearly half of FinTechs outsource and 84% see as ‘business critical’. The top three reasons FinTechs outsource are:

  • Improve the user experience
  • Accelerate time to market
  • Plug gaps in existing capabilities

Outsourcing consumes nearly one fifth of FinTech budgets

With almost one fifth (18%) of total fintech budgets dedicated to outsourcing, selecting a partner is a significant business decision. Furthermore, nearly all outsourced services are considered ‘business critical’ – meaning they are essential to the operations of the business.

Established FinTechs outsource more – especially compliance requirements

For nearly all services analysed, established FinTechs (five years or over) outsource more than their younger (under four years) counterparts. For example, when it comes to loyalty and reward programmes, 35% of younger FinTechs outsource, versus nearly double (67%) for established firms.

100% of respondents agreed that compliance is one of the primary benefits of outsourcing. And when it comes to compliance-related services – from Open Banking to Accounts and Issuing – FinTechs who are more established, are also more likely to outsource.

Specialists are perceived as better partners and deliver additional revenue

FinTechs who only use specialists are more likely to rate their relationship as ‘very good’ (86% for specialists vs. 55% for generalists). And this positive relationship also extends to customers, with FinTechs that use specialists reporting an increase in customer engagement (91% for specialists vs. 76% for generalists).

When it comes to impact, FinTechs that use specialists report additional revenues of almost £1m as a result of their choice of outsourcing partner. And looking to the future, the 75% of the FinTechs that are planning on changing how they outsource, plan to use specialist providers.

“For a long time, the FinTech sector was characterised by the idea of disruption and competition. As the industry matures, propelled by the arrival of Open Banking, BaaS and more recently Embedded Finance, focus has shifted to collaboration to drive growth,” said Vicki Gladstone, CEO and COO at Moorwand.

“The research clearly demonstrates that outsourcing is helping firms to improve the customer experience, expand into new markets and customer segments, and launch new products and services. And it also demonstrates that as a fintech becomes more established, they increasingly work with specialist partners, especially when it comes to compliance.”


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