# The Approaching Fintech Flip

## Incumbent vendors may turn the table on fintech upstarts, once regulation begins to calm down

I’ve spent much of the past week talking to a wide range of vendors servicing the buy side, from execution management system providers through to analytics firms and network specialists. This has all been in support of the Waters Rankings, which are being held next week, but there have been a number of key themes that have emerged from nearly a dozen conversations and interviews.

The first theme has been the change in mindset around regulatory compliance and cybersecurity, two topics that used to draw a lot of attention as separate disciplines within firms but are now, in the words of one vendor, “must-haves.” That might seem obvious, but the deeper meaning is interesting—a general acceptance that these two areas now form a core part of a firm’s technology strategy, rather than bolt-ons that come about as needed.

The second has been changing patterns in demand from clients, and how that has affected software development itself. One vendor I spoke with talked at length about user experience, and how clients are expecting a similar degree of usability with their enterprise applications as they do their consumer software. On the surface this might sound simple enough—a flashy graphical user interface, and you’re all set, right? Not so much.

Several vendors picked up on this point and discussed how it’s fundamentally changed their approach to development. Design, rather than being an afterthought, is now something that many are incorporating from the early stages, and that in turn influences the final product, given that user experience is far more than just nice images in a front-end interface.

Third, the question of mobility is still something that challenges the vendor space. It’s easy to think, with developments in HTML5 and a growing ease of comfort with cross-platform functionality, that the mobility question has been solved, but it isn’t that simple. Wealth managers in particular demand more and more every day from their vendors, such as incorporating elements of risk management, analytics and compliance functionality into the mobile views of their platforms, not just portfolio views. The technical lift behind that backend can be huge, and difficult at times to accomplish.

And finally, on a more abstract note, the key theme I’ve been noticing is a change in how end users are beginning to view technology. Much of the focus on both sides of the Street since the crisis has been on reactionary development, on patching and updating to comply with new rules. As that begins to simmer down, the tenor of the conversation around technology is beginning to change.

That’s evident when you talk to the developers at software vendors, who often have difficulty containing their excitement about finally being able to move on from hot fixes, and start to engage in the type of technology that will define the next 10 years. Growing acceptance of public cloud, for instance, is beginning to transform delivery, while a tendency toward platform strategies—itself, perhaps, a natural outcome of the mergers and acquisitions activity between vendors in this space over the past half-decade—is becoming more evident in every discussion I have with larger vendors.

All of this has interesting applications to the fintech question. Unburdened by having to service a client base reeling from the financial crisis, or by legacy technology, fintech has been able to harry the edges of the traditional vendor community and create an image of a bold, new way of thinking about technology. I’m increasingly convinced that, actually, innovation has been there all along with the incumbents, but it’s taken a while to start to gain prominence again.

As traditional vendors begin to utilize their existing platforms and scale, not to mention their reach in terms of client base, to develop new technology, could we see them begin to turn the table on upstart startups? It’s not outside the realm of possibility.

I’d be very interested to hear your thoughts on this, too, so please do feel free to shoot me an email at [email protected] or give me a call on +1-646-490-3974.

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