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Strong European Presence in the 2014 IDC Financial Insights FinTech Rankings

Europe will remain an important center of technological innovation in the financial industry.

The 2014 release of IDC Financial Insights FinTech Rankings Top 100 reaffirms powerful European presence within the financial services industry. While almost two thirds of IT vendors serving the financial vertical are based in North America, Europe has the second most numerous contingent with 22 companies on the list accounting for a combined total of $7.5 billion in revenue generated from financial services.

There is no surprise that Europe is well represented -- the region has a great legacy for technology and automation. As an established financial industry geography, Western Europe in particular has shown conservative growth rates by global standards in the past several years, and there has been a great desire for cost savings and optimization. This is why this region is the home of best-practices for business process outsourcing and the software-as-a-service (SaaS) model, with financial institutions sharing hardware, software, and human resources to reduce costs. Being under strong pressure after the global financial crisis, European financial industry players were among the first in the world to experiment with customer mobility, social presence, and big-data analytics.

The European fintech vendors’ revenue in the financial sector increased by 4 percent in 2013, which is in line with the region’s 3 percent growth rate in the IT spending, reaffirming the conservative status of this geography. Having gone through a period of transformation, many of those companies are gradually returning to growth after 2012 when their combined revenue was down 1 percent.

Eight of the 22 European vendors saw their financial services revenue increase by double-digit growth rates in 2013, and they were led by predominantly software providers -- eFront, Luxoft Holding, and Multifond. Notably, the other five fastest-growing European fintech firms also generated their revenues mainly from software, and so did the majority of new European entrants to the rankings. This, and the fact that an increasing number of European vendors are keen to position themselves as software providers, underlines high potential and profit margins associated with this segment.

The Europeans are led by Wincor Nixdorf, the German provider of IT solutions and services to banking and retail industries. On the back of a strong recovery, Wincor Nixdorf has made it to the global top 10 of the FinTech Rankings for the first time in 2014. The second largest European firm -- the UK-based banking software house Misys -- has also made a significant move up the ranking in 2014, after a boost to its revenue. The region’s top three is completed by Ingenico, the French supplier of multi-channel payment solutions.

There are also three European companies in the Top 25 Enterprise Rankings -- Accenture, Capgemini, and SAP AG -- and each of them moved up the rankings in 2014 as their combined revenue from financial services increased by 12 percent in 2013.

European companies are generally less diversified across industry verticals than their peers in other regions, with 64 percent of their total revenue coming from financial services, compared with just 52 percent across the entire FinTech Rankings Top 100. This reiterates their focus and commitment to the financial industry, but also highlights the wide range of solutions they can deliver to their demanding clients. With this great legacy in the foundation, Europe will undoubtedly remain an important center of technological innovation in the financial industry and a key fintech hub.

Andrei Charniauski is a research manager with IDC Financial Insights, where he covers the technological landscape of the European banking industry with a particular focus on payments and omnichannel strategies. Charniauski is an experienced analyst in the areas of banking ... View Full Bio

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Jonathan_Camhi
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Jonathan_Camhi,
User Rank: Author
10/13/2014 | 6:21:12 PM
Re: Europe
We're also seeing American institutions moving towards SaaS for some of the same reasons that European ones have.
Byurcan
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Byurcan,
User Rank: Author
10/13/2014 | 9:25:38 AM
Europe
Thanks for the analysis, Andrei. It seems like there are some simialrities between European fintech companies and North American, with slower growth rates in recent years.
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