Four Tips to Winning in the Financial Services IT Market
Most of my monthly guest blogs focus on vertical market strategies for VARs and MSPs. In this blog, I’ll focus on the banking and financial vertical. We’ve all lived through some tough economic times lately, but for those in the banking and finance community, business has been especially challenging. If you’re a growth-minded VAR, you’ll want to pay close attention in the coming months to news from the financial services world, as it could mean big profits for you. Here’s why.
According to Matthew Geer, Avnet’s banking and financial solutions leader, the collapse of the housing market and the federal government’s efforts to minimize the resulting damage have created an environment in which risk-wary banks and credit unions have adopted a defensive posture in their battle to remain liquid, profitable and competitive.
A lack of clarity around new regulations has also limited the growth options for these institutions—many of which have delayed making strategic technology investments. While financial leaders work to define the rules of their new environment, the clamor for better products and services from their financial institutions can be heard from their increasingly sophisticated and demanding customers.
Focus on the Future
Fast-forward a few months from now to 2012: Experts predict we’ll see financial institutions make significant investments in technology to become—and remain—compliant. Why? During 2011, many institutions decided to hold off on major systems initiatives related to how they manage risk and core systems processing until they had a better grasp of the regulatory requirements now impacting them.
Instead, banks and credit unions focused more of their efforts on customers. The acquisition and retention of profitable customers is the number one priority among these institutions (of all sizes). Understanding the customer and providing targeted and customized products, services and pricing are the most pressing needs. Not surprising is the wealth of offerings from the technology community to help these institutions meet their goals.
So how can solution providers prepare for the anticipated increase in financial services IT spending? Here are four helpful tips:
1. Understand the Customer, Industry
Financial institutions know how complex and unique their industry is, so they often seek partnerships with solution providers who understand their business needs and “speak their language.” For a solution provider to be successful, they must demonstrate technology expertise, but perhaps even more important, industry expertise.
2. Partner for Accelerated Success
While this might sound like an endorsement, the right partner really can make a difference. At Avnet, we provide resources to all of our partners to help them explore profitable verticals—including the banking and finance market. Resellers committed to vertical market specialization can extend their partnership more deeply and gain access to consultants, resources and tools to accelerate growth planning, enablement and execution. Whoever you choose as a partner, be sure they have the knowledge and expertise to help you master both the technical and business aspects of the relationship.
3. Brush up on Business Solutions
Analysts predict IT spending in the financial services industry to reach $60 billion this year. Many financial institutions are now making investments to implement and integrate new business intelligence (BI) systems with their existing customer channels and customer relationship management (CRM) systems.
Tier-2 and tier-3 banks in the U.S. (roughly 7,000) will need the most help with these implementations. Many of these institutions have an aging infrastructure and smaller IT staffs so they rely heavily on solution providers to help them design, implement and integrate BI solutions into their customer channels and CRM systems. This new business functionality will mean additional server, storage, networking and security sales for resellers.
4. Services, Services, Services
Professional Services have become a critical factor in the success of many implementations, especially BI. The aggregation and management of data from multiple sources—and in varying formats—has made master data management a prerequisite as well. Manual business processes and organizational silos have also forced these institutions to rely on the expertise of solution providers to tie all of this new technology and capability together functionally within their business operations. I don’t have to tell you the impact services sales can have on your bottom line!
With half of 2011 already behind us, you’ve probably begun thinking about your business plans for 2012 and beyond. As you make plans for next year, consider the opportunities waiting for you in the financial services vertical. You’ll be money ahead in the long run.
Michael Houghton is VP of vertical market solutions for Avnet Technology Solutions, Americas. Monthly guest blogs such as this one are part of The VAR Guy’s annual sponsorship. Read all of Houghton’s guest blogs here.