Europe’s finance firms have deployed budgets of hundreds of millions of euros per year to pursue ambitions as Open Finance attracters. To build the online services that customers demand, these companies must buy and assemble — not build — a two-tier portfolio of Net software and selectively customize it to differentiate their offerings and overcome the partial redundancy of packages, according to a new Report by Forrester Research B.V. (Nasdaq: FORR).
“Finance providers have built consumer-facing online delivery software in-house because they lacked off-the-shelf alternatives or struggled with package choices,” said Forrester senior analyst Andrew Parker. “But this makeshift approach plasters thin online solutions onto the existing back office and won’t carry firms through the next stage of online finance. To build robust, mass-market offerings and differentiate themselves from online competitors, companies must now enslave their apps choices to their business priorities. This strategic approach will force them to source solutions from independent software vendors (ISVs).”
According to Forrester, only Net-native applications — software components designed from inception to perform online — will meet these requirements. Finance providers will more easily build the competitive functionality they require by adopting bought-in packages and focusing in-house creative talent on customizing and assembling them in unique ways.
When tackling package integration, firms will soon realize that the ideal architecture of strictly complementary software components can’t be found. Instead, they must manage overlaps in functionality between packages and across the two layers. To control this redundancy, they should resist the temptation to use every line of code purchased and accept that some elements must be mothballed in favor of best-of-breed alternatives.
“The variety of packaged solutions available will enable each financial firm to architect a distinct solution,” added Parker. “But winners will choose apps and vendors by a ruthless selection process that first identifies best-of-breed apps on the basis of performance and cost, then picks viable vendor partners by their finance-specific credentials and localized support. Today¿s best-performing apps offer rich functionality and ease-of-integration, but all at a price — with apps bills rising to €10 million for licenses alone for a typical site. Strong locally based professional services and apps localization are hallmarks of practical ISV partners. When looking for best-of-breed support in Europe, firms that deliver in multiple markets must set their minimum requirement at 24×7 local-language support capabilities.”
For the Report “Buying Net Finance Apps” Forrester interviewed 32 financial firms, incumbents, and pure plays to understand their online software strategies. We also spoke with 35 vendors, software publishers, and systems integrators to evaluate their offerings.