Note from the CEO: Buy-side firms being left out of fintech? Well, not entirely, BUT like having older brothers/sisters, the youngest gets the hand-me-downs…..or less. “Hot money” has flowed freely into four concentrated areas of fintech (robos, P2P, paments & big data) for quite some time. Will the left out buy-siders get their place in line? Great read to find out.
“Tighter budgets, increasing compliance demands and lower profitability have meant that the technology teams at financial institutions have had to drastically cut back investments in innovation. But this, accompanied by continued advances in technology and changing customer preferences, has created an abnormally large gap in the market for smaller independent firms that don’t carry the financial burden of legacy investments. These financial technology – or FinTech – companies are featuring more prominently in the press as vast sums of money are invested at ear-popping valuations…..
To a large extent, the remainder of the buy-side industry has seen little action so far. With a total spend across the buy-side at around $60 billion, a large and growing market of relatively stable customers and a fairly fragmented set of suppliers, private equity and venture capital firms have been unwilling to front capital and risk exposure to this segment. This may be due to the low probability that technology spending is going to increase dramatically or the lack of M&A and IPO activity needed to ensure a successful exit…..”