vendor highlights: moody’s analytics · its existing user base, its diversity of users, and its...

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October 2017

IFRS 9 Technology Solutions: Market Update 2017Vendor Highlights: Moody’s Analytics

© Copyright Chartis Research Ltd 2017. All Rights Reserved 1

About Chartis Chartis Research is the leading provider of research and analysis on the global market for risk technology. It is part of Infopro Digital, which owns market-leading brands such as Risk and Waters Technology. Chartis’s goal is to support enterprises as they drive business performance through improved risk management, corporate governance and compliance and to help clients make informed technology and business decisions by providing in-depth analysis and actionable advice on virtually all aspects of risk technology. Areas of expertise include:

• Credit risk• Operational risk and governance, risk and compliance (GRC)• Market risk• Asset and liability management (ALM) and liquidity risk• Energy and commodity trading risk• Financial crime including trader surveillance, anti-fraud and anti-money laundering• Cyber risk management• Insurance risk• Regulatory requirements including Basel 2 and 3, Dodd-Frank, MiFID II and Solvency II

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The firm has brought together a leading team of analysts and advisors from the risk management and financial services industries. This team has hands-on experience of implementing and developing risk management systems and programs for Fortune 500 companies and leading consulting houses.

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Table of contents1. Executive summary ...............................................................................................................................4

2. Moody’s Analytics: vendor highlights ...............................................................................................6

3. Context ................................................................................................................................................. 12

4. Appendix A: FinTech Quadrant™ methodology ........................................................................... 15

5. How to use research and services from Chartis .......................................................................... 21

6. Further reading ................................................................................................................................... 23


List of figures and tablesFigure 1: FinTech Quadrant™ for IFRS 9 solutions ...............................................................................7

Figure 2: Moody’s Analytics Credit Loss and Impairment Analysis Suite ................................... 10

Figure 3: FinTech Quadrant™ research process ................................................................................. 16

Figure 4: FinTech Quadrant™ ................................................................................................................. 17

Table 1: Moody’s Analytics – company information ............................................................................6

Table 2: Completeness of offering – Moody’s Analytics .....................................................................8

Table 3: Market potential – Moody’s Analytics .....................................................................................8


1. Executive summaryThis report provides an independent evaluation and description of Moody’s Analytics’ leading practices and competitive position. Our analysis is based on information in the Chartis report IFRS 9 Technology Solutions: Market Update 2017, and our corresponding FinTech Quadrant™.

The report also includes brief coverage of:

• The main demand-side trends in this market, with an analysis of the key business and regulatory challenges.

• The supply-side dynamics, with a focus on the vendor landscape.

Like other regulatory mandates of the past decade, International Financial Reporting Standard 9 (IFRS 9) is another transformational event for all financial institutions (FIs). In all likelihood, it will reduce FIs’ profits and retained earnings, increase their loan loss provisions, and have a negative impact on their regulatory and economic capital. To mitigate these impacts, FIs will have to rely heavily on the rigor of their data management and the quality of their data, and on the application of Expected Credit Loss (ECL) modeling and overall governance.

Implementing an IFRS 9 system is set to be more challenging than FIs had originally anticipated. IFRS 9’s impairment regime is proving to be the most problematic area: FIs are realizing that they will not be able to re-use their Basel implementations to the extent they had hoped.

The standard has three broad components that will affect FIs in varying ways:

• Classification and analytics.

• ECL impairment.

• Hedge accounting.

As a result, FIs will face a variety of challenges around impairment, rollout and model governance, including:

• How to deal with gaps in data.

• Problems with reconciling operations.

• Managing the tension between the risk and finance departments.

• Choosing the right model for the appropriate level of portfolio granularity.

• A fragmented landscape of vendor solutions.

Many FIs aspire to re-use parts of their IFRS 9 systems for other reporting and analytical regulatory requirements, to establish an overall strategic finance, risk management and regulatory systems platform. For most, though, this is a long way off; nevertheless it still provides a useful sales tool for some vendors and consultancies.


Ultimately, IFRS 9 rollouts have worked well when carried out with preparation and conviction. FIs with the right level of internal support, impact analyses and escalation processes have solved several problems at once and eased their budgetary pressures. And strategic IFRS 9 projects – rather than those used just for financial reporting – are starting to promise good payback.


2. Moody’s Analytics: vendor highlightsCompany information

Table 1 summarizes the key facts about Moody’s Analytics and its IFRS 9 offering.

Table 1: Moody’s Analytics1 – company information

Company Moody’s Analytics, Inc.

Headquarters New York, NY

Other offices Moody’s Analytics’ other main offices are in San Francisco, Toronto, London, Paris, Brussels, Singapore, Hong Kong, Tokyo and Shenzhen.

Description Moody’s Analytics is part of Moody’s Corporation, a publicly traded company that split in 2007 into a ratings business, Moody’s Investors Service, and Moody’s Analytics. Moody’s Analytics focuses on the areas of credit risk analysis, economic and regulatory capital calculation, liquidity risk, ALM, insurance risk, economic research, and enterprise risk management.

Service/offerings • Moody’s Analytics Credit Loss and Impairment Analysis Suite is a modular solution that includes data, models, economic scenarios and automation capabilities. It is designed to help firms address new accountancy standards.

• RiskConfidence is a comprehensive IFRS 9 data management and calculation platform designed to produce granular instrument-level results.

• ImpairmentCalc provides a calculation engine for IFRS 9 and Current Expected Credit Loss (CECL). Based on an ECL model, it was created to provide a forward-looking perspective on provisions.

• The RiskBench data benchmarking and visualization tool is used to support qualitative adjustments.

Source: Moody’s Analytics

Competitive position

Figure 1 illustrates Chartis’ latest view of the vendor landscape for IFRS 9 technology solutions. In the FinTech Quadrant™, Moody’s Analytics is positioned as a Category Leader. In our completeness of offering table, Moody’s Analytics rates highly for the following capabilities: data management, classification of financial instruments, stress testing, ECL impairment, hedge accounting, model validation and governance, technology and embedded domain knowledge. The company also has a strong, diversified IFRS 9 client base from a wide-reaching geographical network, as well as a flexible approach to delivery and significant financial strength.

The FinTech Quadrant™ is a proprietary methodology developed specifically for the financial technology marketplace. It takes into account vendors’ product, technology and organizational capabilities (Appendix A sets out the generic methodology and criteria used for the FinTech Quadrant™).

1 Note that the following solutions are trademarks of Moody’s Analytics: ImpairmentCalc, RiskConfidence, RiskBench, RiskFoundation and RiskOrigins.


Specifically, we have considered the following as particularly important:

Completeness of offering. This assessment looks at a number of criteria, grouped into the following categories:

• Data management, sourcing and enrichment.

• ECL calculation, analytics and insight.

• Accounting practices, and integrating risk factors.

Market Potential. This assesses a vendor’s significance in the marketplace, based on factors including its existing user base, its diversity of users, and its brand recognition, financial strength, scalability and geographic influence.

Tables 2 and 3 show Chartis’s rankings for Moody’s Analytics’ coverage against each of these criteria.

Figure 1: FinTech Quadrant™ for IFRS 9 solutions

Best-of-breed

Point solutions

Category leaders

Enterprise solutions

COMPLETENESS OF OFFERINGLow High

MA

RKET

PO

TEN

TIA

LLo

wH

igh

AxiomSL Bloomberg

ClusterSeven

FICO

FIS

Loxon

Misys

Moody’s Analytics

MORS Software

Murex

Oracle

Prometeia

Quanti�

SAS

WKFS

Source: Chartis Research


Table 2: Completeness of offering – Moody’s Analytics

Completeness of offering Coverage

Data management High

General ledger Medium

Classification of financial instruments High

Stress testing High

ECL impairment High

Hedge accounting High

Balance sheet management and optimization Medium

Model validation and governance High

Technology High

Embedded domain knowledge High


Table 3: Market potential – Moody’s Analytics

Market potential Coverage

Existing IFRS 9 user base High

Business categories (retail, commercial lending, generic FIs) Medium

Brand awareness High

Implementation strategy/flexibility High

Value per deal High

Geographic reach High

Financial strength High

Scalability of business model High


Leading practices

Moody’s Analytics’ suite of credit risk models and data, economic forecasts, advisory services and infrastructure solutions can help financial firms implement ECL and impairment analysis. The company targets Tier 1 and Tier 2 institutions with its IFRS 9 solution – primarily corporate banking clients across North America, Europe, the Middle East and Asia-Pacific that either:

• Adhere to IFRS standards.


• Have local standards that converge with IFRS standards.

• Have standards developed in liaison with the International Accounting Standards Board (IASB), which is responsible for the IFRS standards.

IFRS 9 offering

One feature of Moody’s Analytics’ offering is its granular credit risk, economic and financial datasets, which enable users to construct quantitative credit risk and impairment models and benchmarking. This includes multi-asset class coverage, more than 500,000 individual debt securities, and 50,000 distinct issuers. Moody’s Analytics’ history of analyzing comprehensive global data sets has also given it considerable knowledge and experience in scenario generation. It provides macroeconomic scenarios for more than 50 countries. To satisfy lifetime IFRS 9 requirements, this includes probability distributions and global forecasts through to long future horizons.

In addition, benchmarking tools provide Probability of Default (PD), Loss Given Default (LGD) and Expected loss (EL) estimates for user-defined cohorts, giving institutions a benchmark for their own internal data.

Moody’s Analytics’ solutions for IFRS 9 are built on top of a common financial and risk datamart, the RiskFoundation platform. All software products and risk engines rely directly on this single source of data. The solution is also modular, however, enabling clients to distribute the data and infrastructure when necessary to respect operational constraints.

RiskConfidence

The RiskConfidence tool includes:

• IFRS 9 ECL calculations.

• Financial Accounting Standards Board (FASB) CECL calculations.

• Multi-scenario support.

• Support for multiple Generally Accepted Accounting Practices (GAAPs).

• The capability to compute exposure profiles.

• Native integration with Moody’s Analytics’ EL GCorr models, which simulate global risk correlations using macroeconomic variables.

• Integration with Moody’s Analytics Scenario Analyzer model management software for custom PD modeling.

• The ability to import pre-computed PD and LGD term structures per scenario.

• A built-in LGD engine to assess LGD based on collateralization levels (such as Loan-to-Value [LTV]).


• A configurable rules-based engine for stage allocation.

• A variance analysis feature.

• ‘Out of the box’ management reports.

Moody’s Analytics Credit Loss and Impairment Analysis Suite

Moody’s Analytics Credit Impairment Analysis suite of solutions can integrate with other systems, or act as a standalone solution, to support the implementation of credit loss impairment calculations. Its capabilities include:

• Comprehensive data management.

• Visual end-to-end process management, allowing for automated analysis.

• Models for ECL calculation and cash-flow generation.

• Model governance, including a centralized Exposure at Default (EAD), PD and LGD calculation process.

• Process automation tools that integrate data, models and reports, enabling institutions to scale their operations while maintaining performance.

• Seamless integration with accounting systems.

• Reporting for business intelligence and financial disclosures, with automated analysis of allowance volatility over multiple reporting dates.

The Moody’s Analytics Credit Loss and Impairment Analysis Suite has four primary areas (see Figure 2).

Figure 2: Moody’s Analytics Credit Loss and Impairment Analysis Suite

Source: Moody’s Analytics


Regulatory module

The Moody’s Analytics Structured Finance Portal ‘Regulatory Module’ enables financial institutions to dynamically retrieve estimated regulatory, stress-testing and impairment metrics for Structured Finance (SF) securities. The additional modules include a combination of finalized and proposed accounting and regulatory rules to help institutions with their statutory reporting requirements, parallel reporting and quantitative impact study submissions. The approach to IFRS 9 for SF securities leverages firms’ advances with global engagements in regulatory and stress testing frameworks, including:

• Regulatory Capital Management – Basel III (Simplified Supervisory Formula Approach [SSFA], Quantitative Impact Study [QIS], Supervisory Formula Approach [SFA], Internal Capital Adequacy Assessment Process (ICAAP).

• Impairment reporting – Other Than Temporary Impairment (OTTI).

• Stress testing – Comprehensive Capital Analysis and Review (CCAR), Prudential Regulation Authority (PRA), European Banking Association (EBA).

• Advisory services pertaining to reporting submissions.

• Sensitivity analysis, including macro-shock analyses, model validation and benchmarking.

Integration with credit risk

Moody’s Analytics’ commercial loan origination platform, RiskOrigins, includes limits management, real-time pricing, covenant management, spreading, scoring, deal structuring and risk appetite. This product is integrated with single obligor credit risk models, economic capital, financial and risk datamarts, regulatory capital and ALM solutions.

Moody’s Analytics RiskBench solution is a data discovery platform that provides on-demand analytics and peer insight. It includes extensive peer and industry benchmark data, on-demand dashboards, and self-service analytics. RiskBench can benchmark and calculate loss estimates for commercial and industrial (C&I) portfolios by using the proprietary Credit Research Database (CRD), a large financial statement and default database.


3. ContextDemand-side analysis

IFRS 9: a bigger undertaking than expected

IFRS 9 is a new reporting standard that replaces most of the guidance in International Accounting Standard (IAS) 39, and which applies to all jurisdictions operating under IAS 39. It is set to go live on 1 January 2018.

IFRS 9 will impact FIs’ profits; it could also increase their provisioning, and have a negative impact on their regulatory and economic capital. FIs will have to source extra client, loan and credit performance data in-house from relationship management, operations, risk and finance departments, and from external sources.

Generally, the IFRS standards (not just IFRS 9) are widespread: 98 global jurisdictions now require them for all domestically listed companies, with more requiring certain FIs to comply. In terms of implementation, however, different jurisdictions are not on an equal footing, and there is a range of starting points.

Broadly, although there are more laggards and strugglers than anticipated since we last covered this area, most global FIs are in good shape to meet the 1 January 2018 deadline, but with greater expenditure than expected, and the promise of more work to do in the next two years to refine their models and portfolios.

The three main components of IFRS 9

IFRS 9 consists of three components that will affect FIs in different ways:

• The rules on classification of financial liabilities contained in IAS 39 are carried almost unchanged into IFRS 9.

• The new ECL impairment model represents a significant change from the model used under IAS 39. The new requirements use a three-stage approach that classifies transactions and loans based on their observed credit quality from their inception.

• IFRS 9 improves on the hedge accounting rules in IAS 39. However, for hedge accounting. FIs can opt out of IFRS 9 and choose to stay with IAS 39 instead.

The challenges of implementing IFRS 9

• Progressive interpretation. IFRS 9 is principles-based and open to wide interpretation, requiring impact analysis, simulations and fine-tuning.

• Less re-use of Internal Ratings-Based (IRB) models than expected.

• Data gaps. FIs have gaps in their historical, classification, external-market and macroeconomic data.


• One size does not fit all. Specific approaches are developed for different regions, businesses, departments, portfolio constructions, products and term structures.

• Patchy data reconciliation. FIs need more rigorous data reconciliation, but this is currently hampered by lags in synchronization.

• Under-resourced model governance. This is a comparatively new discipline in some FIs, which may only have limited resources and options for effective model validation and governance.

• Risk, finance and operations departments working more closely together.

• Fundamental decisions about how to use behavioral life.

• Budget overspend. FIs are spending more on implementations, often according to their size.

Supply-side analysis

A disparate and fragmented market

The relevant systems offered by vendors can be categorized into several distinct groups, each containing certain specialties:

• ECL analytics.

• Classification.

• General ledger postings.

• Fair valuation and effective interest rate.

Fragmentation is partly due to economies of scale being hard to achieve for vendors, as the models used for one FI will not necessarily work as well in another with a different loan portfolio. One-stop shop vendors may offer a lower Total Cost of Ownership (TCO), but the component pieces of the associated solution may be weaker than individual components sourced from specialist vendors.

Flexibility needed

FIs have different criteria that influence the way they choose and use their models:

• Transaction types.

• Term structures.

• Market positioning.

• Geography.

• Availability of data.


• Sophistication of the business and the diversity of business lines.

• Start date of the implementation, and any fine-tuning needed.

Looking ahead

Vendors are approaching IFRS 9 compliance from various distinct parts of the industry. A great deal of vendors’ IFRS 9 business goes to their existing client base for other risk management or accounting solutions. Where multiple vendors are involved with a single client, there is genuine competition. New-name business therefore tends to bypass the one-stop-shop solutions for new specialist functions.

Vendors can address FIs’ requirements more effectively in their approach to data, their reuse of systems and by recognizing the volume of calculations required.


4. Appendix A: FinTech Quadrant™ methodologyChartis is a research and advisory firm that provides technology and business advice to the global financial services industry. Chartis provides independent market intelligence regarding market dynamics, regulatory trends, technology trends, best practices, competitive landscapes, market sizes, expenditure priorities, and mergers and acquisitions. Chartis’s FinTech Quadrant™ reports are written by experienced analysts with hands-on experience of selecting, developing, and implementing financial technology solutions for a variety of international companies in a range of industries including banking, insurance and capital markets.

Chartis’s research clients include leading financial services firms and Fortune 500 companies, leading consulting firms and financial technology vendors. The FinTech vendors that are evaluated in the FinTech Quadrant™ reports can be Chartis clients or firms with whom Chartis has no relationship. Chartis evaluates all FinTech vendors using consistent and objective criteria, regardless of whether or not they are a Chartis client.

Where possible, FinTech vendors are given the opportunity to correct factual errors prior to publication, but cannot influence Chartis’s opinion. FinTech vendors cannot purchase or influence positive exposure.

Inclusion in the FinTech Quadrant™

Chartis seeks to include FinTech vendors that have a significant presence in a given target market. The significance may be due to market penetration (e.g. large client base) or innovative solutions. Chartis does not give preference to its own clients and does not request compensation for inclusion in a FinTech Quadrant™ report. Chartis utilizes detailed and domain-specific ‘vendor evaluation forms’ and briefing sessions to collect information about each vendor. If a vendor chooses not to respond to a Chartis vendor evaluation form, Chartis may still include the vendor in the report. Should this happen, Chartis will base its opinion on direct data collated from FinTech buyers and users, and from publicly available sources.

Research process

The findings and analyses in the FinTech Quadrant™ reports reflect our analysts’ considered opinions, along with research into market trends, participants, expenditure patterns, and best practices. The research lifecycle usually takes several months, and the analysis is validated through several phases of independent verification. Figure 3, below, describes the research process.


Figure 3: FinTech Quadrant™ research process

Data gathering

Select research topics

• Interviews with industry experts• Interviews with FinTech buyers• Interviews with FinTech vendors•

• Market surveys• Client feedback• Regulatory studies• Academic studies• Conferences •

• • • • FinTech buyer surveys and interviews

• Demand and supply side analysis• • Survey data analysis• Check references and validate vendor claims• Follow-up interviews with industry experts

• • Ongoing scan of the marketplace•


Chartis typically uses a combination of sources to gather market intelligence. These include (but are not limited to):

• Chartis vendor evaluation forms. A detailed set of questions covering functional and non-functional aspects of vendor solutions, as well as organizational and market factors. Chartis’s vendor evaluation forms are based on practitioner level expertise and input from real-life risk technology projects, implementations, and requirements analysis.

• Risk technology user surveys. As part of its ongoing research cycle, Chartis systematically surveys risk technology users and buyers, eliciting feedback on various risk technology vendors, satisfaction levels, and preferences.


• Interviews with subject matter experts. Once a research domain has been selected, Chartis undertakes comprehensive interviews and briefing sessions with leading industry experts, academics, and consultants on the specific domain to provide deep insight into market trends, vendor solutions, and evaluation criteria.

• Customer reference checks. These are telephone and/or email checks with named customers of selected vendors to validate strengths and weaknesses, and to assess post-sales satisfaction levels.

• Vendor briefing sessions. These are face-to-face and/or web-based briefings and product demonstrations by risk technology vendors. During these sessions, Chartis experts ask in depth, challenging questions to establish the real strengths and weaknesses of each vendor.

• Other third-party sources. sources In addition to the above, Chartis uses other third-party sources of information such as conferences, academic and regulatory studies, and collaboration with leading consulting firms and industry associations.

Evaluation criteria

The FinTech Quadrant™ (see Figure 4) evaluates vendors on two key dimensions:

1. Completeness of offering

2. Market potential

Figure 4: FinTech Quadrant™

Best-of-breed

Point solutions

Category leaders

Enterprise solutions

COMPLETENESS OF OFFERINGLow High

MA

RK

ET

PO

TE

NT

IAL

Low

Hig

h



The generic evaluation criteria for each dimension are set out below. In addition to these generic criteria, Chartis utilizes domain-specific criteria relevant to each individual risk, which are available on request. This ensures total transparency in our methodology and allows readers to fully appreciate the rationale for our analysis.

Completeness of offering

• Depth of functionality. The level of sophistication and amount of detailed features in the software product (e.g. advanced risk models, detailed and flexible workflow, domain-specific content). Aspects assessed include: innovative functionality, practical relevance of features, user-friendliness, flexibility, and embedded intellectual property. High scores are given to those firms that achieve an appropriate balance between sophistication and user-friendliness. In addition, functionality linking risk to performance is given a positive score.

• Breadth of functionality. The spectrum of requirements covered as part of an enterprise risk management system. This will vary for each subject area, but special attention will be given to functionality covering regulatory requirements, multiple risk classes, multiple asset classes, multiple business lines, and multiple user types (e.g. risk analyst, business manager, CRO, CFO, Compliance Officer). Functionality within risk management systems and integration between front-office (customer-facing) and middle/back office (compliance, supervisory, and governance) risk management systems are also considered.

• Data management and technology infrastructure. The ability of risk management systems to interact with other systems and handle large volumes of data is considered to be very important. Data quality is often cited as a critical success factor and ease of data access, data integration, data storage, and data movement capabilities are all important factors. Particular attention is given to the use of modern data management technologies, architectures, and delivery methods relevant to risk management (e.g. in-memory databases, complex event processing, component-based architectures, cloud technology, software-as-a-service). Performance, scalability, security, and data governance are also important factors.

• Risk analytics. The computational power of the core system, the ability to analyze large amounts of complex data in a timely manner (where relevant in real time), and the ability to improve analytical performance are all important factors. Particular attention is given to the difference between ‘risk’ analytics and standard ‘business’ analytics. Risk analysis requires such capabilities as non-linear calculations, predictive modeling, simulations, scenario analysis, etc.

• Reporting and presentation layer. The ability to present information in a timely manner, the quality and flexibility of reporting tools, and ease of use are important for all risk management systems. Particular attention is given to the ability to do ad-hoc ‘on-the-fly’ queries (e.g. what-if-analysis), as well as the range of ‘out-of-the-box’ risk reports and dashboards.


Market potential

• Market penetration. Both volume (i.e. number of customers) and value (i.e. average deal size) are considered important. Also, rates of growth relative to sector growth rates are evaluated.

• Brand. Brand awareness, reputation, and the ability to leverage current market position to expand horizontally (with new offerings) or vertically (into new sectors) are evaluated.

• Momentum. Performance over the previous 12 months is evaluated, including financial performance, new product releases, quantity and quality of contract wins, and market expansion moves.

• Innovation. New ideas, functionality, and technologies to solve specific risk management problems are evaluated. Developing new products is only the first step in generating success. Speed to market, positioning, and translation into incremental revenues are critical success factors for exploitation of the new product. Chartis also evaluates business model or organizational innovation (i.e. not just product innovation).

• Customer satisfaction. Feedback from customers regarding after-sales support and service (e.g. training and ease of implementation), value for money (e.g. price to functionality ratio) and product updates (e.g. speed and process for keeping up to date with regulatory changes) is evaluated.

• Sales execution. The size and quality of sales force, sales distribution channels, global presence, focus on risk management, messaging, and positioning are all important factors.

• Implementation and support. Important factors include size and quality of implementation team, approach to software implementation, and post-sales support and training. Particular attention is given to ‘rapid’ implementation methodologies and ‘packaged’ services offerings.

• Thought-leadership. Business insight and understanding, new thinking, formulation and execution of best practices, and intellectual rigor are considered important by end users.

• Financial strength and stability. Revenue growth, profitability, sustainability, and financial backing (e.g. the ratio of license to consulting revenues) is considered as key to scalability of the business model for risk technology vendors.


Quadrant descriptions

Point solutions. Providers of point solutions focus on a relatively small number (typically two or three) of component technology capabilities. These vendors meet a very important need in the risk technology market by solving specific risk management problems with domain-specific software applications and technologies. Point solution providers also provide a strong engine for innovation as their deep focus on relatively narrow subject areas generates thought leadership and intellectual capital. These vendors often have gaps relating to the broader enterprise risk management functionality and do not have the integrated data management, analytics, and business intelligence capabilities found in enterprise technology platforms. Furthermore, these vendors have not yet developed the organizational characteristics for capturing significant market share. Their growth is often constrained by lack of financial and human resources, or relatively weak sales and marketing execution.

Best-of-breed. Providers of best-of-breed solutions have best-in-class point solution capabilities together with the organizational characteristics to capture significant market share in their chosen target markets. Providers of best-of-breed solutions usually have a growing client base, superior sales and marketing execution, and a clear strategy for sustainable profitable growth. Best-of-breed solution providers can also demonstrate a healthy rate of investment in research and development, and have specific product or ‘go-to-market’ capabilities that give them a competitive advantage. Best-of-breed solution vendors have depth of functionality, but lack the breadth of technology and functionality required to provide an integrated enterprise-wide risk management system. Best-of-breed solutions are often considered as a subset of more comprehensive risk technology architecture and are required to co-exist with other third-party technologies or in-house systems to provide an integrated solution to a given risk management problem.

Enterprise solutions. Enterprise solution providers have a clear strategy and vision for providing risk management technology platforms. They are characterized by the depth and breadth of their technology capabilities, combining functionally rich risk applications with comprehensive data management, risk analytics, and business intelligence technologies. A key differentiator is the openness and flexibility of their technology architecture and their ‘tool-kit’ approach to risk analytics and reporting. Enterprise solution providers support their technology solutions with comprehensive infrastructure and service capabilities, ensuring best-in-class technology delivery. Moreover, enterprise solution providers have clear strategies for combining risk management content and data with their risk management software to provide an integrated ‘one-stop-shop’ for risk technology buyers.

Category leaders. Category leaders are risk technology vendors that have the necessary depth and breadth of functionality, technology, and content, combined with the organizational characteristics to capture significant market share by volume and value. Category leaders can demonstrate a clear strategy for sustainable, profitable growth, matched with best-in-class solutions. Category leaders also have the range and diversity of offerings, sector coverage, and financial strength to be able to absorb demand volatility in specific industry sectors or geographic regions. These vendors benefit from strong brand awareness, a global reach, and strong alliance strategies with leading consulting firms and systems integrators. Category leaders can also demonstrate an appetite for ongoing investment in innovation, often matched by deep pockets and a strong financial performance. Ultimately, category leaders combine deep domain knowledge in various risk topics with deep technology assets and capabilities. They can demonstrate this by addressing the needs of very large clients with complex risk management and technology requirements, as well as addressing the needs of smaller clients with standardized requirements looking for integrated solutions from a single vendor.


5. How to use research and services from ChartisIn addition to our flagship industry reports, Chartis offers customized information and consulting services. Our in-depth knowledge of the financial technology market and best practice allows us to provide high-quality and cost-effective advice to our clients. If you found this report informative and useful, you may be interested in the following services from Chartis.

For FinTech buyers

If you are purchasing a FinTech solution, Chartis’s vendor selection service is designed to help you find the most appropriate solution for your needs.

We monitor the market to identify the strengths and weaknesses of the different FinTech solutions, and track the post-sales performance of companies selling and implementing these systems. Our market intelligence includes key decision criteria such as total cost of ownership) comparisons and customer satisfaction ratings.

Our research and advisory services cover a range of FinTech topics such as trading systems, collateral management, risk management, data aggregation, analytics and business intelligence.

Our vendor selection services include:

• Buy vs. build decision support

• Business and functional requirements gathering

• Identification of suitable implementation partners

• Review of vendor proposals

• Assessment of vendor presentations and demonstrations

• Definition and execution of Proof-of-Concept (PoC) projects

• Due diligence activities


For FinTech vendors

Strategy

Chartis can provide specific strategy advice for FinTech vendors and innovators, with a special focus on growth strategy, product direction, go-to-market plans, and more. Some of our specific offerings include:

• Market analysis, including market segmentation, market demands, buyer needs, and competitive forces

• Strategy sessions focused on aligning product and company direction based upon analyst data, research, and market intelligence

• Advice on go-to-market positioning, messaging, and lead generation

• Advice on pricing strategy, alliance strategy, and licensing/pricing models

Thought leadership

FinTech vendors can also engage Chartis to provide thought leadership on industry trends in the form of in-person speeches and webinars, as well as custom research and thought-leadership reports. Target audiences and objectives range from internal teams to customer and user conferences. Some recent examples include:

• Participation on a ‘Panel of Experts’ at a global user conference for a leading Global FinTech vendor

• Custom research and thought-leadership paper on the latest financial services regulations and implications for technology solutions

• Webinar on new FinTech solutions for customer onboarding and due diligence

• Internal education of sales team on key regulatory and business trends and engaging C-level decision makers


6. Further reading• IFRS 9 Technology Solutions: Market Update 2017

• Enterprise Stress Testing Systems: Market Update 2017

• Data Integrity and Control Solutions in Financial Services 2016

• Risk Data Aggregation & Reporting Solutions 2016

• Credit Risk Management Systems for the Banking Book: Market Update 2016

For all these reports see www.chartis-research.com.

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