As I creep ever closer to my eighth work anniversary here at Aite Group, I’ve been in a somewhat reflective mood. What lessons have I learned from listening to eight years of vendor clients and prospects talking about their fintech friends and foes? What have I gleaned from hours of demos and feedback sessions with the vendors and consultants that service the capital markets?
If there’s one thing that jumps out at me, it’s that vendors and the sell-side spend a lot of time obsessing about what their competition is doing. “Vendor/bank A has developed a widget to do X, so we have to develop a better one,” is often the response to a press release or news item touting the latest vendor/bank tech developments. But this really isn’t the best focus of their efforts. How do they know, for example, that the clients and prospects of vendor/bank A are pushing them to go in that direction? How do they know that vendor/bank A is making the best decision possible with the information they have at hand? They don’t.
When engaging in a vendor review report, we ask vendors to provide us with their references, and we naturally expect that these vendors are selecting the happiest and most contented clients of the bunch. Surprisingly, many references are less than complimentary about the vendors that put them forward. Of course, we do our own due diligence and speak to nonclients and those firms that continue to build rather than buy to get a fully rounded picture, but sometimes the reference clients are the most critical of the bunch. The same can be said of buy-side clients of sell-side firms and custodians.
And what exactly is the main bugbear for these clients (across front, middle, and back offices alike)? Their vendors and banks aren’t listening to their feedback. Some aren’t even providing information on the direction their solutions are taking in the future—no roadmap, no feedback loop, no dialogue at all. Vendors and sell-side firms are often criticised for adding bells and whistles to solutions that need core functionality to be improved, because these firms are chasing after the competition’s lead rather than addressing what needs to be addressed.
I often compare the vendor/service provider-client relationship to a marriage, and a marriage with no communication is a poor one. It sounds trite or obvious to say that these firms need to speak to and listen to their clients more, but it seems that this basic tenet of what remains a relationship-driven business is being left by the wayside. Rather than chasing after the latest machine learning widget, find out what your clients actually want you to address this year. It’s likely to improve your client retention rates.
And if you need a hand doing it, we’re always here to help you get it right.
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