Market competition for IT service providers in South Africa intensifies

The South African banking and financial services (BFS) sector is facing a number of global and domestic challenges, among them cyber security. As a result, the market for IT service providers has become highly competitive, says Frost & Sullivan.

In order to differentiate themselves from enterprises offering similar services, providers will need to offer innovative branding and price strategies, such as pay-per-use models, and consider developing contracts with flexible service level agreements.

Frost & Sullivan’s research, ICT Enterprise Spend in Banking and Financial Services, South Africa, Forecast to 2019, finds that in 2016, ICT spend within the BFS sector was an estimated R15.1 billion, and is expected to grow at a CAGR of 2% reaching R16 billion by 2019.

Major growth areas of ICT spending and IT strategy include: cloud-based services, industry-specific technologies and systems integration.

“With service providers offering similar IT solutions and services to enterprises, differentiation through innovative pricing and branding strategies, as well as industry knowledge will be critical to success,” said Frost & Sullivan analyst Naila Govan-Vassen.

“Enterprises will have more control over cost and the ability to implement innovative IT services should they adopt this approach.”

To survive and thrive in a challenging environment, service providers will need to:

  • Leverage data analytics to understand market trends and consumer behavior;
  • Enable secure enterprise mobility by streamlining existing systems;
  • Migrate from legacy systems to become more responsive internally and with customers;
  • Engage with emerging industries needing on-the-go payment solutions, such as mobile payments, while ensuring an exceptional customer experience;
  • Consider offering services around integrated payment platforms, multi-channel platforms for customers and use secure data analytics tools.

“Currently the banking sector’s biggest dilemma sways between security versus innovation, and cloud versus cost saving and efficiency,” noted Govan-Vassen.

“Although there is a general hesitance from the BFS sector to procure services from third-party vendors, due to risk management and security challenges, we see this as a critical step moving forward. This is predominantly due to the fact that the market is forcing the implementation of innovative cloud-based and real-time data gathering and monitoring systems when it comes to systems integration.”


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Market competition for IT service providers in South Africa intensifies