Technological innovation sets new standards in FinTech for analytics, customer service, integrations, and data delivery
Software-as-a-service (SaaS) continues to be the key to a dramatic operational transformation. Often these transformations are triggered by events like regulatory shake-ups, mergers and acquisitions, evolving investment strategies, and, of course, the COVID-19 pandemic.
Enterprises have accelerated the adoption of public cloud for their existing or new SaaS offerings. In 2020, Gartner found that SaaS was the largest market segment for public cloud end-user spending. With this immense focus on digitization and the need to reduce the time to market, organizations are innovating at a much faster pace.
Let's take a look at the top emerging trends that are disrupting SaaS. They include:
- Artificial intelligence
- Data security
- Data analytics
- Customer-centric approach
- Integrations and self-service models
1. Artificial Intelligence
AI and cloud are some of the most talked about aspects of SaaS businesses, which are adding AI-driven personalized experiences. AI adoption is trending in the operational and product/service development space. (McKinsey)
For example, at Clearwater Analytics, we launched an AI powered Data extraction service in August 2020. This service identifies key data elements in a variety of document types, then extracts this data and feeds it into Clearwater’s data aggregation engine.
Like Clearwater, many other organizations are adopting AI in different categories of solutions. One category that stands out is predictive analysis, which in simple terms means that we take large historical data and apply predictive algorithms to generate models. These models are then applied to the incoming new data to yield predictions. Looking at a few top disruptive AI startups of 2020, most of them are building predictive models.
AI will continue to see this traction and be a major trend in 2021 as SaaS providers bring to market more ultra-personalized recommendations and better predictive forecasting services. As the AI offerings from all major public cloud vendors get deep and mature with new features, so is the adoption of SaaS products.
2. Data Security
The past two years not only witnessed an accelerated growth in digitization, but also in threats around data leakage and misuse. In fact, one of the oft-cited concerns for digital transformation is security.
In February 2020, one of the largest distributed denial of service (DDos) attacks in the history of the internet occurred. It peaked at 2.3 tbps (terabytes per second) but was fortunately mitigated by a targeted cloud provider. This was one of several security breaches that happened across different organizations in 2020.
With intense external scrutiny, smart SaaS providers put a lot of resources into ensuring their solutions are secure. As a SaaS provider, one of Clearwater’s top priorities is to detect security vulnerabilities as soon as possible. This detection is followed by immediate and automated (if possible) remediation to strengthen our product with multi-layered protection.
The near future is witness to a huge focus on AI-based vulnerability detection and quick mitigation to avoid any intentional or accidental data breaches. This is more evident from the fact that security detection is going to be one of the topmost trends in cybersecurity.
3. Data Analytics
Two major trends under data analytics that are worth mentioning are SaaS-based business intelligence (BI) and real-time analytics.
As many companies realized the importance of data they collect on a daily basis, they wanted tools to harvest value out of this data and also present it, whether internally or externally. Major cloud providers all have BI tools on the market and continue to innovate to meet customers’ needs.
The evolution of BI tooling is backed by the need for real-time data analysis. The rapid change in business during the pandemic has also resulted in a need for more real-time insights across data.
Moving forward, all SaaS businesses will provide more streaming-based analytical services by adding real-time insights to their offerings. According to Global Streaming Analytics research by VMR, the Streaming Analytics Market, which was valued at USD $10.1 billion in 2020, is projected to reach USD $78.44 billion by 2027, growing at a CAGR of 34.03% from 2021 to 2027.
4. Customer-Centric Approach
The COVID-19 pandemic showed us how swiftly customer needs and their interactions with various systems can change. The technology world responded well to this. Many startups, SMBs, and enterprises enriched their products and services to fulfill this sudden rise in customer requirements.
SaaS businesses, being the backbone for every other product, had to innovate at an even greater pace to match these demands. For example, looking at the EdTech needs, Microsoft quickly pivoted their Microsoft Teams offering by adding many “Teams for Education” features for better remote learning.
SaaS providers will continue to bring customers or end-users to the center of every single requirement. This is going to be the one of the biggest trends around building more customer-centric SaaS offerings. For some this could also mean breaking the end-to-end SaaS products into more concise and focused services based on the need of a particular segment of customers.
5. Integrations and Self-Service Models
SaaS has been around for over a decade now. As more and more systems have been building around these SaaS offerings, one of the key differentiators for these providers against their competitors is seamless integrations.
SaaS providers need to provide relevant and easy integration points for their customers to consume their APIs. If there is a popular platform out there for a respective business domain, the provider needs to enable applicable integrations to reach a wider customer base.
The self-service model is another such aspect that is going to provide a competitive edge. Big players in the market realized that much earlier. Their SaaS offerings come with a very smooth onboarding process without any manual interaction with the provider. SMBs are catching up on this and trying to move toward a complete self-service model wherever possible. This is even more relevant now that many teams continue to work remotely; visiting a customer to onboard them is not always possible.
Easier integrations and self-service model are going to be one of the top charters for SaaS providers. Over the next couple of years, we will see an upward trend around adoption of newer integration platforms, better SDKs, and enhanced self-service developer portals for APIs.
A Solid Foundation for the Future
As the entire world witnessed in the past couple years, there is a need for faster digitization and innovation around us. While the technological world responded strongly, it set a solid foundation for AI, data security, data analytics, customer service, and integrations. It will be interesting to watch how various SaaS solutions continue to respond and outperform each other to build better offerings for their customers.