October 5, 2010
A couple of days ago, global banking platform vendor Temenos announced that it has signed an agreement to acquire Odyssey Financial Technologies, which specializes in the private banking, private wealth management, and asset subverticals of financial services. The deal is expected to close around mid October: Temenos will pay more than 60 million euros and take on Odyssey’s existing debt obligations of more than 20 million euros. Here is my initial reaction to the planned acquisition.
On the asset side, Temenos will get the private banking platform Triple’A Plus, portfolio management and decision support solution WealthManager, plus clients such as Banque Cantonale Vaudoise, Delta Lloyd, and RBS Coutts Bank. This will help Temenos accomplish the necessary extension to its private banking footprint: In spite of prominent private banking clients such as EFG Bank, over the past few years Temenos’ T24 has not been as successful in the private banking/wealth management arena as, for example, ERI Bancaire, SunGard, or Tata Consultancy Services Financial Solutions as far as new named customers are concerned — not to mention the various regional private banking pure players.
At the same time, the Odyssey solutions will add additional technologies and architecture to Temenos’ already existing acquired portfolio: Not considering the two “classic” Temenos banking platforms T24 and TCB and the mobile solutions of recently acquired specialist vendor FE-Mobile, Temenos acquired multiple smaller banking platform vendors over the past few years, including Financial Objects in the UK and Viveo in France, plus further firms such as business intelligence and reporting vendor Lydian Associates.
Temenos has a number of strategic options to retain and enhance its acquired customer base. These options include offering migration paths to the T24 platform. While T24 would become more and more powerful in the course of this exercise this migration option may not be high on the list of all “acquired” customers. Another option would be continued maintenance and extension of the acquired solutions that creates a heterogeneous solution portfolio similar to other highly acquisition-oriented banking platform vendors. However, this option could be more costly. We have to wait to see whether the potential future of the acquired customers will be more risky or more costly than they have planned for — and whether Temenos will come up with a different and very customer-friendly approach.
As always, I would like to hear what you think: JHoppermann@Forrester.com.