February 17, 2012
Some people say that the old Maya calendar predicts that the world will end in the year 2012. Will this happen? Most likely no. Without judging anybody’s beliefs in this ancient calendar: Some experts say that the Maya calendar is like a five-digit odometer in your car: When it reaches 99,999 kilometers or miles, it will restart at 0. However, 2012 is beginning to show the ingredients of the long-expected stronger consolidation in the banking platform space.
While it is not yet clear whether Misys and Temenos will merge to move out of the gap between gorillas and antelopes, French software and services company Sopra announced “a project to acquire a majority stake in the Belgian company Callataÿ & Wouters (C&W).” For obvious reasons, it is too early to provide any detailed comment on this announced merger. However, I see two initial areas of interest:
- Sopra’s ability to integrate the new capabilities technology-wise and organizationally. Sopra has acquired firms in the past. However, its acquisition speed has accelerated enormously: It acquired Delta-Informatique in October 2011 and proposed the acquisition of Tieto Corporation’s UK financial services product business and the UK subsidiary of Business & Decision on February 13 — just four days ago.
- Sopra’s solution portfolio after the acquisition. Sopra stated that it intends to integrate C&W’s Thaler banking platform with its Evolan solution set providing, for example, lending, payments, and cards management. The just-acquired banking platform of Delta-Informatique, Delta-Bank, seems to be positioned somewhat outside this market, for “tier 3 banks” — which is not a very clear separation from C&W’s Thaler banking platform’s target clients.
An initial assessment of Forrester’s global banking platform deals survey for the year 2011 shows a reduction in global customers with new names from 2010 to 2011, albeit not as severe as the drop from 2008 to 2009. In addition, today’s banking platform market has been fragmented until now. While there are a few global key players, a strong group of global and regional pursuers are ahead of virtually tens, if not hundreds, of local players in the banking platform space — in a challenging market environment.
Thus, 2012 has the potential to become the year of acquisition and mergers that Forrester has expected for quite some time as part of increasing competition and of the growth strategies of those vendors that are doing better in the financial services market. Will this be a positive move for the merged entities’ customers? Merged entities may decide to continue maintenance and development for most of, or even their entire, joint solution portfolio — similar to FIS’s approach to go to market with its 13 banking platforms. However, there is no such thing as certainty in an M&A situation — in particular when considering the long term.
Let me know what you think. JHoppermann@forrester.com