IBS Journal April 2015


Finnova gains new core banking system client in Switzerland; eyes APAC markets


Swiss core banking software vendor, Finno- va, is exploring the APAC markets for inter- national expansion. Christoph Erb, chief customer officer and member of Finnova’s executive board, says the region presents opportunities for Finnova’s core banking system in the private and retail banking sectors, depending on the individual mar- kets (e.g. Singapore’s focus will be on pri- vate banking, whilst Australia is more retail oriented). The vendor is planning to utilise its existing partners, some of which are large multinationals like HP, and also find new regional ones. Meanwhile, the market at home is


picking up, observes Erb. ‘Switzerland is definitely more active than it was two years ago, although nowhere near as much as it was ten years ago.’ There is a lot of inter- est in business process outsourcing (BPO), ‘whilst two years ago BPO was pretty much dead’, he notes. He attributes this to the increasing cost pressures that the banks are under. A stronger Swiss franc, far higher costs of doing business, dwindling reve- nues and the ongoing US investigation of tax evasion have adversely impacted the country’s banking market. Some experts predict the market shrinking by about a third in the coming years. There is also a realisation that in some


areas, e.g. in payments, there is simply no differentiation, says Erb. ‘A payment is a payment, and banks are now under a lot


of pressure trying to justify to their clients why their payment services – that are iden- tical – cost more than those of their coun- terparts. So this area is now viewed as a commodity by many banks and they want to outsource it.’ He anticipates a number of BPO contracts to be signed with Finnova imminently. Whilst Finnova itself specialises in


delivering the software and acts as ‘an ena- bler’, its partners take care of the rest of the BPO components, says Erb. Finnova already has three BPO tie-ups in Switzerland, with Swisscom, Finanz-Logistik (targeting the lower-end retail and private banks) and Incore Bank (for private banks). The latter, however, has recently inked a similar part- nership with Finnova’s rival, Sungard (see p6). Erb comments that there is no exclu- sivity on either side in these partnerships. Finnova has also recently gained a new


customer, a private banking start-up in Bern, Zähringer Bank. This is a small entity, with a team of eleven people, a majority of whom are ex-Notenstein Private Bank. Of the ongoing projects, Finnova is


half-way through a software overhaul at Zürcher Kantonalbank. The bank is moving from an in-house environment to outsourc- ing its back office payments to Finnova. Go-live is expected in 2016, and all eyes are on this project, says Erb. The bank is one of the first and few in the country to be com- ponentising its back office, he explains, as until now the trend has been to have one core banking sys- tem used across the board. For its core banking opera- tions, Zürcher Kantonalbank uses Avaloq Banking Suite from Finnova’s domestic rival, Avaloq. A successful comple- tion of this project will unlock more business in this area as other banks might follow suit, Erb feels.


Elsewhere, Erb cites the Finnova HQ 8 © IBS Intelligence 2015


conversion to Finnova at Ban- que Cantonale du Jura. The bank embarked on its core software overhaul in 2012, with the new system replacing the outdated IBIS3G solution


www.ibsintelligence.com


Christoph Erb, Finnova


from another domestic supplier, RTC (IBIS3G has been in the hands of HP since 2010). Banque Cantonale du Jura went live with the Finnova platform at the end of 2014. ‘Like with all our projects, it has been completed on time and budget,’ states Erb. Incidentally, another IBIS3G user, Bern-


er Kantonalbank (BEKB), is currently work- ing with Finnova and HP to modernise its technology. Together, the three parties are building a prototype for HP’s latest initi- ative known as ‘banking as a service’. This Europe-wide venture will gradually involve various partners that will bring their specif- ic expertise to HP’s offering. At BEKB, Fin- nova is assisting with the development of the integration module, dubbed ‘Financial Transaction Processor’, which will connect various platforms and applications and enable parallel operation. Finnova currently has over 100 core


banking clients in Switzerland and Lichten- stein. Of these, around a quarter are private banks and the rest are retail and univer- sal banks. The vendor employs 350 people (it is growing its resources, notes Erb, and added about 30 staff over the last year), with its operation based in Switzerland, plus a small development centre in Germa- ny, where Finnova’s majority shareholder, MSG Systems, resides.


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