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IBS Journal March 2015


Temenos reports on full year financial results; makes another US acquisition


Temenos has outlined its strategy for the next three years after the publication of its 2014 full year financial results. Sluggish sales in Q4 (down nine per cent on 2013’s figure) meant yearly software licensing growth of just three per cent, but the vendor guided investors that this would be offset by total licensing growth in the region of 15-20 per cent in 2015 (likely reflected by the recent signing of a major agreement with Swiss private banking group, Julius Baer, see front page). Total revenues were down five per cent for Q4 on a like-for-like basis. The disappointing Q4 revenue


figure was expected, after Temenos warned investors in January that sales had been below par, in particular in the APAC region, resulting in the Temenos share price taking a hit. At an investor day in London, Temenos CEO, David Arnott, shed more light on the reasons for this, hinting that the sales strategy under new organisation (Martin Frick was poached from Avaloq in April 2014 as head of APAC) had been too focused on new business and neglected exist- ing clients. Arnott outlined that Temenos’ strat-


egy over the next three years falls into six components: o the core T24 software; o consolidating its position in the


private/wealth market; o gaining further ground in the


US market; o developing new digital plat-


forms via Temenos Connect; o building on its presence in the


Software-as-a-Service (SaaS) and microfi- nance markets; o industrialising the sales and part-


ner alignment process. On the core product front, Arnott stat-


ed that Temenos is ‘moving down from the high-level view of bank challenges to address specific regional pains’. In the Middle East, for instance, the vendor is focusing on the Islamic banking market, in Europe on private banking and wealth management, digitalising credit unions and community banks in the US with SaaS (see below), tackling growth challenges


10


David Arnott, Temenos


acquisition of the local operations of Royal Bank of Canada (RBC). RBC’s regional net- work stems from the Royal Bank of Trin- idad and Tobago (RBTT), now known as RBC Royal Bank, which is a long-standing user of T24 and Oracle FSS’s core banking offerings. Arnott added that another custom- er had been picked up in Latin America in Q4 last year ‘against a major compet- itor’, which will install T24 over the next twelve to 18 months. This will be followed up with the roll-out of the Insight BI busi- ness intelligence tool and the FATCA


© IBS Intelligence 2015 www.ibsintelligence.com


for banks in APAC and replacing legacy software in Latin America. Arnott focused on the latter region in particular, citing the major project with Venezuelan bank, Banesco, which is rolling out T24 across its 440-branch network and subsidiaries in Panama and Dominican Republic. Inci- dentally, another recent Caribbean taker is Sagicor, a financial services firm which expanded its presence in Jamaica with the


application. Temenos now claims a pres- ence in every country in the region, the only exception being Brazil which is a stra- tegic focus for 2015. In the private banking/wealth man-


agement space, Arnott definitively declared that Temenos has ‘an unassaila- ble’ position in the market ahead of rivals such as ERI and Avaloq. The aforemen- tioned deal with Julius Baer was won after a lengthy selection process against Avaloq, with the first phase of the pro- ject covering the software replacement of the private bank’s APAC operations with T24. Nordea Bank Luxembourg, the first user of a combination of the TripleA platform, Temenos Connect and T24, is now also nearing go-live. Temenos will use the final version of the combined solution as a ‘private bank-in-a-box’, said Arnott, and will take it to other prospective clients. The vendor has also picked up an extension deal with another Swiss private bank, a customer since 1999, to support its domestic operations. This is thought to be Credit Suisse. Arnott bigged up the importance of building relation- ships with existing clients, citing this collaboration as an example, but the relationship between Temenos and Credit Suisse has been somewhat cheq- uered. The German operations of the bank tried to implement T24 in the ear- ly 2000s, but after a couple of years the project ground to a halt (Credit Suisse subsequently sold its German opera- tions to Bethmann Bank). And finally, Arnott stated that


Temenos had picked up a ‘significant extension’ of an agreement with ABN Amro, replacing one of ‘our largest com- petitors’ in a multi-site implementation. It is understood that this deal stems from Temenos’ relationship with Fortis (it had T24 across multiple locations) before it was merged with ABN Amro in 2010. On the way out is thought to be ERI’s Olympic, which has been in place at the majority of ABN Amro’s international locations for a number of years. In North America, Arnott said Temenos would continue to chase


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