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Consequently, we’re quite attractive to companies, particularly startups, because we can provide access to a huge number of banks around the world.”


Avaloq tries to “provide the plumbing” for FinTechs and give new companies the tools for easier integration and communication with large banks. “We see our job as really trying to encourage new companies to use online Avaloq technology to integrate with customers.” Avaloq operates both pragmatically in finding promising startups as well as advertising itself as a potential partner. “This is one of Francisco [Fernandez, Avaloq CEO]’s passions. He was out in Silicon Valley earlier this year finding new companies. Innovation is a cornerstone of his thinking.”


Large technology companies are already making their way into some sectors of the market, like payments, but banks don’t need to worry too much about their main core businesses being disrupted for the time being. “Does Facebook suddenly want to become a bank? No they don’t. It’s not their core competency so personally I don’t think I see it – they have plenty of other things to worry about. Replacing banks or core banking services, I’d imagine, is not at all on their agenda.”


Compliance will be a major stumbling block for the technology companies, as they’re not used to the amount of hoops needed to jump through to operate in the industry. “If you look at what a lot of banks are doing they’re all looking to collaborate [with big technology companies] and have their own innovation labs.”


Payments is an area in which the tech giants might make their presence felt, but if he were on their board he “wouldn’t be saying ‘hey guys, let’s start a bank’”.


Cybercriminals are targeting banks and vendors in the finance sector with increasing regularity. Security is a major topic for Avaloq and its clients and causes a lot of debate. “It’s something we take very seriously, because of that four million assets statistic I mentioned earlier. It’s a big responsibility to have. Our view might also have something to do with being a Swiss venture – security is always top of the mind.”


Are banks worrying enough? He says that he doesn’t know, but the “figures are frightening” when it comes to the increase in attacks. Banks have a feeling that they are “innately


secure” and that could be a dangerous mindset to have. “It’s one thing siphoning off millions in cash but it’s quite another to steal customer data. It’s happened on a number of cases and is particularly worrying for a bank’s reputation.”


Geographically, Avaloq has “deliberately” kept out of the US market. “We’ve had enough to keep us busy in Asia where our business has developed very successfully over the past 10-15 years,” says Longden. A lot of global clients are now coming to the vendor, though, and saying that since their operations in Europe and Asia are run by Avaloq they would like their US sites to match up.


“We have at least three major organisations – to my knowledge – with which there are ongoing discussions about supporting them in the US.” Asian investment continues to be a focus, since the region has been one of its biggest growth markets. It sees its main development stemming from Zurich, amongst its historical roots, and a new site in Edinburgh that is being called the “near shore centre”. Avaloq aims to snap up the best and brightest from university cities as they graduate. Offshore resource pools have not been its bread and butter, but it is always looking to improve efficiency and cost base. Expansions are planned in Manilla and in its operational bases in Australia, Singapore and Hong Kong.


Avaloq’s plans into 2017 include the expansion of product lines and both the “depth and breadth” of its offerings. “We’ve got a fantastic position in private banking and private wealth,” says Longden. It is looking to continue its strategy of small numbers of high-value deals, one that Longden believes is markedly different from its competitors: “Six Avaloq deals tend to be quite a lot when compared to six deals done by our competition”.


It wants to sell more into the industries in which it is strong and mature its services offering. The BPO operations will also enable it to reach out to smaller organisations who may not have been the target before. Moving further into general core, universal and retail banking is another plan for the future. Avaloq is already being used “wall to wall” by a number of Swiss banks but internationally its position is mainly in wealth. Longden predicts that this will evolve with a push more into retail. This could be very much the case in the UK, where challenger banks “aren’t looking for deployed services”. Newer entrants are exactly the type of client the vendor could snap up, and its experience with the larger banks could help it in winning over customers.


www.ibsintelligence.com © IBS Intelligence 2017


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