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g 2011 analysis


In fact, the protracted nature of the downturn in the core banking systems market was clear to most observers and industry participants throughout the twelve months. There were plenty of symptoms, including the poor results of some suppliers and a wave of consolidation. The latter saw France-based Sopra start 2011 with no core banking systems and end it with three (Delta Informatique’s Delta-Bank, an old UK system from the purchase of Tieto’s UK operation, and Callataÿ & Wouters’ Thaler, albeit with the latter deal consummated in early 2012). Thomson Reuters’ trading and risk business fell to venture capitalist, Vista Equity Partners. Then, in early 2012, it was announced that Misys and Temenos had agreed an all-share merger. This flushed out the VCs, with Vista the first to show its hand, making a cash offer. Temenos withdrew and left a couple of VCs to battle it out. Vista won the day and set about combining Misys with the acquired Thomson Reuters business. The market problems were starkly illustrated by the year’s


Sales League Table. 2011 was grim, even in comparison with the far from rosy 2010. The drop was clear from a glance at industry barometer, Temenos. However, the picture was not black and white. From a geographical perspective, there were some parts of the market that actually experienced growth. The problem was that this was not nearly enough to offset the doldrums in other parts of the world. As the picture has become clearer over time of core


banking as a microcosm of the overall state of the economy, it looks as though there is a fairly close correlation. The drivers for change do not go away in tough times and it could be argued that this is actually a good moment to undertake major projects (a buyers’ market, more focus from suppliers, resources within the bank more available). However, it is clear that the majority of banks do not see it that way, and put off core system replacements when the economy is slow. The headline figure of the overall total of new-name deals spoke for itself: 352 in 2010 and 302 in 2011. It is always near enough a like-for-like comparison, with one or two systems dropping by the wayside each year and one or two coming the other way. Western Europe saw the greatest dip in new-name deals, from 77 in 2010 to 55 in 2011. Central and Eastern Europe remained depressed and was quieter still in 2011, with just ten deals compared with 20 in 2010. Sales by international vendors in North America also fell considerably (from 41 to 30) but it did not look like a bad market for domestic suppliers. The Middle East was also depressed, from 38 deals to 29, so too Africa, from 57 to 35. The bright lights amidst the gloom were Asia Pacific,


which was up marginally across the two years (from 43 to 49), Central and South America, which was steady, with


Brazil looking particularly active, and most pronounced, Central and South-East Asia, climbing from 45 deals to 58. It wasn’t only quantity that was down, but quality as well.


As always stated, IBS has transparency into all deals, with suppliers having to submit the names of their claimed wins so that we can do all of the cross-checking that goes into the Table. Each year, we look down the list to try to identify those deals that are large, in terms of scope (e.g. domestic retail for tier one and two banks or multisite roll-outs for mid- sized to large banks). With all due respect to those banks that did make decisions in 2011, the stand-out deals were hard to see, with the vast bulk of the core banking system selections coming within tier three and four banks, often replacing in-house or local systems, rather than taking out one mainstream package and putting in another. A small but increasing number of core system deals were now with non-bank organisations that were adding banking services. In terms of the gaps, there were, for instance, no mid-tier UK banks making domestic retail decisions, as in days gone by, nor multisite or head office deals at tier ones across the globe. Oracle FSS’s deal to replace the old Hogan system at


Suncorp Metway in Australia was notable (the Suncorp deal subsequently turned out to be for the supplier’s new core system, albeit with Flexcube for trade finance) and this supplier’s haul stood up fairly well, only down slightly on 2010. It had only two deals in Western Europe, none in Central and Eastern Europe. Africa, once a stronghold for Flexcube when in the hands of I-flex Solutions, brought three wins. There were a couple in each of Vietnam and Cambodia and then a smattering across the rest of South- East Asia, plus Asia Pacific and Latin America (one in Brazil and Helm Bank in Colombia). While Oracle FSS did okay, the fact that it regained


the top spot for new-name sales stemmed from the steep decline in new-name deals at Temenos. In some ways, the previous resilience of the supplier was something of a surprise, with it resolutely remaining close to or above 40 in the previous five years, while the totals of I-flex/Oracle FSS and others tailed off. Temenos was not able to sustain the relentless quest for new business in 2011, with this reflected in its financial results. Temenos had a little more traction in Western Europe


than was the case with Oracle FSS, no doubt aided by its acquisitions here.


Its fraught takeover of Viveo at least


appeared to give it an edge in France, with three wins here, and it finally gained a recruit from the base of acquired German company, Actis (Maple Bank). The other European T24 wins were at Aldermore Bank in the UK and Russian Commercial Bank in Cyprus. A win at Banco Itaú stood out, so too success at one of the largest banks in Saudi Arabia,


Market Dynamics Report www.ibsintelligence.com 21


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