Key to note here is that the Sales League Table is drawn
with a certain consistency in the approach to measurement, which is primarily to do with the fact that these are new deals – so an renewal of an existing contract or geographical extension to an existing license is not counted as a fresh deal, even though these may be considered to be new sales by the respective suppliers. Also, the SLT does not distinguish between large and small deals, considering these are more to do with the volume of the deals clocked in the year across system types and geographies, and not a function of value. The domestic deals of US and Russia have also been excluded from the Global Sales League Table for obvious reasons. While we look at size of deal in the commentary, there is no weighing for this on the table itself – quantity isn’t everything, after all. And we are also not comparing like-for-like systems – the colour coding on the Table itself is meant to help categorise, emphasising which systems are universal, retail, lending, private banking and wholesale in primary focus. Please read more on the methodology described later in this report. Nevertheless, the analysis constitutes the industry’s only
real picture of who has been buying what and where, and would seem to be particularly useful when you delve into the detail. This is the key purpose of this report. Comparisons can be made over time, by supplier, geography, type and size of institution. It is a single point repository to compare performance, on a global perspective.
Core banking systems & suppliers There was a clutch that still sold in reasonable numbers
during the 1990s. There was then the pre-Y2K dip for everyone in 1999 and it marked a watershed for a fair few offerings. While their newer counterparts revived once the panic was over and carried on their way as before, some older systems failed to bounce back. For smaller suppliers, it has been a particularly tough period, contributing to yet more consolidation, with this often accelerating the decline of the acquired systems, whether intentionally or not. The performance of suppliers has seen an interesting
pattern over the last 5 years. 7 vendors had clocked double digit sales in 2015, as compared to nine last year. By comparison, only three vendors had new wins in double figures in 2013, compared 14 in 2006. So more of the business is ending up in the hands of fewer suppliers. For those that like history, back at the start, the Sales
League Table was a basic affair centred on only a relatively small range of systems. Kindle’s Bankmaster led the way, followed by Midas-Kapiti International’s Equation and Midas, then the third of the IBM AS/400-based offerings, IBIS. Despite the relatively small base, there were proportionally more universal banking systems recording sales in double figures than is now the case and the field was more widely
6
spread. In 1995, four years into the analysis, eight systems recorded double figure sales, of which the only non- universal offering was Frustum’s Opics (Midas in those days was still sold as a universal solution). Supplier consolidation has been one major change. At the outset, no one supplier had more than one back office system, a situation that started to change with the ACT/ BIS/Kindle and Misys/Kapiti comings together in the early 1990s. The systems were also easier to categorise in the early days, with this largely due to technology. They ran on the mainframe, DEC VAX or IBM midrange or, gradually, Unix and Windows, but none was platform independent. The hardware platforms were also much more limited in scale than today so this restricteWd the target markets. Most of the suppliers came from the US or UK; Citil (I-flex as it became, Oracle Financial Services Software as is) was only starting to emerge out of Citigroup India, leading where other Indian suppliers were to follow. The recent consolidation of Sungard with FIS and Fundtech with D+H are examples of the trends that are now seen to be more regular and inevitable. Many of the systems that were featured at the outset have tailed off or disappeared completely. Several mainframe based systems were among the first to go, under-cut by their rivals and finding that – as is still the case – there was little demand for core packages from the tier one banks for their main domestic operations. Among the suppliers to struggle have been large companies for which application software is not a core business – the likes of Unisys, Alltel, Digital Equipment and EDS. Another issue that has become clear over time is that established suppliers are seldom the source of new systems. They seem unable to rewrite their core offerings. Innovation has tended to come from smaller players, often set up by ex-staff of larger suppliers. Examples are Frustum (ex- IMMS), Calypso (ex-Infinity), and, more recently, Trapedza (ex-Kindle) and TwoFour Systems (ex-Frustum/Misys). The incumbent suppliers do not seem to have the culture for innovation – BIS, for instance, tried to do a rewrite in the late 1980s of Midas; IBIS tried to rewrite its system in the second half of the 1990s. They also have the complication of existing user bases, from both the perspective of having to satisfy the demands of current customers as well as the challenge of positioning their new developments in such a way as to not jeopardise sales of their existing applications. The latest to try a rewrite, intriguingly, is Oracle FSS,
within the ‘Next Generation Banking’ system project that was revealed by IBS in March 2012 and saw a launch later in the year of the Oracle Banking Platform (OBP), with Australia- based NAB and Suncorp as the first takers. At least Oracle has scale on its side but history says it will still be difficult to achieve. Two vendors that have tried and succeeded are Lebanon-based BML Istisharat, which rewrote its ICBS system
Market Dynamics Report
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