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treasury & capital markets overview case study:


IBS Journal Supplement September 2015


Belting out ‘utility’


Rationalisation of systems, internal and external utilities, and better use of data are fla- vour of the day in a low margin treasury and capital markets sector, but there are fewer suppliers left to provide solutions after the consolidation of the last few years.


As with most of the industry, the treasury and capital markets (TCM) sector has been in considerable flux in the last few years, in terms of market drivers, new operational models and supplier consolidation. If there is a single buzzword then it is probably ‘utility’, which for those in the industry with long memories probably evokes a sense of déjà vu. This time it is cost pressures that are meant to be the driver for such a shift and, certainly, several suppliers have been adjusting and componentising their of- ferings in the expectation that the current discussions will lead to actual decisions. In fact, there are fewer suppliers now


to provide solutions, whether utility or not, than pre-crisis. This means a marked reduction in choice for buyers. In parallel, new demands, particularly around collat- eral management, risk management and overall liquidity management, have been the main influences for investment. Some suppliers have adapted well to the shifts in demand but others have struggled. Let’s deal with the reduced choice


at the outset. It isn’t that any of the TCM systems have been deliberately culled but some have gone into a steep decline so now barely register when it comes to new licence deals. Moreover, the com- ing together of multiple systems within individual suppliers (Sungard, Misys and Ion Trading/Wall Street Systems primari- ly) means that previously strong, autono- mous suppliers have disappeared, R&D and


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focus have often been lost, and each con- solidator will only ever respond to an RFP with one of its systems. On that last aspect, where a bank might have previously con- sidered, for instance, Trema’s Trading Assis- tant, the Wall Street System, Financial Soft- ware Systems’ Spectrum, Ffastfill’s trading and risk suite and IT2’s IT2 TMS, Ion Trading – which has hoovered up all of these in recent years – will only propose one of the systems in any selection. It is no coincidence that the two sup-


pliers that have continued to consistently sell their systems in good numbers each year, Calypso and Murex, have remained aloof from the M&A. The vast bulk of their sales, marketing and R&D activi- ties are dedicated to their single flagship platforms. Calypso gained 14 new-name deals in 2014, as reflected in the IBS Sales League Table, while Murex had twelve for its MX.3. These tallies did not include smaller subsets of their systems, sold for limited areas of functionality, something that both suppliers have also tended to do well. Contrast that with, say, Misys’ Fusion- capital Summit, Fusioncapital Opics or its Thomson Reuters-derived Fusioncapital Kondor, all with low single figure new- name wins in the last few years, steeply down from their heydays. Much the same is true of the Risque system from Sophis which is today Fusioninvest Risque in its Misys form (there is also a buy-side ver- sion, Fusioninvest Value).


© IBS Intelligence 2015 www.ibsintelligence.com


The one other company that has sur-


vived the M&A to date, albeit now with venture capital ownership, is Openlink with its Findur trading and risk system (and a profitable niche with its energy trading version of this, with known wins so far this year in the Balkans, Czech Republic, UK and Australia – Openlink is riding on the coat-tails of current growth in the energy trading and wider commodities markets). The supplier can provide a full front-to- back office solution but, as with Calypso and Murex, seems to have also compo- nentised its product to offer niche solu- tions, which play well where there is not a rip and replace requirement. For Findur itself, Openlink had seven new-name wins last year. It is important, when setting out the


TCM market, to explain the categorisation of the systems on offer. Openlink is in the tier three and four space, typically in the past alongside the likes of Spectrum, Opics, Broadridge’s TwoFour Systems (now Broa- dridge FXL) and Sungard’s Quantum and Sierra (both now under the Ambit Treasury Management umbrella brand) plus a few regional suppliers, such as Australia-based CCK with its Guava suite in Asia Pacific. Kondor, in its pure front and middle office form, mainly spanned tier three and four but was also taken from time to time by tier two banks; the addition of back office capa- bilities saw the supplier gain a larger foot- print within some customers.


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