IBS Journal August 2017
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problems in a compartmentalised manner. You need a more holistic, more complete approach.” Incrementality is still a necessity, adds Syed, as banks can’t afford to invest four years into looking for ROI. “You must almost think of banking solutions as LEGO blocks. As you add more on, they need to fit with each other and blend in.” This is where the symbiotic nature of Misys and D+H comes into play, as both of the former vendors’ solutions can slot together perfectly, making a complex LEGO construction that little bit easier.
“If I’m an existing customer of Misys and I use transaction Finastra is planning to provide more seamless services
banking capabilities, it becomes very natural for me to look at cash management or payments. Both can come from D+H. If we flip it and say I’m using cash management and I need trade finance capabilities it makes sense for me to look at Misys.” When you have 9,000 customers, says Syed, there are 9,000 different types of relationships that can be built upon. “It behoves us to take advantage of that relationship and present a better opportunity to our customers.” Early indications from clients are “overwhelmingly positive”. Syed states that he hasn’t had a single conversation in which they’ve asked “why are you guys merging?”
Finastra is going through the exercise of evaluating the branding for the product portfolio. The goal is to create “a consistent brand” across the company. New product families will be rolled out by the firm over the coming weeks and months. “More importantly,” says Syed, “we’re working on improving the usability and visibility for customers. We’re looking at providing more seamless services and implementations to clients.” It’s deeper than the “veneer level” of the brand.
The big crunch
Is the merger the start of something much bigger strategically? Misys, although not known as an acquisitive company, has a few buyouts in its history: IQ Financial Systems in 2004, Almonde in 2005, Intesio in 2006 and the merger with Turaz in 2012. With the birth of Finastra and the significant clout that comes from such a high-profile company, will there be more cash-splashing in the future? “Look, financial software is the largest IT market in the world,” says Syed. “Within that, about 20-22% is packaged software and the rest is home-grown systems.” Among that 20% there is “incredible fragmentation”.
Finastra, FIS and Fiserv, as large as they are, do not account for the majority of a market that includes hundreds of smaller players. “As the industry matures, moving towards packaged software, you’re going to see more consolidation. That’s played out in every industry in software.” With the size and scale that Finastra has, states Syed, it can afford to be a consolidator as opposed to the consolidated.
“We have an incredibly robust platform with a lot of room for growth and a lot of room for scalability. It’s created the space for us to absorb other businesses easily.” When Syed says that there’ll
be “a lot of M&A going forward” I take the opportunity to ask if he means for the industry or for Finastra. “Well, Finastra is part of the industry,” he replies cryptically.
No COBOL at the core
You’ll often hear the phrase “it’s 2017” used to decry something outdated still prevalent in the modern age. I ask Syed if it’s a travesty that almost half of core banking systems still operating run on COBOL, the ancient programming language known only to an elderly cabal of coders. “I’m a firm believer that change for the sake of change is counterproductive,” he answers. “Technology is a means to an end. If you have a robust core banking system that does what you need from it – from a customer perspective – is that where I should focus my energy?
“Our view is that you have to look at the world from the perspective of your customers’ customers. Where can you enable a richer transformative experience? It’s in digital.” From a strategic perspective it doesn’t make sense to have systems still coded in COBOL as it’s not taught in schools or colleges and the new graduates aren’t going to be able to understand the back end. “Pragmatically, stability of that system in the long term isn’t viable,” adds Syed. “But is that where I should focus? Probably not. We need to focus on where the value is.”
No matter what platform you use, they will be protected and supported
“
Core banking transformations are expensive, time-consuming undertakings that are fraught with risk. There may be benefits at the end of the tunnel but there are a number of pitfalls along the way. “There are banks still embarking on these big projects but equally there are those looking for quick ROI.” Syed was recently in discussion with a major UK bank, which is currently going through a selection process for one of its core platforms. The question that was first and foremost in their mind was “I need to see value quickly”. Major banks don’t want a four-year project that then takes six years to earn a profit. “You have to pick a platform that’s evolutionary in nature and gives you the value quickly as opposed to an ROI that takes years to come back to you.”
London (and Toronto) calling
With 9,000 customers, 10,000 employees and two global locations, Finastra has opted to keep London as its main headquarters, with a secondary site in Toronto (the former HQ of D+H). An upgrade is in the works, though, with Misys’ former command centre no longer fit for purpose. Having enjoyed its Paddington vistas and easy-to-navigate (for a journalist at least) corridors, I asked where the new head office will be sited. Canary Wharf perhaps? Or the Silicon Roundabout? “We’re actually moving across the street,” he says with a smile. Finastra will take
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