Domestic wins, pre-Fiserv
Within the TCBS/TCCUS/DNA business, amidst a constant stream of small domestic orders, there was a stand-out deal in mid-2007 when Arizona-based First Magnus Federal Bank (FMFB) reversed a decision to implement the Flexcube retail solution from I-flex (later Oracle FSS), and signed instead with Open Solutions. The decision to cancel the Flexcube deal was thought to have been a mutual one, based on the bank’s expectations for implementation. In 2008, FMFB went out of business. There were a few stop-start international moves, including a first implementation in Mexico, at Banco Deuno, a start-up owned by IXE Financial Group, in late 2007. There was also activity in Thailand, Vietnam and elsewhere but things did not go smoothly and Open Solutions ultimately retrenched, concentrating again on its North American stronghold. In 2009 Open Solutions signed the largest single credit union deal of the year, with USAlliance Federal Credit Union. The New York-based credit union, which had over $700 million in assets in 2009, took DNA to replace a proprietary system. Indeed, the vendor was signing domestic deals twice as quickly as many of its competitors, according to research from Aite Group.
In 2010, another depressed year in North America, there was a haul of 15 new core deals for Open Solutions,
Acquisition by Fiserv
Open Solutions was known for some time to be up for sale. It was eyed by a number of venture capitalists and suppliers, with the most extensive discussions appearing to be with Indian supplier, Infosys. In the end, a buyer was found in the form of its North American rival, Fiserv. Reported shortly beforehand in the IBS Journal, both companies went on the record about the sale in mid-January 2013. Open Solutions came with a price tag of $55 million and a debt of around $960 million, which Fiserv assumed. Speaking at the conference call on the acquisition, Fiserv’s
president and CEO, Jeffery Yabuki, said he felt DNA’s relational database and real-time processing capabilities were highly appealing to credit unions and thrifts in North America, as well as to newer and/or non-traditional banking players, such as direct banks. Furthermore, he saw DNA’s ‘single line of code for all prototypes, geographies and languages’ lending the system to international expansion. ‘The beauty of the technology is that it is global,’ Yabuki stated. Fiserv estimated that there were around 40,000 community-based financial institutions worldwide, ‘and we feel that we are in a pretty good shape’. More generally, being a ‘proven, scalable solution’, DNA would now form the basis of the single platform Fiserv intended to bring to market. Fiserv’s rival Acumen system (launched in 2005, around 30 users, all in North America) would contribute its ‘superior front-end capabilities and integration with Fiserv’s other strategic solutions (such as mobile and online banking, e-billing and debit processing)’. Front office was ‘the primary source of Acumen differentiation’, emphasised Yabuki, namely ‘a modern user interface, highly-customisable workflows and deeply integrated CRM capabilities’. He admitted that Fiserv
with all but three of these on an ASP basis. At the higher end, there was a win for DNA at North American Savings Bank, with $1.4 billion in assets. DNA was also selected to replace Fiserv’s Datasafe at Hawaii State Federal Credit Union, an institution with $1.1 billion in assets. Other 2010 takers included Mid-Hudson Valley Federal Credit Union, Philadelphia-based Hyperion Bank and First Nations Bank of Canada. Core banking software projects in the course of 2011
concentrated in the US and Canada, including First Federal of Bucks County Bank in Pennsylvania with DNA and Chevron West Credit Union in Utah with CUnify. The vendor also completed what it called the ‘credit union industry’s largest core technology consolidation’ in the US, with the merger of Addison Avenue Federal Credit Union and First Tech Credit Union.
Open Solutions’ largest known bank and credit union deals
for DNA in 2011 were Cambridge Savings Bank ($2.1 billion in assets) and Affinity Federal Credit Union ($1.9 billion). First State Bank ($1 billion) and the aforementioned Wealthview user, Stanford Federal Credit Union ($1.2 billion), were the other known deals within institutions at or above the $1 billion asset mark. It did not gain deals of this size in 2012, its final year as an autonomous business, with all takers being below the $1 billion asset mark.
had been under pressure to deliver Acumen on time and in a cost-effective manner to the users. He attributed issues to ‘the strong demand for this new technology and the ability of clients to significantly customise the solution’. Over the next 24 months Fiserv intended to move ‘the best
of Acumen’s front-end capabilities’ onto the DNA core. This would be done ‘in a manner that does not negatively impact the current roadmap and commitments made to DNA clients, and importantly, meets the needs and expectations of the signed Acumen clients,’ Yabuki stressed. Over the next few years, Fiserv anticipated at least $125 million of ‘meaningful revenue and cost synergies’, of which $75 million would come from annualised revenue synergies (over four to five years) and $50 million on the cost front (over two to three years). Acumen seemed to have picked up momentum with new-name wins during 2012, but there was also a loss of business, with three high-profile credit union failures for Acumen. Canada-based Conexus, US-based Gesa Credit Union, and California-based Patelco Credit Union shelved their Acumen implementations in 2012.
In mid-2013, Fiserv confirmed that the Acumen offering would be sunsetted, with all of the existing customers, as well as those mid-implementation, moving to new systems. DNA was expected to take over as the vendor’s flagship offering for the credit union market. Fiserv told IBS at the time that there was no end-date for Acumen as yet and that ‘we are working with each credit union on transition to the Fiserv product best suited to them’. Navigant Credit Union and Midflorida Credit Union were among the first Acumen customers to commit to DNA following this announcement. The former was a year into its Acumen implementation when Fiserv decided to withdraw the system, and issued a new RFP and amended its existing
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