TOP 10

IN FINTECH
Find out who made the upper
echelon of this years ranking of
fnancial technoloy providers.
#1 FIS
#2
#3
#4
Tata
Fiserv
Sungard
#5 NCR
Forty percent of this years top 100 fnancial
technoloy companies are overseas.
THE
GLOBALIZATION
OF FINTECH
ANNUAL
SPECIAL
REPORT
First Community Bank and Team
Capital share the stories behind
their recent core conversions. Plus: Citis
multi-year project rolls on. Page 24
CORE
OVERHAULS
October 2012
americanbanker.com/ntech100
A SUPPLEMENT TO
ALSO INSIDE
How to Manage
Cloud Vendors
The Big Risks
of Big Data
The Benefts of
Merchant-Funded Rewards
C1_FINOct12 1 9/24/2012 11:27:00 AM
Contents
8 FinTech Titans
A look at whats on the drawing boards and in the leadership philosophies of
those at the helm of the top 10 FinTech companies.
Neil Weinberg
Editor in Chief, American Banker
Penny Crosman
Editor in Chief, Bank Technoloy News
John Adams
Executive Editor, Bank Technoloy News
Hope Fitch
Group Art Director
Pablo Turcios
Associate Art Director
Richard Melville
Group Editorial Director, Banking and Capital Markets
Karen Massey
Senior Analyst, Consumer Banking
David Potterton
Vice President of Research for the Global Banking, Insurance,
Capital Markets and Risk Management Practices
Jeanne Capachin
Research Vice President
Marc DeCastro
Research Director, Consumer Banking
Aaron McPherson
Practice Director, Payments and Security
Michael Versace
Research Director, Global Risk
www.idc-i.com, [email protected]
Main Number 5086205533
Karl Elken
EVP & Managing Director, Banking and Capital Markets Groups
Liesbeth Severiens
Publisher, Bank Technoloy News
David Cleworth
Publisher, American Banker Magazine
Customer Service 8002211809
[email protected]
Reprints: Joylyn Yaw 8003683989
Published as a supplement to American Banker
a SourceMedia publication
One State Street Plaza, New York, NY 10004
2128038200
Public relations support provided by the William Mills Agency
OCTOBER 2012
2 The Year in Review
On the whole, 2011 was a good year for fnancial technoloy companies.
3 The FinTech 100 Rankings
The 100 most successful fnancial technoloy companies, ranked by revenue.
5 Methodoloy
How the FinTech 100 rankings are calculated.
6 The Enterprise 25 Rankings
The top tech companies that serve fnancial services and everyone else.
14 The Impetus Behind Core Overhauls
Why so many banks are doing major IT refreshes this year.
18 FinTech Around the World
Overseas companies are making headway in the U.S. market.
20 Managing the Cloud
Cloud vendor relationships come with unique challenges and risks.
21 The Branch is Not Dead Yet
Branches are still relevant and will most likely never completely go away.
22 The Promise of Merchant-Funded Rewards
The many reasons banks should consider merchant-funded programs.
23 Old Models Must Go
Banks business and IT operating models are in dire need of upgrade.
24 The Risks of Big Data
Big data management worries include privacy and scalability issues.
Frank Martire,
Chairman and CEO, FIS
AMERICANBANKER.COM AMERICAN BANKER | FINTECH 100 | OCTOBER 2012 1
001_FINOct12 1 9/21/2012 5:13:20 PM
FinTech 100
|
Overview
T
echnology is
the backbone of
fnancial services,
enabling efciency
and driving innova-
tion in products and services.
And when fnancial institu-
tions are faced with business
or regulatory challenges, they
frequently turn to technology
consultants and providers
for guidance and solutions.
Some of the prominent issues
that vendors are paying atten-
tion to are compliance and
governance; big data and
analytics; evolving business
models, including payments;
optimal utilization of cloud
and outsourcing; and meeting
customers changing demands.
Three things in particular
strike me about this years
FinTech 100:
Impressive revenue
growth: FinTech 100 vendors
collectively grew their rev-
enues from $53 billion in 2010
to $64 billion in 2011, almost
a 20% increase. Gross World
Product grew 3.5% during this
same time.
Increasing globalization:
40% of the FinTech 100 hail
from outside the US.
Predominance of
outsourcers and service pro-
viders: Almost 50% of FinTech
providers are in this category.
After several years of
anemic merger and acquisi-
tion activity, the pace of
acquisitions among the
FinTech 100 accelerated signif-
icantly in 2011. In 2009, there
were only two acquisitions
among the FinTech and there
were four in 2010. In 2011, that
number doubled to eight Fin-
Tech providers acquired over
the course of the year. The
increase in M&A activity, still
way below pre-fnancial crisis
levels, is primarily attributable
to pent-up demand and cur-
tailed activity in the previously
sour economy. Five of the
eight acquired vendors were
from outside the U.S., further
evidence of the increasing glo-
balization of the FinTech 100.
Acquisitions in 2011 were
dominated by providers of
IT services, payments, and
risk management. IT services
and outsourcing were due for
consolidation given matura-
tion and the search for cost
efciencies. We expect to see
continued M&A activity in
this space since the number
of providers is still large and
clients exert continued cost
containment pressures.
Globalization will be a con-
tinued theme, as evidenced
by U.S.-based IT services frm
iGates acquisition of Indian
outsourcer Patni Computer
Systems. Consultant and out-
source provider Capgemini
acquired a majority interest
in CPM Braxis, a Brazilian IT
services company. Business
processing and tech manage-
ment frm Genpact acquired
U.S.-based Headstrong Ser-
vices, a provider of consulting
and IT services.
Two acquisitions occurred
in 2011 by payment providers:
electronic payment processor
Verifone acquired US-based
Hypercom upon Hypercoms
divestiture of its U.S. payment
systems business per regula-
tory approval; and payments
frm ACI Worldwide acquired
S1, one of the last stand-alone
payments and channels solu-
tion companies in the U.S.
These three round out the
M&A list: IBM acquired Algo-
rithmics of Canada, provider
of risk management solutions.
Wolters Kluwer Financial Ser-
vices acquired compliance and
risk management company
FRS Global of Belgium. Misys
acquired capital markets frm
Sophis of Ireland.
This year we welcome 14
new entrants to the FinTech
100: Genpact (N.Y.), Computer
Services Inc. (Ky.), Simplex
Consulting Inc. ( Japan), BRQ
IT Services (Brazil), NIIT Tech-
nologies Inc. (GA) , Silverlake
Axis (Malaysia), Carlisle &
Gallagher Consulting Group
(NC), ARGO (TX), TransCen-
tra Inc.(formerly Regulus)
(GA), GBST Holdings Limited
(Australia), Diasoft (Russia),
TAS Group (Italy), eFront S.A.
(France), and Primatics Finan-
cial (VA).
In the top 10, the largest
revenue increases come from
Tata Consulting Services
(TCS) and Cognizant, both IT
services providers and out-
sourcers, which proves the
prominence of outsourcing
and services providers in the
industry. First Data also rose
in the rankings among the top
10 from #8 to #7.
The Enterprise 25 also saw
two new entrants. Financial
management provider Intuit
enters the Enterprise rank-
ing at #24. Also joining the
Enterprise 25 is outsourcing
provider of managed com-
puting Savvis, a CenturyLink
Company based in Missouri,
debuting at #25. IBM and HP
continue to dominate the top
spots. Microsoft achieved the
greatest upward movement,
jumping from #6 in 2010 to #3
this year.
Karen Massey is senior
analyst, consumer banking, at
IDC Financial Insights.
Pent-up Merger
Activity Builds
By Karen Massey
We expect to see continued
merger and acquisition
activity in this space since the
number of providers is still
large and fnancial institution
clients continue to exert cost
containment pressure.
2 AMERICAN BANKER | FINTECH 100 | OCTOBER 2012 AMERICANBANKER.COM
002_FINOct12 2 9/21/2012 3:24:15 PM
1 1 FIS Jacksonville, FL Public $5,746 $4,999 87
2 3 Tata Consultancy Services Limited (TCS) Mumbai, India Public 9,767 4,250 44
3 2 Fiserv, Inc. Brookfeld, WI Public 4,337 4,120 95
4 4 SunGard Wayne, PA Private 4,499 3,190 71
5 5 NCR Corporation Duluth, GA Public 5,443 2,999 55
6 6 Diebold, Incorporated North Canton, OH Public 2,836 2,639 93
7 8 First Data Corporation Atlanta, GA Private 10,714 2,574 24
8 12 Cognizant Technology Solutions Teaneck, NJ Public 6,121 2,518 41
9 9 Nomura Research Institute, Ltd. Tokyo, Japan Public 4,109 2,489 61
10 10 Infosys Limited Bangalore, India Public 6,825 2,418 35
11 7 Lender Processing Services Jacksonville, FL Public 2,090 2,027 97
12 11 Wincor Nixdorf Inc. Paderborn, Germany Public 2,983 1,969 66
13 13 Total System Services, Inc. (TSYS) Columbus, Georgia Public 1,809 1,809 100
14 14 CA Technologies Islandia, NY Public 4,754 1,807 38
15 15 DST Systems Kansas City, MO Public 1,744 1,116 64
16 17 SAS Institute Cary, NC Private 2,725 1,090 40
17 16 CoreLogic Santa Ana, CA Public 1,339 1,030 77
18 18 Jack Henry & Associates, Inc. Monett, MO Public 994 994 100
19 31 Misys London, UK Public 897 897 100
20 19 Equifax Atlanta, Georgia Public 1,960 804 41
21 22 EDB Ergo Group Oslo, Norway Public 2,108 801 38
22 NR Genpact New York, NY Public 1,600 669 42
23 36 Ingenico Paris, France Public 1,300 611 47
24 21 Broadridge Financial Solutions, Inc. Lake Success, NY Public 2,167 520 24
25 27 FICO Minneapolis, MN Public 634 501 79
26 24 Experian Group Limited Costa Mesa, CA Public 4,337 477 11
27 25 Temenos Group AG Geneva, Switzerland Public 473 473 100
28 34 ACI Worldwide Naples, FL Public 465 450 97
29 32 Syntel, Inc. Troy, MI Public 642 450 70
30 30 Fidessa group PLC London, UK Public 445 445 100
31 28 Murex Paris, France Private 445 445 100
32 26 IPC Systems, Inc. Jersey City, NJ Private 506 439 87
33 20 Oberthur Card Systems S.A. Nanterre, France Private 1,185 415 35
34 29 Itautec S.A. So Paulo, Brazil Private 923 401 43
35 41 D+H Toronto, Canada Public 733 390 53
36 33 Open Solutions Inc. Glastonbury, CT Private 383 383 100
37 37 SS&C Technologies, Inc. Windsor, CT Public 371 371 100
38 38 Polaris Financial Technologies Chennai, India Public 372 365 98
39 48 Wolters Kluwer Financial Services Minneapolis, MN Public 340 340 100
40 42 Advent Software, Inc. San Francisco, CA Public 326 326 100
41 23 MphasiS (An HP Company) Bangalore, India Private 913 326 36
42 44 Moodys Analytics New York, NY Public 722 325 45
43 45 TransFirst Holdings, Inc Broomfeld, CO Private 865 311 36
44 43 Harland Financial Solutions Lake Mary, FL Private 286 286 100
45 46 3i Infotech (Includes 3i Infotech Billing & Payments) Mumbai, India Public 427 267 63
46 70 Six Payment Services Zurich, Switzerland Private 424 265 64
47 47 SimCorp A/S Copenhagen, Denmark Public 252 252 100
48 54 L&T Infotech Mumbai, India Private 643 249 39
49 67 Pegasystems Inc. Cambridge, MA Public 417 234 56
50 51 Aegis Global Communications Irving, TX Private 700 231 33
American Banker/Bank Technology News/Financial Insights FinTech 100 (2012)
Top 100 Companies in FinTech
RANK CY 2011 REVENUE (MILLIONS)
2012 2011 COMPANY NAME OWNERSHIP TOTAL FINANCIAL SERVICES % FS
FinTech 100
|
Ranking
AMERICANBANKER.COM AMERICAN BANKER | FINTECH 100 | OCTOBER 2012 3
003_FINOct12 3 9/21/2012 5:03:00 PM
FinTech 100
|
Ranking
51 49 GFT Technologies AG Stuttgart, Germany Public $352 $229 65
52 61 Calypso Technology San Francisco, CA Private 220 216 98
53 64 Fundtech Ltd. Jersey City, NJ Private 210 210 100
54 55 Charles River Development Burlington, MA Private 208 208 100
55 58 Collabera Morristown, NJ Private 441 205 46
56 52 Ness Technologies Teaneck, NJ Public 569 193 34
57 53 GlobeOp Financial Services London, UK Public 221 189 86
58 57 Linedata Services S.A. Neuilly-sur-Seine, Paris Public 185 185 100
59 59 BancTec, Inc. Irving, TX Private 254 178 70
60 NR Computer Services, Inc. Paducah, KY Public 174 174 100
61 NR Simplex Consulting, Inc. Chuo-ku, Japan Private 170 170 100
62 63 Interactive Data Corporation Bedford, MA Private 868 156 18
63 62 Online Resources Corporation Chantilly, VA Public 155 155 100
64 79 Virtusa Corporation Westborough, MA Public 262 151 58
65 NR BRQ IT Services Sao Paulo, Brazil Private 187 140 75
66 72 Hundsun Technologies INC Hangzhou, China Public 166 140 84
67 86 VASCO Data Security International, Inc. Oakbrook Terrace, Illinois Public 168 137 81
68 80 Luxoft Moscow, Russia Private 252 128 51
69 74 Open Link Financial Uniondale, NY Private 267 127 48
70 71 NICE Actimize New York, NY Public 124 124 100
71 NR NIIT Technologies Inc Atlanta, GA Public 311 121 39
72 NR Silverlake Axis Kuala Lumpur, Malaysia Public 122 120 98
73 73 Bravura Solutions Sydney, Australia Public 123 119 97
74 83 Bottomline Technologies Portsmouth, NH Public 211 118 56
75 78 Eagle Investment Systems LLC Wellesley, MA Public 115 115 100
76 81 Clear2Pay Diegem, Belgium Private 111 111 100
77 75 SmartStream London, UK Private 109 109 100
78 84 Hexaware Technologies Ltd. Navi Mumbai, India Private 308 105 34
79 77 Viewpointe New York, NY Private 100 100 100
80 NR Carlisle & Gallagher Consulting Group Charlotte, NC Private 96 95 99
81 82 Callatay and Wouters Brussels, Belgium Public 94 94 100
82 68 ISGN Corporation Melbourne, FL Private 93 93 100
83 91 Scorto Corp. Cupertino, CA Private 125 92 74
84 NR ARGO Richardson, Texas Private 86 86 100
85 87 Celero Solutions Inc. Calgary, Canada Private 81 81 100
86 NR TransCentra Inc. Norcross, GA Private 161 81 50
87 NR GBST Holdings Limited Milton, Australia Public 76 76 100
88 NR Diasoft Moscow, Russia Private 76 75 99
89 99 Financial Technologies (I) Ltd Mumbai, India Public 75 72 96
90 94 Eze Castle Integration Boston, MA Private 70 70 100
91 90 COCC Avon, CT Private 69 69 100
92 89 Investment Technology Group, Inc. New York, NY Public 572 69 12
93 NR TAS Group Rome, Italy Public 64 58 90
94 96 Multifonds Luxembourg Private 51 51 100
95 NR eFront, S.A. Paris, France Private 51 51 99
96 97 WAUSAU Financial Systems Mosinee, WI Private 77 50 65
97 98 FNC, Inc. Oxford, MS Private 50 50 100
98 92 Nucleus Software Exports Ltd. Noida, India Public 49 49 100
99 NR Primatics Financial McLean, VA Private 45 45 100
100 100 Novantas, llc New York, NY Private 39 39 100
Top 100 Companies in FinTech
RANK CY 2011 REVENUE (MILLIONS)
2012 2011 COMPANY NAME OWNERSHIP TOTAL FINANCIAL SERVICES % FS
American Banker/Bank Technology News/Financial Insights FinTech 100 (2012)
4 AMERICAN BANKER | FINTECH 100 | OCTOBER 2012 AMERICANBANKER.COM
004_FINOct12 4 9/21/2012 3:24:38 PM
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is more than a challenge. Its an honor.
Diebolds security integration connects an array of systems, giving operators
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For more information, call 1.800.806.6827 or visit Diebold.com/innovation.
FinTech 100
|
Methodology
I
DC Financial Insights relied
on many sources to gather
the data used in the Fin-
Tech 100 and Enterprise 25
rankings.
The research frm, along
with American Banker, Bank
Technology News and William
Mills Agency, requested fnan-
cial information from several
thousand technology compa-
nies globally. Publicly available
resources such as Hoovers,
Edgar, company flings, and
company Web sites were used
to validate and augment data.
IDC Financial Insights also
used proprietary research,
previously published reports,
internal research under way,
and IDC resources.
IDC Financial Insights deter-
mined eligible revenue. To be
included, revenues must origi-
nate from software, hardware
and IT services sold to fnancial
institutions. Not included are
revenues from any network,
telecommunications, electronic
exchanges, or data service (e.g.,
market/credit) providers. For
vendors that provide qualifying
services and solutions in addi-
tion to nonqualifying ones, we
used just the qualifying portion
of their revenue as the basis for
our rankings. This is why ven-
dors appear on the FinTech 100
list with revenues below 33%.
Companies on the FinTech
100 list are fnancial services
technology providers that
derive more than one-third of
their total global revenue from
the fnancial services industry.
Enterprise 25 companies are
horizontal technology frms
that derive less than one-third
of their revenues from fnancial
institutions.
IDC Financial Insights
and American Banker made
a concerted efort to include
all possible candidates for the
rankings.
Some companies in qualify-
ing industries that submitted
forms did not make the rank-
ings because of insufcient
revenue or inability to validate
submitted data. For companies
outside the U.S., we calculated
U.S. dollar fgures using IDCs
standard exchange rate for the
year end 2011.
How the Rankings Are Calculated
AMERICANBANKER.COM AMERICAN BANKER | FINTECH 100 | OCTOBER 2012 5
005_FINOct12 5 9/21/2012 4:34:39 PM
1 1 IBM Armonk, NY Public $107,000,000,000 $31,030,000,000 29%
2 2 Hewlett-Packard Palo Alto, CA Public $127,200,000,000 $13,992,000,000 11%
3 6 Microsoft Redmond, WA Public $72,001,000,000 $8,640,120,000 8%
4 3 Dell, Inc. Round Rock, TX Public $62,071,000,000 $7,448,520,000 12%
5 4 Fujitsu Limited Tokyo, Japan Public $54,000,000,000 $7,020,000,000 13%
6 7 Accenture Dublin, Ireland Public $28,659,000,000 $5,649,000,000 20%
7 5 Cisco Systems, Inc. San Jose, CA Public $44,900,000,000 $5,388,000,000 12%
8 8 Oracle Corporation Redwood Shores, CA Public $35,600,000,000 $4,984,000,000 14%
9 10 Intel Santa Clara, CA Public $53,999,000,000 $4,859,910,000 9%
10 9 Hitachi Tokyo, Japan Public $118,998,920,000 $4,759,956,800 4%
11 12 EMC Hopkinton, MA Public $20,007,590,000 $4,201,593,900 21%
12 11 Thomson Reuters New York, NY Public $13,807,000,000 $4,004,030,000 29%
13 14 Capgemini Paris, France Public $13,477,000,000 $2,787,000,000 21%
14 13 CSC Falls Church, VA Public $15,965,000,000 $2,714,050,000 17%
15 16 Wipro Technologies Bangalore, India Public $7,210,000,000 $1,946,700,000 27%
16 17 ATOS Origin S.A Bezons, France Public $8,277,260,000 $1,903,769,800 23%
17 15 Deloitte & Touche Tohmatsu New York, NY Private $28,800,000,000 $1,872,000,000 7%
18 18 SAP AG Walldorf, Germany Public $18,464,000,000 $1,506,000,000 8%
19 19 CGI Group Inc. Montreal, Canada Public $4,207,257,000 $1,058,890,000 25%
20 24 HCL Technologies Ltd Noida, India Public $3,901,000,000 $1,014,260,000 26%
21 22 Logica Reading, U.K. Public $6,029,000,000 $966,000,000 16%
22 23 Unisys Blue Bell, PA Public $3,853,800,000 $847,836,000 22%
23 25 Teradata Corporation Dayton, Ohio Public $2,362,000,000 $661,360,000 28%
24 NR Intuit, Inc. Mountain View, CA Public $4,054,000,000 $362,000,000 9%
25 NR Savvis, a CenturyLink company St. Louis, MO Private $1,039,000,000 $296,335,000 29%
FinTech 100
|
Ranking
Top 25 Enterprise Companies in FinTech
RANK CY 2011 REVENUE (MILLIONS)
2012 2011 COMPANY NAME OWNERSHIP TOTAL FINANCIAL SERVICES % FS
American Banker/Bank Technology News/Financial Insights FinTech 100 (2012)
Biggest Movers
These companies made large jumps up or down in our rankings in 2011. We provide clues as to why
PLACES RANK
CLIMBED/DECLINED 2012 2011 WHY
FinTech 100
Six Payment Services +24 46 70 SIX merged SIX Multipay, SIX Pay and SIX Card Solutions.
Vasco Data Security +19 67 86 Landed several large transactions in the banking market.
Pegasystems +18 49 67 Signifcant customer wins, including a large U.K. bank.
Virtusa Corporation +15 64 79 Acquired ALaS Consulting LLC, a fnancial services consulting frm.
MphasiS -18 41 23 Percentage of fnancial services revenue dropped from 42%to 36%.
ISGN -14 82 68 Revenue dropped from $126 million to $90 million.
Oberthur -13 33 20 Percentage of revenue from fnancial institutions dropped from 55%to 35%.
Itautec S.A. -6 34 29 Revenue dropped from 2010 to 2011 while fnancial services percentage stayed the same.
Enterprise 25
HCL Technologies Ltd. +4 20 24 Company is seeing strong demand, signed several new contracts in 2011.
Microsoft +3 3 6 Total revenue is up while fnancial services percentage stayed the same.
Teradata +2 23 25 Two former Enterprise 25 companies dropped out, letting Teradata move up.
Cisco -2 7 5 Cisco exited the Flip camera business, reorganized and faced strong competition.
Deloitte & Touche Tohmatsu -2 17 15 Challenging market conditions.
6 AMERICAN BANKER | FINTECH 100 | OCTOBER 2012 AMERICANBANKER.COM
006_FINOct12 6 9/21/2012 5:14:37 PM
007_FINOct12 1 9/24/2012 11:02:54 AM
MEET THE
TOP 10
Frank R. Martire learned one of the most important lessons
of his career in the 1970s, when he was in his 20s, working at
Connecticut National Bank.
The chairman and chief executive of Fidelity National
Information Services was then fresh out of Sacred Heart Uni-
versity of Fairfeld, Conn., and exhausted after working all
night on a project that he just couldnt complete.
The goal of the project wasnt important, but what he was
about to hear from his boss was.
I said: I did everything I could. I did the best I could and
we just didnt get the project done, Martire recalls. But
he [answered]: Mr. Martire dont ever confuse [efort] for
results.
That is now one of the guiding principles of FIS business,
which includes core processing among a broad suite of fnan-
cial technology products.
Its something that stuck
with me throughout my whole
career. I want to get results,
Martire says. The attitude of
my employees to our clients is
a refection of me personally.
Either we do it well or we dont
do it.
Its a strategy that has served
him well.
This year, FIS is number
one in the FinTech 100, having
racked up $5.7 billion in rev-
enue in 2011, 87 percent of it
from the fnancial services
industry.
But FISs business is con-
stantly changing. On the
horizon are managed services
that the company plans to
ofer to banks. Those bank
clients are having to compete
with a host of potential disrup-
tive competitors including
fnancial technology start-ups
and expanding prepaid card
companies.
As we speak, the industry is
going to have to get more ef-
cient in the delivery of products
and services, says Gary Nor-
cross, FISs president and chief
operating ofcer. With the
increased burdens around risk,
1
We asked the leaders of the top 10 FinTech companies whats
ahead for them and what it takes to be a great tech boss
around fraud, around emerging
competitors.
That will inevitably cause
banks to outsource some of
their systems. Norcross projects
that by 2015, most banks, if not
all of them, will be doing some
sort of back ofce processing in
the cloud.
Banks are going to have
to turn themselves more into
marketing engines, Norcross
says. They are going to have
to compete and drive, but
because of these non-fnancial
institution competitors, theyll
have to really come into the
market in a meaningful way, he
says. They are going to have
to change the way that they do
sales.... And fnancial institu-
tions, unless they are in the top
50 in the world, they are not
going to be able to completely
FIS
HQ: Jacksonville, Fla.
Frank Martire, Chairman and CEO
manage their back ofce.
Martire says everyone at FIS
is on-board for the change thats
on the way.
Employees in departments
ranging from sales to IT are on
call to handle the needs of FISs
customers. Thats why FIS only
recruits from within the fnan-
cial services industry. Martire
pledges individually, and to
every one of FIS customers
that anyone that leaves a mes-
sage will get a call back in less
than 24 hours, even if that call
back is from him.
What I cant guarantee to
you is that we will never make
a mistake, says Martire, who
speaks in a hushed but stern
tone. But what I can tell you
is I have zero tolerance for
non-responsiveness.
By Sean Sposito
FinTech 100
|
Top 10
The attitude of my employees to our clients
is a refection of me personally.
Either we do it well or we dont do it.
2
Fiserv
Fresh off of a couple of big
partnership deals, Tata Consul
tancy Services is wielding an
expansion strategy that covers
growth in new mobility and old
school geography.
We have to fnd new ways
to grow, says N. Ganapathy
Subramaniam. [Banks] are
saying, Can I have a clean bal
ance sheet? Thats what they
are looking at from a balance
perspective, but they are also
The development of new mobile banking and payment
products remains Fiservs top priority, as it was last year.
The fnancial institution market is, as we all know, fairly chal
lenged right now, Yabuki says. Were putting a lot of focus on
those products and services we can develop and deliver that
help fnancial institutions generate more revenue, increase their
efciency, and build more loyalty within their customer base.
Mobile is one of the ways we can do that; its becoming an impor
tant part of creating loyalty and relationships while increasing
efciency by better extending the self-service channel.
Person-to-person payments are in the frst inning of what
will be ultimately be a nine-inning game, Yabuki says. P2P is an
intriguing opportunity because its the intersection of potentially
8 AMERICAN BANKER | FINTECH 100 | OCTOBER 2012 AMERICANBANKER.COM
008_FINOct12 1 9/21/2012 4:16:45 PM
manage their back ofce.
Martire says everyone at FIS
is on-board for the change thats
Employees in departments
ranging from sales to IT are on
call to handle the needs of FISs
customers. Thats why FIS only
recruits from within the fnan-
cial services industry. Martire
pledges individually, and to
every one of FIS customers
that anyone that leaves a mes-
sage will get a call back in less
than 24 hours, even if that call
What I cant guarantee to
you is that we will never make
a mistake, says Martire, who
speaks in a hushed but stern
tone. But what I can tell you
is I have zero tolerance for
The attitude of my employees to our clients
is a refection of me personally.
Either we do it well or we dont do it.
Tata
2
3
Fiserv
HQ: Mumbai, India
N. Ganapathy Subramaniam,
president, TCS Financial Solutions
HQ: Brookeld, Wis.
Jeff Yabuki, CEO
Fresh off of a couple of big
partnership deals, Tata Consul-
tancy Services is wielding an
expansion strategy that covers
growth in new mobility and old
school geography.
We have to fnd new ways
to grow, says N. Ganapathy
Subramaniam. [Banks] are
saying, Can I have a clean bal-
ance sheet? Thats what they
are looking at from a balance
perspective, but they are also
looking at regulatory issues,
fnancial crime and mobility.
In July, the frm partnered
with Century Link and Savvis
to allow the TCS BaNCS suite
to be ofered on a cloud-
enabled hosted environment
in North America. The plat-
form includes core banking,
payments and anti-money
laundering technology, as well
as corporate actions and insur-
ance. Savviss IT infrastructure
The mobile wallet technol-
ogy will enable bill payment,
remittances, mobile top-up
and payroll deposit, as well as
marketing, redemption and
targeted analytics based on
real-time transaction behavior.
The partnership also includes
the Mozido Mobile Vault, a
real-time digital payment
processing platform thats
designed to improve cash han-
dling. Payments is one area
where everyone wants to take a
shot, says Subramaniam.
TCS seeks to compete with
frms such as Infosys in a chal-
lenging economic environment
for outsourcers. In its most
recent fnancial statement, TCS
said revenues grew 13.1 percent
to about $2.72 billion, while net
income increased 1.36 percent
to about $604 million. The frm
reported strong performance
in banking and fnancial ser-
vices, especially in U.S. and
European markets. However,
the frm also said foreign
exchange volatility posed risks
going forward.
Subramaniam says that
as a leader of a large team
of programmers and other
technologists, its vital to be
transparent when linking
discussions of economic per-
formance to corporate strategy.
I think people understand the
economic situation, and they
are comfortable if, as a leader,
you can look in their eyes and
tell them what you plan to do,
he says.
He also says the tech talent
pool is changing, and that
requires a management strat-
egy that puts a premium on
teaching multiple tech skills
and providing a variety of tasks
for staf.
When I frst joined the frm
[more than 20 years ago], I
grew up in a programming cul-
ture where you looked at one
thing. Young people today are
more comfortable with multi-
tasking. If you give them only
one thing they will get bored.
By John Adams
options include colocatoin,
managed hosting and cloud
delivery. TCS BaNCS includes
a group of pre-confgured
customizable banking prod-
ucts such as core banking,
payments, compliance, and
treasury management.
Subramaniam sees a trend
among fnancial institutions
toward expanded use of man-
aged service oferings as a way
to free themselves from IT
and application management
chores and respond to devel-
opments in payments and
mobility. On the customer
side, how can I improve the
customer experience on things
like iPhones, Pads, etc? Sub-
ramaniam says.
TCS in April entered into
a partnership with Mozido
to expand that frms enter-
prise cloud payment network.
Mozidos mobile wallet plat-
form will be integrated with
TCSs mobile point-of-sale
system and TCS Rewardz, a
customer loyalty program.
The development of new mobile banking and payment
products remains Fiservs top priority, as it was last year.
The fnancial institution market is, as we all know, fairly chal-
lenged right now, Yabuki says. Were putting a lot of focus on
those products and services we can develop and deliver that
help fnancial institutions generate more revenue, increase their
efciency, and build more loyalty within their customer base.
Mobile is one of the ways we can do that; its becoming an impor-
tant part of creating loyalty and relationships while increasing
efciency by better extending the self-service channel.
Person-to-person payments are in the frst inning of what
will be ultimately be a nine-inning game, Yabuki says. P2P is an
intriguing opportunity because its the intersection of potentially
no limit on what people can
do, Yabuki says. Geolocation
and the ability to combine dif-
ferent streams of information
on a mobile device will pro-
vide new ways to bank from a
mobile device, he believes. He
expects Fiserv to roll out new
products along these lines over
the next six to eighteen months.
Such added convenience
and capability calls for more
security, he concedes. I do
think it raises the stakes on
security and authentication,
making sure that as you think
about new transactional capa-
bilities, security stays at top
of mind and is integrated at
the applications, he says. If
people dont feel secure, that
changes the trajectory of usage
pretty quickly. I think the
industry is doing a good job of
that and Ive seen new authen-
tication methodologies that are
pretty exciting.
Another area Fiserv has
been working on is integrat-
ing account aggregation with
personal fnancial manage-
ment. The company purchased
CashEdge last year, which has
an aggregation service called
AllData.
How does Yabuki inspire,
encourage, promote and exe-
cute good ideas?
Isnt that the question of
the day? he says. Fiserv has
increased R&D spending over
the last several years, he says.
One of our fve values is create
with purpose what can we
do to help solve everyday prob-
lems for our clients and their
customers?
Its also important, at least
for me, to have our people
understand theyre part of
something much larger than
what they do, he says. When
someone is working on core
banking or mobile or debit or
ACH or risk, thats really impor-
tant. But to the extent that it
comes together and creates a
unique experience for clients,
thats where the win is.
Having 20,000 people
understand that theyre part
of something big and unique
and is really changing the face
of fnancial services, that kind
of energy does a lot to make
people be their very best and
to take some risks and do
everything they can to make
their clients successful.
By Penny Crosman
the last bastion of check and
cash payments the roughly
$11 billion in payments a year
that are transacted among
consumers, largely in check
and cash.
In the fourth quarter of
this year, Fiserv will intro-
duce real-time person to
person payments, the ability
for people to move money
to another individuals bank
account immediately. That
is necessary to truly be able
to take the place of check
and cash, Yabuki says. We
believe that will provide some
revenue opportunities for
fnancial institutions.
The payments will ride
on existing debit networks,
including Fiservs own Accel/
Exchange, which supports 40
million cards. Point-of-sale
transactions will occur as real-
time memo debits and credits.
Today, its not that easy to
conduct complex transactions
on a mobile phone because
of all the typing on tiny keys
required, he points out. But
to the extent you can auto-fll
information and fnd other
ways to allow people to more
easily transact, theres almost
FinTech 100
|
Top 10
AMERICANBANKER.COM AMERICAN BANKER | FINTECH 100 | OCTOBER 2012 9
009_FINOct12 2 9/21/2012 4:16:49 PM
What does it take to be a great
tech boss?
Patience, says David Ham-
ilton, president of SunGards
banks business. To encourage
and promote good ideas, Ham-
ilton does something he calls
picking a fght not with a spe-
cifc competitor or person, but
with a market situation or prob-
lem. If we can identify those
challenges, that helps focus peo-
ples minds, he says. Once you
have peoples minds focused,
its easy to fuel and encourage
thinking and innovation.
He also talks to his team
about providing software that
has opinions. Our customers
dont want us to explain to them
six ways they could solve their
problem, he says. An example
is a platform for mobile phone,
tablet, and online applications
that SunGard launched late last
year called Ambit MyMoney,
primarily in Asia and the Middle
East. In Asia, the lines between
a persons personal fnancials
and business interests are
blurry, Hamilton says. We
wanted to enable our customers
and their small businesses to
have a more fexible engage-
ment model with their bank.
The U.S. is a tricky market
for SunGard lately. A lot of
institutions in the U.S. in our
target market the $3 billion
to $40 billion-asset banks are
relying heavily on core banking
providers for mobile and online
channel access, Hamilton says.
U.S. and European clients
have been cautious, due to
budget issues and regulatory
uncertainty.
Yet in the last six months,
SunGard has launched a new
software product for commer-
cial credit lifecycle management.
Earlier this year, SunGard
launched Ambit Concierge, an
iPad app that customer service
staf can use in the lobby of a
branch to handle customers
fnancial and non-fnancial
requests. Somebody with an
iPad could walk up to a teller
queue and satisfy a customer
who simply wants to transfer
money from one account to
another, Hamilton says. We
see a lot of those sorts of queue
busting techniques in the
branch lobby right now.
This fall, SunGard will
announce Ambit Wealth
Strategist, another iPad app
that enables private banking
and relationship managers to
become more mobile.
To retain IT talent, Sun-
Gard lets people move around
between projects. Whilst they
may be working on a tedious
back ofce system, we want
them to know that once that
project is behind them, they
can immediately move to an
HTML5 project for mobile
devices, Hamilton says. Ive
put some HMTL5 developers
on our, lets call them nostalgic
transaction systems. At frst
they grimace, shrug their shoul-
ders and say why me? But they
come out of it having learned a
great deal about what it takes
to build a resilient, scalable
product.
By Penny Crosman
Pass Michael OLaughlins ofce at
NCR headquarters, outside of Atlanta,
and you might mistake it for a con-
ference room. A large, round table
surrounded by six comfortable chairs,
and a speaker phone is there instead
of the oak desk youd expect.
There are no family photos. No ferns.
None of the accoutrements youd fnd
familiar in any bosses workspace.
We are all sitting around this table,
says OLaughlin, NCRs senior vice presi-
dent of fnancial services. Its a meeting
place for open ideas.
Out of those meetings have come
some of NCRs biggest thoughts around
bank branch consolidation.
They include mobile cash withdrawal,
which allows an ATM user to take out
cash from an automated teller machine
without a card and PIN number. The
technology relies on smartphones to
relay pre-staged transactions.
They also include video ATMs; NCRs
Aptra Interactive Teller is designed to
extend bank branch hours by allowing
a teller to talk face-to-face with a user at
the ATM through a camera and a screen.
Earlier this year, NCR bought an
undisclosed minority stake in uGenius
Technology, the company the ATM
maker collaborated with to launch this
special device that features a built-in
camera. Tellers can also remotely con-
trol these video-equipped ATMs.
In August, FirstOntario Credit Union,
based in Hamilton, became the frst
Canadian fnancial institution to deploy
the NCR Aptra Interactive Teller, to let
members bank after hours.
This is the work OLaughlin is most
excited about.
Interactive teller [is part of that], a
kind of a frst step in that direction, and
mobile deposit withdrawal, he says. You
are going to see some other things in the
near term that Im very passionate about.
Indeed, hes seldom at home.
In late August, OLaughlin took a
fve-day tour of India where he met with
NCR sales employees, and politicians, in
Mumbai. He also visited several other
Southeast Asian cities.
In September, NCR acquired Tran-
soft International of Cary, N.C. in an
efort to bolster its cash management
software services. NCR will integrate
Transofts product suite and employ-
ees into its fnancial services line of
business. NCR believes the cash man-
agement segment is worth about $1
billion, industry-wide.
Also in September, NCR and Vendor-
Net completed the integration of the
VendorNet StoreNet In-Store Pickup ful-
fllment technology with NCR Advanced
Store point-of-sale software. This
accommodates online-only retailers that
want to provide locker type pick-up
locations to serve the growing number of
shoppers for whom work or home deliv-
ery is impossible or inconvenient. One
driver of this type of service is the fact
that companies are increasingly imple-
menting policies against employees
receiving non-work-related packages at
work, eliminating for many online shop-
pers the main avenue for ensuring quick
and secure delivery of online purchases.
Back in Atlanta, OLaughlin struggles
to talk about himself. Hes not that
kind of guy. Hes the type of boss that
would rather talk about his employees
accomplishments.
Thats just how he likes to lead.
Its [more] about processes, people,
and then technology, OLaughlin says.
How it all comes together.
By Sean Sposito
NCR
4
5
SunGard
HQ: Wayne, Pa.
David Hamilton, president, banks
HQ: Duluth, Ga
Michael OLaughlin,
senior vice president of
nancial services
OLaughlin struggles to talk
about himself. Hes not that kind
of guy. Its more about process-
es, people, and then technology.
How it all comes together.
FinTech 100
|
Top 10
First
Thomas W. Swidarski, president and CEO
vice president of global product man
Thomas W. Swidarski knew
he had to change his ATM game
soon after he was named the
chief executive and president
of Diebold in 2005.
The pace of technology
was quickening. Financial
technology start-ups were
just beginning to pop up. The
potential to disintermediate
From his perch at the center of the ercely competitive
payments game, First Datas Mark Herrington cant help but be
amazed at other leaders who exert a sense of calm amid a storm
of combatants.
Mike Krzyzewski [Dukes basketball coach] seems to be a
tremendous game planner, and has a very calm way about him.
He also comes across as a humble guy, and thats an important
part of leadership, says Herrington, executive vice president of
global product management and innovation for First Data.
Herringtons the Coach K for a team of 1,000 people who
produce new digital payments tech for First Data. For the
next two to three years you will see a slugfest with a lot of value
added products, he says, adding that at some point we will
6
10 AMERICAN BANKER | FINTECH 100 | OCTOBER 2012 AMERICANBANKER.COM
010_FINOct12 3 9/21/2012 4:17:24 PM
This is the work OLaughlin is most
Interactive teller [is part of that], a
kind of a frst step in that direction, and
mobile deposit withdrawal, he says. You
are going to see some other things in the
near term that Im very passionate about.
Indeed, hes seldom at home.
In late August, OLaughlin took a
fve-day tour of India where he met with
NCR sales employees, and politicians, in
Mumbai. He also visited several other
In September, NCR acquired Tran-
soft International of Cary, N.C. in an
efort to bolster its cash management
software services. NCR will integrate
Transofts product suite and employ-
ees into its fnancial services line of
business. NCR believes the cash man-
agement segment is worth about $1
Also in September, NCR and Vendor-
Net completed the integration of the
VendorNet StoreNet In-Store Pickup ful-
fllment technology with NCR Advanced
Store point-of-sale software. This
accommodates online-only retailers that
want to provide locker type pick-up
locations to serve the growing number of
shoppers for whom work or home deliv-
ery is impossible or inconvenient. One
driver of this type of service is the fact
that companies are increasingly imple-
menting policies against employees
receiving non-work-related packages at
work, eliminating for many online shop-
pers the main avenue for ensuring quick
and secure delivery of online purchases.
Back in Atlanta, OLaughlin struggles
to talk about himself. Hes not that
kind of guy. Hes the type of boss that
would rather talk about his employees
Thats just how he likes to lead.
Its [more] about processes, people,
and then technology, OLaughlin says.
5
FinTech 100
|
Top 10
Diebold
7
First Data
HQ: North Canton, Ohio
Thomas W. Swidarski, president and CEO
HQ: Atlanta
Mark Herrington, executive
vice president of global product man-
agement and innovation
Were operating with a sense of urgency.
If youre going to fail, fail fast.
Thomas W. Swidarski knew
he had to change his ATM game
soon after he was named the
chief executive and president
of Diebold in 2005.
The pace of technology
was quickening. Financial
technology start-ups were
just beginning to pop up. The
potential to disintermediate
was there. And he knew, deep
inside, that what his company
had to concentrate on next was
what it knew best.
And that is, every aspect of
what happens in an ATM net-
work, whether its a Diebold
unit, or not... Whether we do
the software or someone else
does it, he says. We under-
ground with its employees.
And just last month, the
North Canton, Ohio company
announced that it was open-
ing up two new data centers
located in Richardson, Texas
and Manassas, Va. Previously,
the company was handling
its managed services out of
three data hotels near its
headquarters.
Some of the frst Diebold
customers placed in those new
data centers one of which is
located directly on Verizons
fber optic network in the
Lone Star State went live in
September.
Also in September, Diebold
acquired Gas Tecnologia, a Bra-
zilian internet banking, online
payment and mobile banking
security company that protects
nearly 70% of the countrys
internet banking transactions.
Diebold hopes to expand its
Brazilian footprint.
Today, especially in the U.S.
market, Swidarski says, its all
about ATMs.
But, in the future you can
be doing things on handheld
devices, or tables, he says. I
want to be able to participate
in that, and help the company
thrive as the world changes.
Focusing on this aspect
of fnancial services will give
Diebold a future, Swidarski
says.
Making sure we arent so
blinded by something that we
call an ATM that we miss the
forest for the trees, he says.
This is the biggest step for me.
By Sean Sposito
stand the whole ecosystem.
That realization led him to
one conclusion: Why not just
handle a banks ATMs for it?
Roughly a year after becom-
ing Diebolds captain, he took
one of his head salesmen of
of some of the companys
largest accounts and started
hunkering down and talking to
customers.
Indeed, by 2009, the com-
pany had signed $75 million
worth of contracts with its
managed services business,
doing all the back ofce pro-
cesses and monitoring a bank
needs to do to manage its ATMs.
A year later, Diebold inked
roughly $150 million worth
of those deals, and last year
it grew this business to about
$600 million.
Earlier this year, Toronto-
Dominion Bank handed over
the reins of its roughly 4,400
ATMs to Diebold. The company
is monitoring those ATMs
remotely with its OpteView
Resolve software as well as
tending to those devices on the
From his perch at the center of the ercely competitive
payments game, First Datas Mark Herrington cant help but be
amazed at other leaders who exert a sense of calm amid a storm
of combatants.
Mike Krzyzewski [Dukes basketball coach] seems to be a
tremendous game planner, and has a very calm way about him.
He also comes across as a humble guy, and thats an important
part of leadership, says Herrington, executive vice president of
global product management and innovation for First Data.
Herringtons the Coach K for a team of 1,000 people who
produce new digital payments tech for First Data. For the
next two to three years you will see a slugfest with a lot of value
added products, he says, adding that at some point we will
comes partly under the
umbrella of First Datas Univer-
sal Commerce strategy, under
which the company produces
tech tools for digital payments,
integrates disparate applica-
tions, provides intelligence for
shopping and deals, connects
stakeholders, and enables
computing devices to execute
fast and compliant payments.
Mobile delivery is the hub of
the model.
A number of new products
have spun of of Universal Com-
merce, including the FD35 PIN
Pad, which allows PIN-based
debit transactions and swipes
traditional payment cards,
but also can accept chip and
PIN (EMV), contactless cards,
mobile payments and key fobs.
Snap! is an iPad app for
generating paperwork and col-
lecting electronic signatures so
merchants can begin accepting
payments quickly. Otherwise
is an open platform that lets
marketers and other publish-
ers electronically attach ofers
such as deals, e-coupons and
loyalty programs to a consum-
ers cards or mobile wallets.
The company has also
rolled out RapidComply, a
self-assessment questionnaire
and vulnerability scanning tool
that helps merchants maintain
Payment Card Industry Data
Security Standard compli-
ance. And its launched Global
Gateway e4, an online payment
service.
We have a good share of
the merchant community and
are putting in place tech to
allow any combination of form
factors at the point of sale,
Herrington says.
Were operating with a
sense of urgency. If youre
going to fail, fail fast, Her-
rington says.
By John Adams
need to see an environment
where these services can be
consumed in a ubiquitous
fashion.
First Data, which pro-
cesses payments for more
than six million merchants
and thousands of credit card
issuers, believes its uniquely
positioned to take advantage
of the coming payments
revolution, as wallets, cash
and credit cards morph into a
mobile-phone enabled portal
for shopping and payments.
The Atlanta-based frm is
already providing the process-
ing rails for the Google Wallet,
and is turning its attention
toward developing additional
mobile and web-friendly
digital payment products for
merchants and consumers.
Were seeing consumers
empowered in a way that they
havent been in the past. They
have so much access to so
much information where they
can quickly fnd a merchant
that they want, Herrington
says.
The slew of new pay-
ments tech development
6
Making sure we arent so blinded by
something that we call an ATM
that we miss the forest for the trees.
This is the biggest step for me.
AMERICANBANKER.COM AMERICAN BANKER | FINTECH 100 | OCTOBER 2012 11
011_FINOct12 4 9/21/2012 4:17:46 PM
FinTech 100
|
Top 10
Cognizant
HQ: Teaneck, N.J.
Francisco DSouza, president and CEO
9
NRI
HQ: Tokyo
Shin Kusunoki, senior vice president and
division manager for nancial and asset
management solutions
Outsourcing rm Cognizant
has been growing fast and
makes its debut in the FinTech
Top 10 this year.
When we started the busi-
ness 19 years ago, we saw a
very large market opportu-
nity ahead of us and made
a conscious and deliberate
efort to capture it, says Fran-
cisco DSouza, president and
CEO. Weve orchestrated and
engineered growth into the
business strategy of the com-
pany from day one. We created
a fnancial model that lets us
reinvest back into the business
for long-term growth to make
sure the products and services
we ofer our clients stay ahead
of where our customers are
and where the market is.
While some outsourcers
see a movement of U.S. banks
work from overseas to the
States, DSouza does not.
to the table. On the business
process outsourcing side, the
Philippines is a signifcant con-
tender, he says.
Cognizants road map for
the next 18 months is focused
on the smac stack social,
mobile, analytics and cloud.
We think theres still a lot that
can be done to maximize the
impact of these technologies,
DSouza says.
How does he see new ideas
through? The challenge we
faced was how to identify,
incubate and protect new ideas
that have great potential but
take time to come to fruition
and contribute meaningfully
to revenue, DSouza says. We
encourage employees not just
to give us ideas but to form
teams to execute these ideas.
The emerging technologies
organization reports directly to
me so I can give it the air cover
it needs to grow and operate
with autonomy and indepen-
dence, which is needed to
shepherd new good ideas.
By Penny Crosman
Our clients are always look-
ing at the equation of, where
in the world does the right
combination of cost, capability,
and talent exist to do a piece of
work, he says. In the IT por-
tion of our business, the reality
is there isnt enough talent in
the U.S. and Western Europe
to meet our clients demands.
The talent production in the
U.S., if you look at the number
of college graduates and so on,
is not keeping up. Clients who
want to remain competitive
in the global market need to
tap talent around the world.
Cognizant has delivery centers
in the U.S., Europe, Asia, and
South America. Our goal is to
fnd the best talent in the world
and bring that talent to bear on
a particular problem, he says.
India and China have the
largest tech talent pools, he
notes. We see eastern Europe
being strong in pure comput-
ing statistics and mathematics.
We have centers in South
America that bring that time
zone and the Spanish language
For Nomura Research Institute, attracting and retaining top
tech talent is a matter of giving them something they can sink their
teeth into.
We motivate technologists by assigning more and more chal-
lenging projects, says Shin Kusunoki, a senior vice president and
division manager for fnancial and asset management solutions in
NRIs fnancial technology solutions division.
NRI, which gets about 60 percent of its revenue from fnancial IT
solutions, including banks, asset managers, broker-dealers and insur-
ance providers, has a number of new projects underway to serve
a customer base that includes Credit Suisse, Barclays, HSBC, UBS,
JPMorgan Chase, Nomura, ING and Mizuho. NRIs solutions support
partners for a U.S. expansion.
NRI is working on new devel-
opments in mobile channels
and researching how to leverage
Oracle Exadata for a multiten-
ant platform as a service model.
Oracle Exadata is a package of
servers, storage, networking and
software that is designed to con-
solidate tech systems, provide
data warehousing and online
transaction processing.
The execution of these ini-
tiatives is reliant on fnding IT
people with knowledge of these
new technologies and keeping
them happy. Kusunoki says that
in Japan, most people work for
one company in their careers.
NRI recruits heavily from local
universities in Japan, China and
India, and provides chances for
staf to transfer to other jobs, as
well as collaborate on new ideas
for products, tech or strategy.
As the frm expands further
outside of Japan, Kusunoki has
to work harder to encourage the
cross-job skill sharing that it ofers
developers. It has an annual of-
site event in which tech staf from
the frms diferent divisions share
ideas and experiences.
By John Adams
about 80 percent of the Japa-
nese mutual fund market and
are used by about 70 percent of
the participants in the Japanese
capital markets system.
Two of NRIs largest current
initiatives involve expanding its
Japanese base to include more
smaller bank clients, and grow-
ing NRIs presence in India.
NRI recently fnished work
on a new hosted online bank-
ing system that will be aimed at
Japans 106 regional banks. In
addition to internally hosting
online banking within NRIs
own data center, the new
online banking service will also
come with customized advertis-
ing and marketing campaigns.
Outside of Japan, the frm
established NRI FT India in
Kolkata following the comple-
tion of its acquisition of Anshin
Software. The new unit will
ofer customer support, IT
services, fnancial services R&D
and software development, and
includes about 200 new system
engineers. Kusunoki also says
NRIs current priority is to
assist Japanese fnancial frms
to expand their businesses out-
side of Japan, but is also seeking
8
As Infosys plots its expansion
strategy following the tech
spending slumps of the past
few years and stif competition
from frms such as Tata Con-
sulting Services, its ofering
expanded outsourcing options.
These new services range from
social media to the cloud to
expanded back ofce functions
such as human resources.
But more than that, Infosys
is attempting to compete in
a new era for outsourcing, in
which jobbing out specifc func-
tions for scale and cost cutting
gives way to a mix of tech
hosting, assessments, advisory
services and management.
Outsourcing is no longer
about transaction process-
ing, but a banks leveraging
a global workforce for a tech
strategy, says Mahesh Makhija,
vice president and head of the
fnancial services and insur-
ance practices for the Americas
for Infosys.
Infosys is hoping its
expanded advisory, manage-
ment and hosting options will
help the outsourcing frm ben-
eft from the complexity posed
by IT pressures on banks that
include risk and compliance
mandates, customer acquisi-
tion challenges and budget
pressures.
Makhija notes that tech
strategies dont look the same
for all institutions. There is a
ton of jargon in tech, and not
everyone wants to be on the
most bleeding edge of technol-
ogy. Some banks want to move
more aggressively into social
10
Infosys
HQ:
Bangalore
Mahesh Makhija,
vice president
media, for example, while
others are more conservative.
Infosys uses a variety of
techniques to marry a banks
demand for new tech with its
business requirements, such
as consulting and maturity
models that measure the
institutions development cycle
and how that cycle may impact
its business objectives. The
frm is also focusing on hosting
entire business units. We have
designed a set of platforms that
take a core function like HR,
and we host the entire function
in our data center from recruit
ment to retirement. Its starting
to move into other core units,
Makhija says.
Other new developments
include a new infrastructure
testing service, in which com
panies can test the business
readiness and performance of
their IT infrastructure during
major changes such as data
center consolidation, virtualiza
tion and other tech upgrades.
It also launched the Infosys
Cloud Ecosystem Hub, which
allows frms to create, adopt
and govern cloud services. The
hub includes a decision-making
tool that leverages more than
20 parameters such as qual
ity of service, technology
compatibility, regulatory com
pliance needs and total cost of
ownership.
Infosys adjustments have
not caused the economic pres
sures to fade entirely. Barclays
Capitals equities researchers
in late August downgraded
Infosys from an overweight
to an equal weight saying
the frm was missing guidance
and possibly underestimating
risk. Infosys reported $0.73
per share for the most recent
quarter, missing the consensus
estimate by $0.01.
Makhija says that when
dealing with economic chal
lenges, Infosys has adopted a
strategy in which the nature of
the challenge, its impact and
how the business is respond
ing is communicated to each
staf member. He says in such
cases consistency and trans
parency of the message and
plan is important so even pro
grammers will hear the same
message from their immediate
manager.
By John Adams
12 AMERICAN BANKER | FINTECH 100 | OCTOBER 2012 AMERICANBANKER.COM
012_FINOct12 5 9/21/2012 4:17:45 PM
As Infosys plots its expansion
strategy following the tech
spending slumps of the past
few years and stif competition
from frms such as Tata Con-
sulting Services, its ofering
expanded outsourcing options.
These new services range from
social media to the cloud to
expanded back ofce functions
such as human resources.
But more than that, Infosys
is attempting to compete in
a new era for outsourcing, in
which jobbing out specifc func-
tions for scale and cost cutting
gives way to a mix of tech
hosting, assessments, advisory
services and management.
Outsourcing is no longer
about transaction process-
ing, but a banks leveraging
a global workforce for a tech
strategy, says Mahesh Makhija,
vice president and head of the
fnancial services and insur-
ance practices for the Americas
Infosys is hoping its
expanded advisory, manage-
ment and hosting options will
help the outsourcing frm ben-
eft from the complexity posed
by IT pressures on banks that
include risk and compliance
mandates, customer acquisi-
tion challenges and budget
Makhija notes that tech
strategies dont look the same
for all institutions. There is a
ton of jargon in tech, and not
everyone wants to be on the
most bleeding edge of technol-
ogy. Some banks want to move
more aggressively into social
10
Infosys
FinTech 100
|
Top 10
media, for example, while
others are more conservative.
Infosys uses a variety of
techniques to marry a banks
demand for new tech with its
business requirements, such
as consulting and maturity
models that measure the
institutions development cycle
and how that cycle may impact
its business objectives. The
frm is also focusing on hosting
entire business units. We have
designed a set of platforms that
take a core function like HR,
and we host the entire function
in our data center from recruit-
ment to retirement. Its starting
to move into other core units,
Makhija says.
Other new developments
include a new infrastructure
testing service, in which com-
panies can test the business
readiness and performance of
their IT infrastructure during
major changes such as data
center consolidation, virtualiza-
tion and other tech upgrades.
It also launched the Infosys
Cloud Ecosystem Hub, which
allows frms to create, adopt
and govern cloud services. The
hub includes a decision-making
tool that leverages more than
20 parameters such as qual-
ity of service, technology
compatibility, regulatory com-
pliance needs and total cost of
ownership.
Infosys adjustments have
not caused the economic pres-
sures to fade entirely. Barclays
Capitals equities researchers
in late August downgraded
Infosys from an overweight
to an equal weight saying
the frm was missing guidance
and possibly underestimating
risk. Infosys reported $0.73
per share for the most recent
quarter, missing the consensus
estimate by $0.01.
Makhija says that when
dealing with economic chal-
lenges, Infosys has adopted a
strategy in which the nature of
the challenge, its impact and
how the business is respond-
ing is communicated to each
staf member. He says in such
cases consistency and trans-
parency of the message and
plan is important so even pro-
grammers will hear the same
message from their immediate
manager.
By John Adams
AMERICANBANKER.COM AMERICAN BANKER | FINTECH 100 | OCTOBER 2012 13
013_FINOct12 6 9/21/2012 4:18:33 PM
A fl urry of core processi ng upgrades and conversi ons have
taken pl ace around the country. Behi nd the


FinTech 100
|
Cover Story
014_FINOct12 1 9/21/2012 4:18:34 PM
A fl urry of core processi ng upgrades and conversi ons have
taken pl ace around the country. Behi nd the
acti vi ty: a dri ve for effi ci ency, compl i ance
and competi ti veness
By Penny Crosman
Photography by Tim Knox
015_FINOct12 2 9/21/2012 4:18:34 PM
Lilly wasnt crazy about performing in the
video. Ill tell you what, being chief operating
ofcer is what I need to stick to, he jokes. I
dont believe my acting career is going very far.
Im doing the best I can to get the message out.
Banks rarely ofer public announcements
about their technology upgrades until after
theyre done, for fear of glitches that could cause
errors, delays and outages. But at $2.8 billion-
assets First Community, We feel like they have a
right to know, particularly with the new internet
banking solution thats going in, Lilly says.
The new system would require customers
to re-establish their online banking credentials.
We fgured it would be unfair to spring it on
them, he says.
First Community Bank is part of a wave of
banks that have engaged in core banking trans-
formations over the last year or so.
Historically, transformations in the U.S. and
Europe have stood at around 1-2% considerably
lower than the rest of the world, says Celent ana-
lyst Stephen Greer. Currently, were seeing that
number rise to around 4-5%. Its not consider-
ably higher this year, but considering how many
banks there are in the U.S., this represents a lot of
banks. These numbers are based on Celents esti-
mates and conversations with clients, he says.
A quest for improved efciency is one driver
behind this conversion. The banks efciency
ratio the amount it spends to make a dollar
in revenue is currently at about 57 cents per
dollar, or 57%. Industry averages hover in the
high 60s. Our goal is to get it as close to 50 as
we practically can, Lilly says.
Compliance issues were another driver of
this project. Monitoring compliance, making
sure we got it right and that we were able to
satisfy regulators, continued to be based on
manual processes rather than trying to stitch
databases together to get the information in the
right places at the right time, Lilly says. Its
been one of our bigger headaches. Another has
been our debit card processing, theres been a
lot of manual process in getting a Visa card in
the hands of our customers.
Also behind the change was the fact that the
banks IT staf was spending a lot of time writing
and customizing code to get external modules,
such as online banking, bill payment and debit
card processing software, to talk with the incum-
bent core system (Fiserv Signature). The bank
has two developers. Theyre very good and
talented, Lilly says. Our philosophy here is we
dont want to run a development shop, we want
to run a bank.
The just-completed conversion was conceived
fve years ago, when a technology assessment
revealed the bank had too many manual processes.
As we started looking at that, we structured all
of our major IT contracts to be coterminous in
September of this year, in order to search for the
best technology we could aford that provided best
integration and the highest degree of automation
that we could fnd, Lilly says.
A post-conversion feature CEO John Mendez
is looking forward to is a one-signature account
opening process. Our account opening process
could span 15-30 minutes depending on the type
of account, sometimes longer. Were converting
to a system that will populate all the necessary
applications and well also be using electronic
signatures as we image those deposit documents.
Customers will be able to sign up for an
account, online banking, bill payment and
mobile banking through one paperless appli-
cation. There will be fewer FedEx packages
between the banks headquarters in Bluefeld,
Va. and its 72 branches, which are up to 350
miles away. Compliance with anti-money laun-
dering, Regulation DD, Regulation CC, and other
rules will all be handled by the software.
We feel thats very important in this day and
time to achieve compliance but not to impose it
on our customers to the point where its ofen-
sive, Lilly says.
Over time, the bank will evolve into iPad-
based account openings and paperless branches.
Branch staf are elated about the new system,
Lilly says. Theyve already done some testing,
it will make life in the branch a lot better so that
we can spend time talking to customers about
important things that matter, as opposed to cre-
ating a paper chase, he says.
Certain HR functions have already been
made paperless. We want to expand on that,
Lilly says. We also have a trust division and I
think theres a great deal of potential there as
well as in compliance and risk management.
Well migrate all those departments to paperless
as soon as we can.
A new native mobile banking app for iPhone,
Android and BlackBerry devices thats part of
the upgrade will be a quantum leap for our
customers from the mobile browser the bank
has had so far, Lilly says, including text messag-
ing and bill payment.
In the Bluefeld metro area (population
around 60,000), local competitors include
BB&T and several community banks.
BB&T is a formidable competitor, particularly
in the cash management arena for business
customers, Mendez says. Silverlake includes
support for commercial cash management. Jack
Henry also has an iPad app for small businesses
that helps them run their business from their
iPad anywhere, at any time, Mendez says.
Were looking forward to those enhancements.
The bankers expect the new system to pro
vide stronger security. I wont be specifc there,
but were going to see a much tighter and more
manageable security environment because
were dealing with one vendor overall as
opposed to several, Lilly says. We wont have
to oversee as much as we have to today.
The bank is retaining its check processing
platform. We like it, weve had it since 1997,
and it has evolved, Lilly says. It made no sense
for us to change it.
First Community has also purchased Jack
Henrys Synergy imaging and workfow system.
We feel we can leverage that considerably across
the enterprise, not only for deposits and loans
but for a number of other functions within the
company, Lilly says.
Data validation has been critical to this project.
You are taking over 300,000 accounts and
moving them from point a to point b, the poten
tial for things to go wrong is very high without
meticulous data verifcation and making sure
things convert and end up on other side of the
fence the same as they were before they trav
eled, Lilly notes. It is a very meticulous, time
consuming process to make sure those are right
because you have thousands of codes, hundreds
of thousands of accounts in the customer infor
mation fle. Theres a lot of diverse information
within our data.
Another complication is that First Com
munity acquired Peoples Bank of Virginia in
Richmond at the end of May and was going to
convert that banks IT to the Jack Henry plat
form over the same weekend. (Peoples was
using an FIS system before.)
All in, include investments in storage and
signature pads, the bank has spent $3.6 million
on this conversion. The return on investment for
the project is around 21%, based on reduced cost
of processing transactions.
FinTech 100
|
Cover Story
hrough late August and most of September of this year, First Community Bancshares
in Bluefeld, Va. maintained an online countdown to its core conversion at
www.fcbupgrade.com. (At press time, there were 23 days to go). The site features a video
with soothing piano music in the background, in which CIO Steve Lilly touts some of the
benefts of the new core system being adopted, Jack Henrys Silverlake. It will allow us to
provide big-bank capability in the community banking style you prefer, he says.
The largest core conversion project in the U.S.
remains Citis, which the bank says is meant to
improve customer service and support. It is due
to be completed in 2013.
The project is a multi-year effort to develop a
single, customer-centric banking platform that
will span all channels and consumer products in
North America Consumer Banking, according to
a Citi offcial. Our customer support and sales
experts will beneft from a streamlined application
environment and can more easily extend consis-
tent service across all channels, she says. The
platform is reportedly FIS Systematics.
The overall core platform project is global. Each
of Citis four regions is approaching the project
in phases. Southeast Asia is complete, for ex-
ample, and in the U.S. the bank has completed
the frst of several phases.
Project Rainbow, as the project is called
internally, began in South East Asia. We frst
used the Rainbow name due to the seven initial
countries that came together onto the common
platform to create something truly magnifcent,
the offcial says.
When this project has been completed, Citi
will be able to give consumers more personal-
ized solutions and a consistent client experi-
ence whenever and wherever they interact with
Citi, whether online, in a branch, through a call
center, on a mobile device, or at an ATM, the
spokesperson said.
Critics have slammed Citi for going with a batch
processing, rather than a real-time transaction
system. But the banks more ambitious goals
may be around customer analytics, for which it
recently purchased IBMs Watson.
In a press release in March, the bank said
it will assess ways to use a frst-of-a-kind
customer interaction solution combined with
Watsons deep-content analytics, natural lan
guage processing, decision support, and evi
dence-based learning to continue to advance
digital banking. With 200 million customer
accounts in more than 140 countries, the bank
has a wealth of consumer data to mine.
CITIS GLOBAL CORE CONVERSION CHUGS ON
16 AMERICAN BANKER | FINTECH 100 | OCTOBER 2012 AMERICANBANKER.COM
016_FINOct12 3 9/21/2012 4:18:48 PM
Over time, the bank will evolve into iPad-
based account openings and paperless branches.
Branch staf are elated about the new system,
Lilly says. Theyve already done some testing,
it will make life in the branch a lot better so that
we can spend time talking to customers about
important things that matter, as opposed to cre-
Certain HR functions have already been
made paperless. We want to expand on that,
Lilly says. We also have a trust division and I
think theres a great deal of potential there as
well as in compliance and risk management.
Well migrate all those departments to paperless
A new native mobile banking app for iPhone,
Android and BlackBerry devices thats part of
the upgrade will be a quantum leap for our
customers from the mobile browser the bank
has had so far, Lilly says, including text messag-
In the Bluefeld metro area (population
around 60,000), local competitors include
BB&T and several community banks.
BB&T is a formidable competitor, particularly
in the cash management arena for business
customers, Mendez says. Silverlake includes
support for commercial cash management. Jack
Henry also has an iPad app for small businesses
that helps them run their business from their
iPad anywhere, at any time, Mendez says.
Were looking forward to those enhancements.
The bankers expect the new system to pro-
vide stronger security. I wont be specifc there,
but were going to see a much tighter and more
manageable security environment because
were dealing with one vendor overall as
opposed to several, Lilly says. We wont have
to oversee as much as we have to today.
The bank is retaining its check processing
platform. We like it, weve had it since 1997,
and it has evolved, Lilly says. It made no sense
for us to change it.
First Community has also purchased Jack
Henrys Synergy imaging and workfow system.
We feel we can leverage that considerably across
the enterprise, not only for deposits and loans
but for a number of other functions within the
company, Lilly says.
Data validation has been critical to this project.
You are taking over 300,000 accounts and
moving them from point a to point b, the poten-
tial for things to go wrong is very high without
meticulous data verifcation and making sure
things convert and end up on other side of the
fence the same as they were before they trav-
eled, Lilly notes. It is a very meticulous, time
consuming process to make sure those are right
because you have thousands of codes, hundreds
of thousands of accounts in the customer infor-
mation fle. Theres a lot of diverse information
within our data.
Another complication is that First Com-
munity acquired Peoples Bank of Virginia in
Richmond at the end of May and was going to
convert that banks IT to the Jack Henry plat-
form over the same weekend. (Peoples was
using an FIS system before.)
All in, include investments in storage and
signature pads, the bank has spent $3.6 million
on this conversion. The return on investment for
the project is around 21%, based on reduced cost
of processing transactions.
TURNING IT INTO
A PROFIT CENTER
Up until a year ago, Chan Desai, CIO of Team
Capital Bank, was relying on what he calls bank
in a box a hosted service with one vendor pro-
viding everything for the banks IT. Team Capital,
which is based in Bethlehem, Pa., is a de novo
that started in 2005. There was no IT, there
was no back ofce there were the investors
and an idea, Desai says. At the time, the all-in-
one solution from Fiserv made sense.
But by 2009, it became clear to senior man-
agement that at the rate the bank was growing,
the existing technology wasnt going to carry it
into the future. The problem with a bank-in-a-
box approach is you get everything from one
vendor, and that really limits you when youre
looking for a certain type of mobile banking or
social media [product], Desai says.
We wanted a strong core platform and the
fexibility to make decisions as our needs change
down the road, so we can swap something out
thats not working and extend something that is
working, he says.
The now $900 million-assets bank came up
with a short list of vendors Fiserv, Jack Henry
and Open Solutions and conducted a shoot-
out. We wanted a vendor that would not only
allow us to keep our operating costs low but con-
tinue to reduce them, Desai says. I know thats
asking a lot.
This was a huge deal for us, because we
werent just looking to replace the core, but also
our merchant capture system, our online bank-
ing system, our business online banking system,
our data warehouse system, our enterprise
reporting system, our wiring system, and our
ACH platform, he says. This was a complete
overhaul of the technology layer. Ultimately
the team chose Open Solutions. The project
began in April 2010 and went live Feb. 2011. One
unusual element: no additional IT resources
were summoned for the conversion.
Most conversion projects require additional
overhead, Desai says. We had the right team
of people, all wearing multiple hats. Also, there
was support from a strong project management
team from Open Solutions.
The bank is running the hosted option of
the software; its paying to run everything
out of Open Solutions Cherry Hill data center.
Because we went with best of breed, not all the
apps we use are from Open Solutions, there are
third-party apps in the mix as well, he says.
Desai hopes to make money of the new
system by building add-on applications that
work with the Open Solutions core platform and
selling them to other Open Solutions customers.
A lot of community banks look at their back
ofce as a cost center, he says. We wanted to
go to that next level of transforming ourselves
into a proft center.
In the past year and a half, Desai, another
developer and a new hire have built about 15
commercial-grade applications using Open Solu-
tions DNACreator.
Theres been tremendous interest from
clients in some of our products, Desai says. A
credit union in Hawaii has already bought one.
The applications the bank is building also are
meant to help internally, to eliminate operations
costs wherever possible.
Desais group recently created an ACH origina-
tion platform that automates formerly manual
ACH processes. Its a lights-out process, nobody
has to do anything, Desai says. The app validates
the fle, customer, and limit; it generates excep-
tions and exception emails; there are approval
links attached to the emails, somebody in author-
ity for that customer has to approve those.
These development projects have moved
quickly. These are not eight-hour days, we
put a lot of sweat equity into building all these
applications for our bank and turn around and
market them to other clients of Open Solutions,
Desai says.
Our ulterior motive is to turn our IT opera-
tions into a proft center.
hrough late August and most of September of this year, First Community Bancshares
www.fcbupgrade.com. (At press time, there were 23 days to go). The site features a video
with soothing piano music in the background, in which CIO Steve Lilly touts some of the
benefts of the new core system being adopted, Jack Henrys Silverlake. It will allow us to
in phases. Southeast Asia is complete, for ex-
ample, and in the U.S. the bank has completed
Project Rainbow, as the project is called
internally, began in South East Asia. We frst
used the Rainbow name due to the seven initial
countries that came together onto the common
platform to create something truly magnifcent,
When this project has been completed, Citi
will be able to give consumers more personal-
ized solutions and a consistent client experi-
ence whenever and wherever they interact with
Citi, whether online, in a branch, through a call
center, on a mobile device, or at an ATM, the
spokesperson said.
Critics have slammed Citi for going with a batch
processing, rather than a real-time transaction
system. But the banks more ambitious goals
may be around customer analytics, for which it
recently purchased IBMs Watson.
In a press release in March, the bank said
it will assess ways to use a frst-of-a-kind
customer interaction solution combined with
Watsons deep-content analytics, natural lan-
guage processing, decision support, and evi-
dence-based learning to continue to advance
digital banking. With 200 million customer
accounts in more than 140 countries, the bank
has a wealth of consumer data to mine.
LOBAL CORE CONVERSION CHUGS ON
AMERICANBANKER.COM AMERICAN BANKER | FINTECH 100 | OCTOBER 2012 17
017_FINOct12 4 9/21/2012 4:18:57 PM
but at JP Morgan Chase it is more like 4,800 interfaces. The TEFA data framework will
make T24 much more scalable in environments like this.
TEFA is also designed to facilitate integration with third-party products such as the
PWM (private wealth management software) Temenos acquired in 2010 with the acqui-
sition of Odyssey Group SA, a Luxembourg frm. Odyssey is still not fully in line with
T24, Hoppermann says, and, while TEFA looks like a nice architecture, I havent seen
enough of the details yet to evaluate whether or not it can do this kind of integration.
Aimed more at smaller customers is the Temenos Model Bank, an accelerator designed
to speed up implementations. It (Model Bank) is essentially a bank out of the box, says
Hoppermann. New and existing customers could implement quickly and then modify.
Most banking platform vendors are trying to build accelerators like this.
INGENICO
Already one of the largest makers of point-of-sale terminal hardware in Europe, Ingenico
is moving aggressively into services, mobile payment systems, and the U.S. market.
The Paris-based vendors acquisition in 2009 of EasyCash, a German payment
services company, seems to have paid of. Ingenico saw a 28% growth in its services
revenue last year, says Rachel Hunt, head, EMEA (Europe Middle East Asia), IDC
Financial Insight. This partly ofset a decline in hardware sales.
Ingenico and U.S. rival VeriFone are almost neck and neck in reported 2011 rev-
enues with Ingenico coming in just under, and VeriFone slightly over $1.3 billion. Hunt
estimates that ffty percent of Ingenicos business is in EMEA, but the companys
acquisition last year of the U. S. portion of Hypercom signals a strong intent to com-
pete more vigorously on VeriFones home turf. Going forward, Ingenico may have an
advantage in the U.S. migration to EMV cards, due to their depth of EMV experience in
Europe, says Hunt.
In February, Ingenico acquired a controlling interest in ROAM Data, a rival of Square
that makes systems to turn tablets and mobile phones into POS devices. We have seen
a rapid shift in the last eighteen months to mobility, says Christopher Coonen, execu-
tive vice president, global sales, marketing and stratey for Ingenico.
Ingenico also makes its own mobile payment device dubbed iSMP, a sleeve that con-
verts an iPhone or iPod Touch into a POS terminal that accepts EMV, magstripe, and
non-contact payment cards.
The bulk of the business for both Ingenico and VeriFone is still in traditional POS
systems for banks, retailers, and merchants, according to Hunt, who estimates that
mobile accounts for less than two percent of cashless transactions. But, she adds, the
trends are clearly in the direction of mobile payment. NFC (Near Field Communica-
tions), particularly if Apple, as expected, releases an NFC enabled phone with mobile
wallet attached could be a game changer.
EVRY ASA
In 2010, two Norwegian IT fnancial services frms, EDB Business Partner Holding AS
and Ergo Group AS, merged to form EDB ErgoGroup, now renamed Evry ASA and
based in Oslo. The company remains focused on the Nordic market but dreams of a
more global presence.
We have a lot of customers in the U.K., says an Evry spokesperson. Our Indian
subsidiary, SPAM (Sweden Poland America Norway), has a healthy business in Ameri-
can bank and card services.
Evrys preferred development platform is Oracle. Like most service companies,
Evry also competes with Oracle Financial Services for customization and integration. It
has similar relationships with IBM and SAP.
The intellectual property that is Evrys core business was developed for the Nor-
wegian market where banks historically have invested with a 1520 year lifecycle
expectation for fnancial software solutions. Part of the companys stratey to go more
global is to reduce time to market for new functionality so customers can be more busi-
ness focused.
While Evry is not a platform vendor, the lines between the services it provides and
the software that support them is often blurred.
Choosing a services company such as Evry is very diferent from going with a plat-
form vendor such as Temenos.
Both approaches have advantages, says Jost Hoppermann, vice president, banking
L
ike a lot of executives at tech frms based out-
side the U.S., Shin Kusunoki is seeking a path
that leads to IT back of ces in the States, and
the big client wins that can result. But that
path isnt easy.
In order to get into the U.S. market, we feel we need
a partnership with a local company, says Shin Kusu-
noki, a senior vice president and division manager for
fnancial and asset management solutions in NRIs fnan-
cial technoloy solutions division.
The Tokyo-based NRI does most of its fnancial
services business in Japan, but is expanding into other
parts of Asia and India, and, as Kusunoki mentioned, is
seeking possible partners for U.S. expansion.
NRI is not nearly alone, as almost all of the major
technoloy frms outside the U.S. look to expand or move
inside the U.S. in a larger way. From the big outsourcers
like Tata Consulting, which has inked a North American
partnership to deliver broader cloud capabilities, to core
banking providers like Temenos, which has long sought
to bring its T24 solution to American banks, most of
these frms have established a frm beachhead in the U.S.
And theyre now looking for more as American banks
scramble to follow new rules, adopt new mobile chan-
nels and migrate to new digital payment models.
Examples abound. Ingenicos purchase of the U.S.
portion of Hypercom suggests the Paris-based payments
frm has its eyes squarely on VeriFones lunch. When
the Paderborn, Germany-based Wincor Nixdorf looks
at the U.S., it sees a chance to make big waves in branch
automation as American banks look to streamline
branches through strategies that remove paper and bring
about other ef ciencies. And like all American bank IT
shops, the London-based Misys which already provides
a suite of treasury and capital markets systems in the U.S.
and other markets hopes to cash in on the Dodd-Frank
frenzy, introducing a new risk and regulatory product
line designed to tackle the tough, still developing, U.S.
regulatory overhaul. Misyss acquisition by Vista Equity
Partners, which includes a merger with risk management
provider Turaz, should provide more ammo for risk and
compliance eforts in the U.S.
Of course, the U.S. isnt the only market targeted
by international IT frms. Opportunities in the EMEA
region abound, and large U.S. bank tech frms such as
Fiserv and FIS also have vigorous international expan-
sion plans of their own.
In the following profles, we take a closer look at
Wincor Nixdorf, Misys, Evry ASA, Ingenico and Teme-
nos, and the stories of their plans for local and global
expansion. By John Adams
TEMENOS
In a June report, Forrester Research ranked Temenos
Group AG (TEMN) as one of the top global banking plat-
form vendors with an excess of 35 deals done in more
than six global regions in 2011. Only fve of these were
in North America, the majority closing in Europe and
Asia/Pacifc.
The Geneva-based frm competes with the likes of
Oracle, Infosys, and SAP to sell banks a platform that
includes core banking, mobile banking, branch solu-
tions, and risk management. The heart of this platform
is T24, a service-oriented architecture (SOA). T24
comes with a huge set of parameters, says Jost Hop-
permann, vice president, banking applications and
architecture at Forrester Research in Cambridge, Ma.
By changing the parameters, customers can change
the user interface, workfow, protocol for dealing with
currencies, and organizational structures, all without
changing the source code.
There are currently about 560 installations of T24.
These are mainly universal and retail banks, says John
Schlesinger, chief architect at Temenos.
Temenos is rolling out Enterprise Frameworks Archi-
tecture (TEFA), which Schlesinger says will be complete
in about three years. Right now a typical T24 instal-
lation has about 50 user interfaces, Schlesinger says,
PAYMENTS, COMPLIANCE AND
MOBILITY SPELL BIG REVENUE IN
ALMOST EVERY CORNER OF THE
WORLD. FOR FINANCIAL
TECHNOLOGY PROVIDERS
LOOKING TO HIT TOUGH EARNINGS
TARGETS IN A FIERCELY
COMPETITIVE ENVIRONMENT,
GROWING MARKETS IN ASIA AND
THE U.S. ARE AN ENTICING TARGET.
U.S. TECH FIRMS WOULD BE
WISE TO BE ON GUARD.
SANS FRONTIERES
FINANCIAL
TECHNOLOGY
FinTech 100
|
Global
18 AMERICAN BANKER | FINTECH 100 | OCTOBER 2012 AMERICANBANKER.COM
018_FINOct12 7 9/21/2012 3:24:46 PM
but at JP Morgan Chase it is more like 4,800 interfaces. The TEFA data framework will
make T24 much more scalable in environments like this.
TEFA is also designed to facilitate integration with third-party products such as the
PWM (private wealth management software) Temenos acquired in 2010 with the acqui-
sition of Odyssey Group SA, a Luxembourg frm. Odyssey is still not fully in line with
T24, Hoppermann says, and, while TEFA looks like a nice architecture, I havent seen
enough of the details yet to evaluate whether or not it can do this kind of integration.
Aimed more at smaller customers is the Temenos Model Bank, an accelerator designed
to speed up implementations. It (Model Bank) is essentially a bank out of the box, says
Hoppermann. New and existing customers could implement quickly and then modify.
Most banking platform vendors are trying to build accelerators like this. By Mark Leon
INGENICO
Already one of the largest makers of point-of-sale terminal hardware in Europe, Ingenico
is moving aggressively into services, mobile payment systems, and the U.S. market.
The Paris-based vendors acquisition in 2009 of EasyCash, a German payment
services company, seems to have paid of. Ingenico saw a 28% growth in its services
revenue last year, says Rachel Hunt, head, EMEA (Europe Middle East Asia), IDC
Financial Insight. This partly ofset a decline in hardware sales.
Ingenico and U.S. rival VeriFone are almost neck and neck in reported 2011 rev-
enues with Ingenico coming in just under, and VeriFone slightly over $1.3 billion. Hunt
estimates that ffty percent of Ingenicos business is in EMEA, but the companys
acquisition last year of the U. S. portion of Hypercom signals a strong intent to com-
pete more vigorously on VeriFones home turf. Going forward, Ingenico may have an
advantage in the U.S. migration to EMV cards, due to their depth of EMV experience in
Europe, says Hunt.
In February, Ingenico acquired a controlling interest in ROAM Data, a rival of Square
that makes systems to turn tablets and mobile phones into POS devices. We have seen
a rapid shift in the last eighteen months to mobility, says Christopher Coonen, execu-
tive vice president, global sales, marketing and stratey for Ingenico.
Ingenico also makes its own mobile payment device dubbed iSMP, a sleeve that con-
verts an iPhone or iPod Touch into a POS terminal that accepts EMV, magstripe, and
non-contact payment cards.
The bulk of the business for both Ingenico and VeriFone is still in traditional POS
systems for banks, retailers, and merchants, according to Hunt, who estimates that
mobile accounts for less than two percent of cashless transactions. But, she adds, the
trends are clearly in the direction of mobile payment. NFC (Near Field Communica-
tions), particularly if Apple, as expected, releases an NFC enabled phone with mobile
wallet attached could be a game changer. By Mark Leon
EVRY ASA
In 2010, two Norwegian IT fnancial services frms, EDB Business Partner Holding AS
and Ergo Group AS, merged to form EDB ErgoGroup, now renamed Evry ASA and
based in Oslo. The company remains focused on the Nordic market but dreams of a
more global presence.
We have a lot of customers in the U.K., says an Evry spokesperson. Our Indian
subsidiary, SPAM (Sweden Poland America Norway), has a healthy business in Ameri-
can bank and card services.
Evrys preferred development platform is Oracle. Like most service companies,
Evry also competes with Oracle Financial Services for customization and integration. It
has similar relationships with IBM and SAP.
The intellectual property that is Evrys core business was developed for the Nor-
wegian market where banks historically have invested with a 1520 year lifecycle
expectation for fnancial software solutions. Part of the companys stratey to go more
global is to reduce time to market for new functionality so customers can be more busi-
ness focused.
While Evry is not a platform vendor, the lines between the services it provides and
the software that support them is often blurred.
Choosing a services company such as Evry is very diferent from going with a plat-
form vendor such as Temenos.
Both approaches have advantages, says Jost Hoppermann, vice president, banking
applications and architecture at Forrester Research in Cambridge, Mass. A platform
vendor will likely provide a more out-of-the-box solution. A services frm like Evry will
likely do a custom-built integration. Which option a bank chooses depends on require-
ments and cost, and corporate culture; that is, the willingness to change business
practices at a detailed level.
Evry is feeling the squeeze from SEPA (Single European Payments Area), which
requires EU countries to make international payments on the same cost basis as
domestic. Another driver of innovation and cost containment is increased competition
particularly from Asia as Indian giant Tata shows itself more in European markets. By
Mark Leon
MISYS
London-based Misys claims 1,800 customers in 120 countries. Its customer list includes
47 of the worlds 50 largest banks and 13 of the top 20 asset managers, according to the
company.
Vista Equity Partners announced June 1st that it had acquired Misys and merged it
with Turaz, which sells Kondor+ risk management software. Other key software pack-
ages provided by Misys include Summit FT, a treasury and capital markets system that
specializes in derivatives and structured products for global investment banks, and
Loan IQ, a commercial lending system used by 15 of the top 25 syndicated loan book
runners. The Misys business serves four main verticals in the U.S., with dedicated
experts within each segment: capital markets, commercial lending, banking and the
buy side, says Rick Salk, Misyss North America sales director.
Adding Turaz strengthened Misyss risk management and front-of ce capabilities,
he says. Misys has had signifcant client expansion in the U.S. with its Summit and
Loan IQ software packages, according to Salk. In 2011, the company had 28 new name
sales across its various businesses.
In the U.S., more banking clients are looking to consolidate their systems to reduce
operational costs and increase return on investment, and more are investing in fee gen-
eration businesses, he said.
Misys is uniquely positioned in the market (because) we can provide multiple solu-
tions to our clients, as well as integrated best-of-breed cross-asset solutions, Salk says.
For its U.S. customers, Misys has created new risk and regulatory solutions to meet
the requirements of the Dodd-Frank Act. The company has also introduced a client
portal that works with its major products and allows Misys Loan IQ to support mid-
market lending, complementing its syndicated lending capabilities. By Keith Button
WINCOR NIXDORF
Paderborn, Germany-based Wincor Nixdorf Inc., which provides hardware and soft-
ware solutions for banking and retail industries with a focus on improving customer
service and reducing costs for branches, is in the same boat as a number of large frms
as it navigates a tough international economic climate.
Wincor Nixdorf is projecting earnings before interest, taxes and amortization of about
$127 million for the fscal year ending Sept. 30, 2012, following EBITA of about $207 mil-
lion for the previous fscal year. This projected drop in operating proft includes a $51
million charge for an extensive restructuring that will cut more than 500 positions from
the companys 9,200-employee workforce, mostly in Western Europe. Half of the cuts
are to be completed in the current fscal year, and half in the 20122013 fscal year.
According to the company, the goal of the restructuring is to substantially
strengthen its global competitiveness and target business activities faster in emerging
markets. Oliver Weber, CEO of Wincor Nixdorf U.S., says the restructuring will beneft
the companys U.S. business, because it aims to allocate research and development
investments into markets with the biggest growth opportunities.
We have invested in the build-out of our sales, service and operations organiza-
tion in the last (several) years and we will continue to do so, Weber said. Since the
U.S. market represents a very attractive growth opportunity for us, we expect positive
results from these investments.
Besides new deposit automation technoloy, the next wave of modernization will
include consolidating deployed technologies to completely remove paper from the
branch, Weber says. This will improve sales and service at the branch level while driv-
ing down costs. By Keith Button
provider Turaz, should provide more ammo for risk and
Of course, the U.S. isnt the only market targeted
by international IT frms. Opportunities in the EMEA
region abound, and large U.S. bank tech frms such as
Fiserv and FIS also have vigorous international expan-
In the following profles, we take a closer look at
Wincor Nixdorf, Misys, Evry ASA, Ingenico and Teme-
nos, and the stories of their plans for local and global
In a June report, Forrester Research ranked Temenos
Group AG (TEMN) as one of the top global banking plat-
form vendors with an excess of 35 deals done in more
than six global regions in 2011. Only fve of these were
in North America, the majority closing in Europe and
The Geneva-based frm competes with the likes of
Oracle, Infosys, and SAP to sell banks a platform that
includes core banking, mobile banking, branch solu-
tions, and risk management. The heart of this platform
is T24, a service-oriented architecture (SOA). T24
comes with a huge set of parameters, says Jost Hop-
permann, vice president, banking applications and
architecture at Forrester Research in Cambridge, Ma.
By changing the parameters, customers can change
the user interface, workfow, protocol for dealing with
currencies, and organizational structures, all without
There are currently about 560 installations of T24.
These are mainly universal and retail banks, says John
Temenos is rolling out Enterprise Frameworks Archi-
tecture (TEFA), which Schlesinger says will be complete
in about three years. Right now a typical T24 instal-
lation has about 50 user interfaces, Schlesinger says,
AMERICANBANKER.COM AMERICAN BANKER | FINTECH 100 | OCTOBER 2012 19
019_FINOct12 8 9/21/2012 3:25:07 PM
B
anks are moving
away from having
direct control over
their technology
assets to increased
reliance on managing technol-
ogy through contracts.
As banks move to public
cloud providers, they are
recognizing that procuring
cloud services may require a
shift in contract negotiation
and vendor management.
Buying public cloud services
moves software and process-
ing environments into the
realm of commodity services
providing much less room to
negotiate contract terms and
service level agreements.
Most bank technology
organizations use traditional
technology procurement
practices. But with cloud, the
contract is for use of pre-estab-
lished commodity services.
With commodities, margins
are slimmer, customization
doesnt occur and there is
little room for negotiation.
The recent FFIEC statement
on external cloud computing
shows that U.S. regulators are
aware that banks are contract-
ing with cloud providers, but
little guidance is provided.
The bottom line from the
FFIEC is that fnancial institu-
tions should use the same
approach to cloud computing
that they currently use with
traditional outsourced tech-
nology. This is good as far as it
goes, but there are some best
practices we have compiled
from our discussions with
banks and providers. Follow-
ing are a few points to consider
and discuss with legal counsel
and your procurement group.
Security and data protec-
tion. We have to start with
security as that tops every
banks list of concerns about
public cloud. Unfortunately
though, banks often focus in
the rear view window as they
review providers security
controls. Providers tell us
that banks are overly focused
on physical security, while
paying much less attention
to more common attack vec-
tors. This is probably due to
an over-reliance on leveraging
the same kinds of controls
the bank uses to manage its
owned assets. One common
question that is missed is
about how the provider con-
trols access to backup data
and disaster recovery. Banks
will tour primary processing
locations, but will often not
use the same diligence when
probing the provider regard-
ing the complete data life
cycle. Providers should ofer
details on where back-ups are
stored, how chain of custody
is tracked, how data is secured
in transit, and how retired
assets are wiped clean after
assets are re-deployed or after
data retention time periods
have been met. Banks must
also consider the geographic
locations where all data will be
kept at rest or in transit, and
ensure that there are no con-
ficts due to legal jurisdictions.
People. In addition to
making sure that data is pro-
tected, banks must also ensure
that the provider has well-
trained staf. Human error
whether true mistakes or
those that have been coaxed
along with social engineering
are among the biggest risks
in any processing environ-
ment. All staf from operators
to executives must be trained
to be vigilant so that they can
recognize attacks underway
and not fall prey to rapidly
evolving techniques. IDC
Financial Insights has yet to
fnd an easy way to measure
this capability, as its more
about the culture of the pro-
vider than about checking of
boxes with training programs.
This is where bankers need to
trust their guts and make sure
they have confdence in the
providers ability to maintain a
culture of vigilance.
Plan for the unexpected.
Just as wealthy older grooms
require their younger,
impoverished brides to sign
pre-nuptial agreements, bank-
ers need to plan for the worst
at the start of the relationship.
Part of the contract nego-
tiation process must address
termination. Banks must have
explicit exit clauses that docu-
ment those conditions that
will nullify the contract and
allow the bank to take over
processing. In addition to
setting the legal parameters,
the bank must also plan for
the logistical aspects when
a processing arrangement
terminates. Banks must be
clear about the format of the
data they will receive in an
extract, specify a reasonable
timeframe for delivery, and
make sure that all defnitions
and schema are also provided
by the vendor.
Short of termination,
there are other unforeseen
circumstances that can occur.
Contracts or service level
agreements will include the
vendors incident response
plans and when and how sus-
pected or actual events must
be communicated to the bank.
Liability for data security
breaches must be addressed,
as well as making sure that the
vendor has adequate insur-
ance coverage to support their
level of indemnity. Coverage
should include any penalties
or fnes the bank may be sub-
ject to in the event of a breach
that can be tracked back to
negligence or fraud on the
part of the provider.
Square peg, square hole.
As mentioned at the start of
this piece, banks contracting
for public cloud services are
buying into a commodity. For
most banks, public cloud
services are being considered
because they can deliver
computing capacity at a
lower price than on-premises
options.
However, banks have
higher service requirements
than the average business, and
some service levels cannot be
compromised to reduce costs.
Banks must ensure that they
are making the right kinds of
trade-ofs when they procure
cloud services, and are choos-
ing a provider that can support
a banks requirements now
and in the future.
Fortunately, public cloud
providers make their con-
tract terms and service level
agreements publicly avail-
able, so banks can educate
themselves about the standard
options each ofers. Although
low-cost providers may be
attractive, requiring too much
customization or additional
requirements can diminish the
economic returns for the pro-
vider, and may not adequately
protect the bank.
Best practices dictate that
banks seek providers whose
standard oferings provide a
higher level of service, and
can guarantee that they
can comply with banking
regulations and availability
requirements.
Although most banks
have experience with tradi-
tional outsourcing, and even
near-cloud services such as
card networks, check image
warehouses, and co-location
services for many, the word
cloud gives them pause. In
many ways, accessing shared
assets through shared net-
works is same old, same old
for banks. But there are some
real diferences that banks
should focus on when they
engage with cloud service
providers.
Jeanne Capachin is research
vice president with IDC
Financial Insights.
FinTech 100
|
Cloud Computing
How to Manage
Vendors in the
Public Cloud
By Jeanne Capachin
Human error whether true
mistakes or those that have
been coaxed along with social
engineering are among the
biggest risks in any
processing environment.
20 AMERICAN BANKER | FINTECH 100 | OCTOBER 2012 AMERICANBANKER.COM
020_FINOct12 9 9/21/2012 3:24:57 PM
FinTech 100
|
Branch Automation
I
n the movie Monty
Python and the Holy Grail,
there is an often quoted
scene where the town
ofcials are picking up the
deceased from the plague and
loading them into a cart as the
ofcial screams out bring out
your dead. One particular old
man is being loaded into the
cart who is not exactly fully
deceased. The dialog goes like
this:
Cart-Driver: He says he is
not dead.
Townsman: (with old man
draped over shoulder): He is
quite ill.
Old Man: I am getting
better.
Townsman: No you are
not, you will be stone dead in
a moment.
It is easy to compare the
old man to todays branch net-
work. Everyone keeps saying
the branch is dead, that there
is no need for it anymore with
all the advances in technology.
From a technical standpoint,
there is some truth to those
beliefs. However, year after
year, the branch continues to
defy the critics and is in fact
not going to be stone dead
anytime soon.
Let us look into why the
branch is in fact not dead
yet. In IDC Financial Insights
Consumer Channel Prefer-
ence Survey, we asked our
respondents to identify how
they have interacted with their
fnancial institutions over the
last 30 days. The 2012 survey
had 2,663 respondents; the
2011 survey had 2,560.
The most often cited trans-
action type in 2012 was at the
branch with a teller. In fact,
across all age groups, the teller
transaction was still being
used at least once a month.
This despite the fact that
nationwide branch foot traf-
fc continues to dwindle and
new technology continues to
decrease our need to interact
with a human. In fact, all chan-
nels, with the exception of
online, saw an increase in indi-
viduals using the channel at
least once in the last 30 days.
Interestingly, the main reason
for the decline in online is the
rise of mobile, so perhaps at
some point we will hear the
battle cries that online bank-
ing will be stone dead just
like the branches! It is unlikely
either will be obsolete any
time soon.
This particular survey has
been conducted annually for
the last four years and the
results speak for themselves.
The trend continues to be
that each channel is seeing an
increase in customer interac-
tion, but not necessarily in
number of transactions con
ducted with each channel. For
example, the branch transac-
tion for many has contracted
from once a week to twice a
month or less. If this were the
case for all customers, then
the total number of branch
transactions would have
decreased by 50%, but the
same number of people will
be conducting transactions at
least once a month in a branch.
This still requires that the
banks and credit unions have
a physical presence, despite
all the access to technology
that helps us skip the teller
line. This actually makes
stafng the branch more of a
challenge, not knowing when
those transactions may occur
and ensuring a good experi-
ence for the customer once at
the branch.
If customers were not
interested in branch networks,
we would see a much higher
penetration of customers
willing to use 100 percent
online institutions. Time will
tell if the recently launched
Simple (formerly known as
BankSimple) will be successful
with their leave your bank
program, which is a product
basically built around a debit
card with online and mobile
banking.
If history is an indica-
tor, Simple will encounter
signifcant head winds with-
out a teller network. It is
not just a physical ATM that
customers want, they want a
teller or platform representa-
tive when they walk into a
branch. In fact, with remote
mobile deposit, even making
a deposit has become easier,
thus it may put even more of
an emphasis to want to bank
with an organization that has a
physical presence.
From a psychological
standpoint, let us look at
the way most people digest
information and educate
themselves on any particular
topic. There are three modes
of learning styles that defne
most customers. This research
has been around since the
1920s and still resonates today.
Your customers are visual,
auditory or kinesthetic.
The visual learners like
to see things, the auditory
learners like to listen, and
the kinesthetic learners like
to touch. While most people
have a dominant character-
istic, many people need a
combination of two or more
modes before making a fnal
decision.
This holds true in bank-
ing and fnancial decisions.
On the banking side, one
may start a process based on
something they have seen
this could be an electronic
message from the ATM, from
online banking, or driving by
a branch and seeing a great
rate on some product. They
may have started learning
from the visual side, but need
more input. They then hear a
friend talking about the great
rate that they got from the
same institution, and now it
resonates that this may be for
them.
They go online, look up
more information, then head
into the branch to apply for
that product. Why didnt they
go online and fnish the trans-
action? Perhaps it is because
to them it is more important
to be able to talk to someone,
particularly if it is a complex
transaction. This has not
changed, no matter how much
technology we throw at the
customer.
As we continue to see new
channels added in banking,
the reality is that we are just
increasing and spreading
out the transactions across
both physical and digital
worlds. The ATM took some
transactions away from the
teller, online took some from
the ATM, and mobile is taking
some from online. What is
not changing is that at the
core, the face-to-face meet-
ing cannot be ignored. If you
know how the scene ends in
Monty Pythons Holy Grail,
you know that ultimately the
old man ends up in the cart. I
dont see a similarly gloomy
ending for our branch net-
work at least not for a long
time.
Marc DeCastro is research
director, Consumer Banking at
IDC Financial Insights.
We Are Still
Banking In a
Physical World
By Marc DeCastro
Year after year, the branch continues to defy
the critics and is in fact not going to be
stone dead any time soon.
ConsuMer Banking CHanneL usage
2012 2011
Branch teller 85.1 78.5
Internet 84.8 85.3
Branch ATM 81.8 71.3
Debit card purchase 78.4 67.1
Debit card with cash back 54.9 41.8
At another ATM 48.3 39.5
Mobile 43.8 23.2
Call Center 38.3 24.9
AMERICANBANKER.COM AMERICAN BANKER | FINTECH 100 | OCTOBER 2012 21
021_FINOct12 10 9/21/2012 3:25:06 PM
FinTech 100
|
Retail Channels
I
n the last fve years, a
number of fnancial insti-
tutions, including Bank
of America and Regions
Bank, have extended
their card reward programs
with targeted ofers generated
by merchants. The essential
features of the model are as
follows:
Merchants defne a target
group of consumers, based on
such variables as age, income
range, address, and total
spend in a particular mer-
chant category.
An intermediary, such
as Afnity Solutions, Cartera
Commerce or Cardlytics,
sends a query to its partner
fnancial institutions, asking
for a list of customers that
belong to the target group.
Customers on the list who
have opted in to the targeted
ofer program are sent the
ofer via e-mail, banner ad
on the online banking site, or
in-line messages appearing
underneath related historical
transactions on the online
banking site.
What all of these programs
have in common is that they
enable the fnancial institution
to act as a marketing channel
for non-fnancial businesses.
Where the traditional bank
loyalty program was focused
on increasing usage and sales
of bank products, these new
programs are focused on non-
bank products. The revenue
comes in the form of a com-
mission tied to new sales or
customer relationships.
This is a substantial para-
digm shift, requiring fnancial
institutions to fundamentally
rethink their business model.
Instead of zealously guarding
their customer information,
they must be willing to share it,
for a price.
However, in a time where
the traditional business model
is under attack from all sides,
incumbents must be willing to
move beyond that model and
meet their attackers on their
own territory.
What is often mistakenly
referred to as disinterme-
diation is in fact just the
opposite, intermediation,
the insertion of a third party
between the service pro-
vider and the customer. In
most industries, this occurs
to improve efciency and
achieve economies of scale.
For example, in consumer
packaged goods, distribu-
tors reduce the number of
interconnections between
manufacturers and retailers,
keeping a share of the savings
for themselves in the form of
a markup.
The threat to banks is
not so much to their existing
business as to their growth
prospects; with non-banks
seizing most of the new oppor-
tunities to add value, banks
are trapped in a low-growth,
low-margin business, seen
primarily as utilities rather
than value creators. This has
led directly to the increasing
willingness on the part of
government to establish price
controls and restrictions on
fnancial institutions, while
non-banks, seen as value
creators, are allowed to grow
unchecked.
In order to escape from
this trap, banks must fnd
ways to exert greater infuence
over their customers eco-
nomic lives.
Reward programs ofer a
way to do this that builds on
the information assets that
banks already possess the
transaction history of the con-
sumers that use their payment
instruments.
Through their use of
services such as Google and
Facebook, consumers have
strongly signaled that they are
willing to sacrifce some per-
sonal privacy in exchange for
meaningful benefts.
Financial institutions can
get their customers consent
to participate in targeted mar-
keting by:
Explaining the far richer
rewards that can be earned
through the new system;
instead of pennies on the
dollar, consumers can get
20% or more. Linking the new
rewards to the well-under-
stood coupon can help aid
understanding.
Providing consumers
with full control over how
many ofers they receive, and
through which channels.
Giving consumers an easy
way to opt-out of the rewards
altogether.
Partnering with local
businesses to encourage
participation.
By acting as a channel
for targeted rewards, fnan-
cial institutions can make
themselves more relevant to
businesses and increase their
leverage in negotiations over
fees, sales of core fnancial
products, and participation
in emerging mobile payment
schemes.
If, on the other hand, fnan-
cial institutions stay in their
safe but confning traditional
markets, they will face dimin-
ishing opportunities.
Aaron McPherson is
practice director,
Payments and Security,
at IDC Financial Insights.
Why You Should Care
About Merchant-
Funded Rewards
By Aaron McPherson
What is often mistakenly
referred to as disintermediation
is in fact intermediation, the
insertion of a third party between
the service provider and the
customer, improving efciency.
22 AMERICAN BANKER | FINTECH 100 | OCTOBER 2012 AMERICANBANKER.COM
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FinTech 100
|
Innovation
T
he fnancial services
industry continues
to be challenged by
a number of factors
including regula-
tory/compliance changes and
constant cost pressure. In
addition, formerly reliable
sources of revenue are drying
up, especially in the U.S. and
many European nations.
Therefore, fnancial institu-
tions should be thinking more
strategically around how to
redefne their business model
in this new era including iden-
tifying new sources of revenue
and cost containment.
To accomplish these goals,
however, fnancial institutions
need to take a good, hard,
objective look at their current
business model and begin to
take some bold steps to move
in the direction of their cur-
rent and potential customers.
However, from our discus-
sions with fnancial services
professionals over the past
year, we have come to the
unfortunate conclusion that
most bankers have not yet
recognized that the world as it
was pre-2008 no longer exists.
It appears we have gone back
to business as usual: a small
upgrade here, a software
tweak there, and lets leave
the hard decisions for the next
guy to make.
Unfortunately, these are
exactly the types of decisions
that we believe bankers, as
well as their solutions provid-
ers, need to reject. Instead, we
see a need for dramatic shifts
in the banking business to
adjust to current and future
demands, especially as tech-
nologies such as mobile are
changing the landscape and
have put consumers in charge
of when and how they want
to deal with fnancial institu-
tions. Change for the industry
can longer be incremental and
slow moving as more nimble
competitors continue to ofer
new products and services.
While regulation does not
make for a level playing feld,
that is not to say that banks
need to sit on the sidelines
pining for the good old days.
Here are a few of the proof
points we see as to why banks
must adapt.
End User Transformation
The consumerization of IT
has the net result of mobile
smart devices and apps touch-
ing most if not all commerce
applications. In addition, end
users today have higher expec-
tations for the companies they
choose to do business with
including bundled products,
24/7 cross channel capabil-
ity, consistent interactions,
greater customization and
preference recognition.
For fnancial institutions,
these new expectations
necessitate a redefning of
numerous areas including
customer centricity, cus-
tomer service, and customer
preferences.
Ultimately, the challenge
for companies is how to
develop the products and
services necessary to deliver
value based on these new
expectations. Therefore,
companies need to think
strategically about key areas
of interaction impacted by
changing technology includ-
ing their solution strategy, OS
environment, and cost efec-
tive access management. In
addition, companies need to
determine the level of person-
alization and customization
they will deliver to their end
users.
Enterprise Transforma-
tion Once organizations
have decided how they will
address their external end
user demands for products
and services, a key next step is
to look inwardly at their abil-
ity to deliver. This includes a
review of crucial departments
such as operations, customer
support, marketing, product
management, and policy
administration to make sure
they are aligned to support
the new end user. A critical
component of this review is
the employees themselves,
who must have the skills and
tools to deliver quality and
service to their customers.
For example, in some depart-
ments there might be a need
to use smart mobile devices;
either their own or supplied
by the organization.
This bring your own device
(BYOD) debate is currently
taking place in most if not all
companies today and has a
profound impact on how IT
can and should support both
current and future employees.
IT Transformation The
increasing number of access
channels, mobile devices, and
end user/employee expecta-
tions presents particular
challenges for IT.
For fnancial institutions to
be successful today, IT can no
longer dictate how end users
and the enterprise interact but
instead must understand the
changing dynamics brought
about by these technologies
and adjust accordingly. This
takes true IT and business
alignment which starts with
understanding the chang-
ing business issues in the
marketplace.
Once IT has this knowledge
and understands the value of
supporting this model within
the enterprise, it can review
the organizations policies,
tools, and technology deci-
sions to help diferentiate their
organization.
Bufeting this need for
change are back-end sys-
tems that continue to show
their age as data process-
ing throughput increases
alongside the number of new
requirements that need to be
refected in legacy technology
environments new products,
new channels, new risk man-
agement reporting mandates,
and so on. Incidences of oper-
ational outages and failures
have been well publicized in
the past and will become even
more frequent as legacy core
systems are taken to the point
of breaking.
Against this backdrop of
legacy infrastructure, chang-
ing technology, and real
business need, we believe
solution providers are in an
ideal position to help fnancial
institutions focus on the future
and build a more coopera-
tive environment that will be
more efcient and allow banks
to create truly diferentiated
services. For these providers,
partnering with IT will be criti-
cal to success. Some key areas
to start include:
Change the IT operating
model to drive cuts but also
work across channels for more
efective decision making
around IT choices.
Implement technology
solutions that provide a single
view of the customer through
secure integrated channels
and a consistent experience.
Provide key business
information such as tracking
customer sentiment, usage,
and proftability through
analytics.
Realistically, however, we
believe most fnancial institu-
tions in the near term will
continue to implement rela-
tively minor changes within
existing business silos to
manage short term proftabil-
ity expectations.
The unfortunate result
will be a continued erosion
of proftability under existing
business models. For those
willing to move more aggres-
sively towards the future, we
believe the time to do so is
now.
David Potterton is vice presi-
dent of research for the Global
Banking, Insurance, Capital
Markets and Risk Management
practices of IDC Financial
Insights.
How to
Change Your
Business Model
By David Potterton
From discussions with fnancial services
professionals over the year, we have come to an
unfortunate conclusion: most bankers do no yet
recognize that the pre-2008 world no longer exists.
AMERICANBANKER.COM AMERICAN BANKER | FINTECH 100 | OCTOBER 2012 23
023_FINOct12 12 9/21/2012 3:25:40 PM
FinTech 100
|
Data Management
T
he worlds informa-
tion ecosystem runs
increasingly on what
we at IDC describe
as third platform
technologies. The conver-
gence of intelligent devices
(consumer products such as
smartphones and tablets, as
well as smart buildings, smart
infrastructure, smart cities,
etc.), social networking, per-
vasive broadband networking,
and analytics will undoubtedly
redefne the relationships
between bankers and their
customers and partners.
Banks will use this third
platform to create prod-
ucts for small to enterprise
business users, consumers,
students and travelers that will
provide content and experi-
ences more tightly linked
to their individual pursuits,
needs and wants.
These applications and
services will be built on inno-
vative mash-ups of the third
platforms four pillars and will
create solutions and intercon-
nect trillions of things that
directly or indirectly afect
our lives. Most banking execu-
tives agree that they must
be successful at embracing
these new technologies and
the capabilities they enable,
or else lose traction in the
continuous march toward
competitive advantage and
improved proftability.
Business architecture,
including everything from
brand positioning to products
and marketing strategies,
to customer engagement
and operating models, to
performance of governance
functions will be challenged
by these technological
advances as many frms look
for sustained proftability and
growth. Success will be more
difcult to come by given cur-
rent economics, as brands
continue to be negatively
impacted by performance,
media and shareholder pres-
sure, and increased regulatory
oversight.
The third platform
is already playing out in
fnancial services, as seen
in the continued build-out
of cloud infrastructure and
mobile banking platforms
worldwide. But of the four
major third platform trends,
the implications of big data
and analytics, and the infra-
structure enabling big data
applications seem to be
least understood, based on
recent interviews with bank
IT executives earlier this year.
However, more recent data
suggests the fog is clearing.
At the end of 2011, IDC
Financial Insights forecasted
that over 40% of all Tier 1
frms would gear up to execute
big data / analytics business
and technology strategies in
2012.
Today, this forecast
appears conservative, as
almost 48% of frms we
recently surveyed have imple-
mented, are implementing, or
are evaluating third platform
fnancial applications built
with big data technologies
such as Hadoop and MapRe-
duce, and over 21% plan to
invest more than $1 million
on their big data strategies in
2012, with a small perentage of
frms, less than 4%, planning
to invest over $100 million.
Many discussions around
big data trends and applica-
tions in banking and other
regulated industries quickly
turn to issues of risk and gov-
ernance. Can big data become
a big liability? The answer is
undoubtedly yes. Poor big
data governance will most
likely lead to management
and system failures, breaches,
and missteps, which in turn
will generate standards, and
potentially regulatory guid-
ance. So now is the time for
the industry to engage in
discussions on a number of
big data governance issues,
including these top fve:
1. Evolution of governance
programs How data gov-
ernance and organizations
models will evolve with the
advent of big data.
2. Ownership and privacy
protection What will be
the impact on personal and
corporate privacy and owner-
ship protection policies when
external data is on-boarded
and intermingled with enter-
prise data.
3. Scalability of security
Can existing information pro-
tection and security systems
and technologies properly
scale to maintain a sustainable
risk profle when assessing the
confdentiality, integrity, and
availability requirements of
big data applications.
4. Lifecycle management
Are there new information
lifecycle management, data
inventory and classifca-
tion requirements? How
should decades-old records
management standards
of accountability, custody,
stewardship, and so forth be
applied to the big data trend?
5. Model governance
Analytics and modeling excel-
lence are core to success in
our industry. As big data, mod-
eling and analytic excellence
rise in importance as a difer-
entiating business capability
and compliance requirement,
what steps must be taken for
fnancial frms to re-orient
GRC programs and explicitly
focus on frameworks, goals,
and best practices for model
governance?
Over at least the last
decade, data management
has been in a reactive mode,
responding to gaps in the
environment exposed by
inefciencies, breaches and
failures, which have led
many times to new legal or
regulatory imperatives. These
reactions have fueled both the
retroft of existing processes
for governing data (e.g., creat-
ing Sharepoint storage pools
for unstructured content and
fle based data classifcations
schemes) and the acquisition
of new point solutions to ease
the pain of satisfying new
requirements, such as elec-
tronic discovery. Now enter
the era of big data.
The big data trend pro-
vides yet another chance to
address what has been missing
for many proactive, strate-
gic thinking about the data
governance challenge. Data
management is no longer only
about messaging, databases,
and storage, feeds and speeds.
The big data trend should
force management once again
to see the degree to which
data is permeating the orga-
nization and becoming more
than ever the currency of third
platform fnancial services.
The business challenge
now is to govern this trend
without restricting innovation,
by ensuring that all big data
is known, declared, classifed
and managed to maximize
value and minimize risk.
Sustainable big data gover-
nance has to become part of
the DNA of the organization
and, like quality controls,
embedded in every business
process.
Michael Versace is a research
director at IDC
Financial Insights.
Can Big Data Become
A Big Liability?
By Michael Versace
Almost 48% of frms recently
surveyed have implemented,
are implementing, or are
evaluating fnancial applications
built with big data technologies
such as Hadoop and MapReduce.
24 AMERICAN BANKER | FINTECH 100 | OCTOBER 2012 AMERICANBANKER.COM
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