SunGard is following the money in banking these days, with its company-leading Financial Systems division responding to regulatory demands, and seeing growth in its consulting business, emerging markets, and technology associate with B2B payments and wholesale banking transaction services.
SunGard brought together its consulting and technology services operations in April 2010 to form a global services organization, focused primarily on financial services and energy. "With over 5,000 employees worldwide, consulting and professional services is one of our strongest growing lines, and so is the revenue it generates," said Jim Ashton, chief executive of the Financial Systems division.
SunGard's banks business operates in 80 countries and is seeing its strongest growth in the emerging markets of Asia-Pacific, with the Middle East in second place, said David Hamilton, president of the Financial Systems banks' business. The company is also seeing growth in Central and Eastern Europe. "Large European banks are once again expanding across Europe now that the financial crisis has abated, and this is prompting local banks to prepare for the competition," Hamilton said.
SunGard is entering the B2B electronic payments arena, particularly through its sale of the Ambit Messaging Hub to SWIFT in July 2010, said Aaron McPherson, practice director of financial services at IDC Financial Insights. "SWIFT is keen to accelerate the adoption of electronic invoicing and remittances between corporations," he said. "For SunGard to address B2B electronic payments is a significant new departure. Up to now, it has only been marginally involved in payments."
Aite Group senior analyst Nancy Atkinson said that transaction services within banks' wholesale operations will be an increasingly important revenue stream, rather than lending or brokerage. "This will be a big opportunity for SunGard," she said.
SunGard sees its bundling of technologies as a competitive strength. "We're able to bundle packaged solutions and consulting services, globally, across front-, middle- and back-office environments in various financial services sectors, such as wealth management, trading and banking," Ashton said.
All of this is taking place while the vast and hasty changes in the regulatory environment create a sense of urgency on the part of bankers and vendors. "There's a tremendous amount of anxiety about what regulators will bring to the market in the next 12 months," said Hamilton. "With the increased requirement for capital adequacy and the greater difficulty of obtaining ready liquidity and credit, banks are paying a lot more attention to risk-adjusted return on every segment of their capital."
In September 2010, SunGard launched the Ambit Credit Risk Management suite to help banks make lending decisions based on a proper assessment of the risk across the entire institution. "Ambit [Credit Risk Management] shows banks an integrated view of their current liquidity and credit risks across the enterprise," Atkinson said. "It also provides forecasts of their future cash positions and credit exposures."
Hamilton said, "We will be getting much more involved in the commercial credit field."
In 2009, SunGard's Financial Systems business posted revenues of $3.07 billion, 60% of the firm's total. In the second quarter of 2010, Financial Systems' revenues rose 7% to $703 million from $659 million in the previous quarter.