Last year was a recessionary market for global banking platform sales, but spirited international competition among vendors means U.S. banks will have more options if and when they begin to consider new projects.
While most of the action has been in Asia/Pacific and Europe in the past several years, Forrester Research Vice President Jost Hoppermann says, "in 2008, North America joined the club."
Any acceleration in the U.S. market can be attributed to a new willingness to accept off-the-shelf solutions. "Even the large, tier one banks are showing interest on off-the-shelf software," Hoppermann says.
Forrester asked 17 banking vendors to submit information on their 2008 deals and projects; in total the vendors supplied details on a total of 870 new deals, extended business deals and renewed licenses. Of those, about 290 were recognized as new named deals.
In the data cache, Forrester identified four primary trends: The number of deals shrank about 10 percent, when counting only those vendors that submitted in 2007 and 2008. Second, success was "highly distributed" with new category entrant India-based Nucleus Software tallying 16 deals, and category leaders Oracle and Temenos posting 62 and 42 respectively. Completely shut out of the action were Accenture, Computer Sciences Corporation and NTBSL, with no counted deals.
Third, the disclosed deals are becoming more complex, often involving a headquarters location and systems in multiple countries outside headquarters. Finally, the number of vendors who declared their deal data not "publishable" is increasing, making it impossible to share names and case studies of deals in progress.
In years past U.S. banks have refrained from hiring non-U.S. vendors like Temenos, Infosys and SAP for core replacement projects, primarily out of concerns that the products weren't fully ready for the U.S. market. But Hopperman writes that fear should be dissipating.
"With more and more banking platform vendors serving clients in four, six, or even all regions of the world, country specific requirements will continue to lose importance...," he writes.
India-based Infosys was a finalist this year in several deals to convert the cores at formerly-U.S. owned institutions that were bought by foreign banks. Sanat Rao, vp and global head of sales for Finacle, Infosys' platform line, says because U.S. vendors' technology is seen as lagging behind global competition from a real-time, integrated technology perspective, when those competitive pilots winnowed the long list of vendors down to two or three finalists, there were no U.S. companies in the running.
"Any bank that commences evaluations here will find it hard to ignore U.S. based vendors," Rao says. "But are they in the final two? No."
Given the realities of global competition, domestic competition from IBM, Microsoft and others, Fidelity's anticipated acquisition of Metavante, and the possibility that other U.S. players may be appealing acquisition targets for global vendors looking to penetrate the U.S. market, the platform market will likely look dramatically different next year.
