Two large core banking software providers, Misys and Temenos, agreed to merge this week in a deal that should enable the former rivals to fill in certain gaps for one another as they integrate their products. Geneva-based Temenos offers core software for banking and wealth management, while Misys in London provides core banking, treasury, capital markets and lending software. In a stock swap, Misys shareholders will receive 53.9% of the combined group and Temenos stockholders will get the remaining 46.1%.
Mike Lawrie, who as CEO of Misys had been leading the company in a turnaround plan since 2007, has departed to become president and CEO of Falls Church, Va. systems integrator CSC. (Guy Dubois, currently CEO of Temenos, will act as CEO of the combined group and Stephen Wilson, currently CFO of Misys, will become CFO of the combined company.)
Misys was #31 on the latest
As part of the turnaround strategy led by Lawrie, Misys had recently developed a next-generation core platform called BankFusion. "It's very componentized and integrates with other products easily; that may make the integration with [Temenos'] T24 integration easier and may enable it to happen quickly," Barry says. She notes however, that there's always potential for customers to face challenges in the wake of a vendor merger.
Temenos was ranked #25 in the 2011 FinTech 100; it generates all its revenue from financial services. The company says it has 1,500 customers in 125 countries. "Temenos has a strong, modern offering and they've seen a lot of success," Barry says. Although the company has had few U.S. wins to date, in recent years Temenos has won high-profile accounts such as Metro Bank in the U.K., a group of Mexican banks and
"These two companies joining forces are a great combination," Barry says. "Temenos is strong on the wealth management side, they've been ramping up their corporate offerings, and they're strong in core banking," Barry says. "Misys is strong on the lending side and in capital markets and Treasury. The combined company will have a broad product portfolio, which we're finding to be very attractive in the marketplace today, as banks want to limit the number of vendors they work with."
In the U.S., Misys has a stronger brand through its work in the capital markets, and this visibility may enable Temenos to obtain a bigger footprint in this country, Barry says. "I do see greater opportunity for the combined company in North America."
Both companies offer their core banking products in a cloud-like, remote delivery from Microsoft Azure as well as in traditional software deployments. "It's important for vendors to offer both," Barry says. "The market is not at a place where there's only one direction banks are going in. Banks still have very different preferences, so there's demand for both types of deployments."
A Temenos spokesperson made the case that the combined company would be in a strong market position to gain more bank clients. "Banks and financial services providers are under significant pressure to improve efficiency and raise asset yield to grow return on equity," the spokesperson said in a statement. "This means technology investment and core renewal is becoming a much more important strategic priority. We believe that the importance of these investments mean that customers want to engage with a global market leader. The combined group would be able to leverage the expertise and intellectual property of both companies."
