The merger of two companies that provide workforce optimization software to the banking industry — Verint and GMT — will leave banks with one provider that owns 76% market share among the top 25 U.S. retail banks and that serves nine out of the top 10. The combined company will also count five of the top five banks in Australia, New Zealand and Canada among its customers. It will be called Verint [] and headquartered in Melville, N.Y. The deal, which was announced Monday, is worth $42 million, with $24.3 million to be paid at closing.

Workforce optimization software, formerly known as workforce management software, is used by banks to manage branch, call center and back-office employees. The software typically includes tools to automate activities such as payroll and benefits, HR administration, time and attendance and forecasting and scheduling. This software category was on the bank technology community's radar last week, when Fiserv and Kronos announced plans to integrate their core banking and workforce management software products.

Executives at Verint and GMT are seeing a shift toward smaller banks adopting their software. "While historically it's been the bigger banks that have been forced to adopt this technology, we're now seeing a lot of growth among small and mid-size community banks and credit unions as well," says Simon Angove, CEO of GMT.

Three things drive retail banks to purchase workforce optimization software, Angove says. One is a need to reduce operating costs, the largest of which is labor, which is primarily branch-based, he says. "Generally speaking, one-third of a bank's payroll is tellers alone," Angove relates. "How do you make sure they're efficient and that people aren't sitting around idle, waiting for work?"

The second driver is a need for improved customer service, including shorter wait times. "Banks want to make sure they have just the right number of staff in the branch so they don't keep customers waiting and provide a consistent experience," Angove says.

The third motivator for buying workforce software is to drive sales in the branch. "The branch is still an important channel, even in a multi-channel world," Angove says. "It's still the place where most sales transactions are consummated, even if customers did their explorations through other channels, so it's critical they make sure they've got the right number of sellers in the branch to address the market opportunity and that those sellers are working on the right things. We help them do that by making sure they've got their technology and their people deployed in the right place at the right time."

The two companies have been competing for about fifteen years and had been circling each other for many years, Angove relates. "Earlier this year we decided we wanted to seek a strategic partner, and our conversation with Verint led from one thing to another," he says. "We managed to unite forces."

GMT brings a strong partner network and international client list to the deal, says Jackie Hudson, director, retail banking practice at Verint. "They've done some great things with their product, some of the tools they've developed in terms of sales effectiveness and technology value optimization will be key to the combined organization," she says.