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The payments technology firm Fundtech can still expand but spend more on R&D and invest for the long term, an executive explains.
September 19 -
The board of the payments technology vendor Fundtech plans to halt its intended merger with S1 after receiving a separate offer from the private equity firm GTCR.
September 15
The deal to create the new Fundtech Inc. still has to be finalized, but its architects are eager to start fulfilling their ambition — the establishment of a global payments hub for businesses.
"There is a great opportunity in the market to expand the payments hub into the corporation, because corporations need to consolidate their global payments into a single point of execution," says Reuven Ben-Menachem, chief executive of Fundtech, which
The combined companies will blend their expertise in front-end payments with back-end capabilities such as electronic invoice-transaction processing and cash and treasury management systems, Ben-Menachem and Dave Kvederis, the chief executive of BankServ, said in an interview. It aims to sell its services to 1,500 banks, 10,000 midsize and large commercial clients and more than 100,000 small businesses in 70 countries.
That includes developing products and services in the evolving trade finance market, which helps banks and companies assess their liquidity, Ben-Menachem says.
"This kind of thing can't be done on a local basis — it has to be done on a global basis," he says.
In mid-September, Fundtech
Merging with S1 would have created a similar breadth and depth of products, Ben-Menachem says, but ACI Worldwide Inc.'s
Kvedris says he and Ben-Menachem have known each other for years, and had frequently talked about merging the two companies.
About two thirds of BankServ's business consists of small business payments products offered through banks, and "one third is in industrial-strength money transfer applications like Swift and Fedwire," Kvedris says.
Both companies are service bureaus for Swift, which enables secure transmissions of sensitive financial transactions. Fedwire enables electronic payment transfers between Federal Reserve banks.
"Security and risk with transactions is very different than it was 20 years go," Kvederis says, echoing Ben-Menachem's comments. "It is a global, not a local, issue."
ACI's bid for S1 is largely seen as a competitive bid that would remove products and services from the market, which in turn would create concerns for S1's bank and corporate customers, industry experts say. Ben-Menachem and Kvederis say they have no plans to remove products from the market.
"The commitment of both companies is to our customer base and making sure our customers are happy and there is no disruption," Kvederis says.
