Metavante Corp. is pursuing the core processing business of the nation's biggest banking companies through a marketing agreement that could eventually give it a 4% stake in the Swiss software developer Temenos Group in Geneva.
Under the agreement, which Metavante was expected to announce today, the technology subsidiary of the Milwaukee banking company Marshall & Ilsley Corp., plans to customize Temenos' Corebanking software to meet U.S. regulations and to offer specialized banking products.
"Over the next three years we will build out the TCB product and get it ready for the U.S. marketplace," Paul T. Danola, the group president of Metavante Enterprise Solutions, said in an interview Tuesday.
He acknowledged that the top-tier banks Metavante is targeting which he described as the largest 20 or 25 are not likely to undertake a wholesale replacement of their core systems, so the vendor is planning to offer Temenos applications on a "component basis."
Metavante plans to introduce the first component in 2008, after taking the next five or six months to decide which to pursue. "We believe this puts us in a position in the U.S. marketplace to be a leader for the next 30 years," Mr. Danola said.
Metavante already operates the nation's largest hosted platform for core deposit accounting, which is aimed mainly at small banks. It handles more than 20 million retail accounts. It also licenses the Bankway core system from Kirchman Corp. in Orlando, Fla., which it acquired in May 2004.
Alex Groenendyk, the president of Temenos' Americas unit, said his software company plans to use Metavante's outsourcing expertise to establish operations in developing markets such as Brazil, Russia, Indonesia, and China. "These countries really are ripe for data-center-type solutions," he said. "Temenos has no core competency in running data centers."
Temenos told investors in February that it expected a deal in the United States, with an unnamed customer, to generate minimum contractual revenues of $102 million by 2012. Mr. Groenendyk confirmed Tuesday that this was a reference to the Metavante agreement. He said that Metavante could get warrants to buy up to 2.5 million Temenos shares if the companies meet their goal of $195 million in U.S. sales by 2012. Temenos has 57.8 million shares outstanding.
