Like a lot of executives at tech firms based outside the U.S., Shin Kusunoki is seeking a path that leads to IT back offices in the States, and the big client wins that can result. But that path isn't easy.
"In order to get into the U.S. market, we feel we need a partnership with a local company," says Shin Kusunoki, a senior vice president and division manager for financial and asset management solutions in NRI's financial technology solutions division.
The Tokyo-based NRI does most of its financial services business in Japan, but is expanding into other parts of Asia and India, and, as Kusunoki mentioned, is seeking possible partners for U.S. expansion.
NRI is not nearly alone, as almost all of the major technology firms outside the U.S. look to expand or move inside the U.S. in a larger way. From the big outsourcers like Tata Consulting, which has inked a North American partnership to deliver broader cloud capabilities, to core banking providers like Temenos, which has long sought to bring its T24 solution to American banks, most of these firms have established a firm beachhead in the U.S. And they're now looking for more as American banks scramble to follow new rules, adopt new mobile channels and migrate to new digital payment models.
Examples abound. Ingenico's purchase of the U.S. portion of Hypercom suggests the Paris-based payments firm has its eyes squarely on VeriFone's lunch. When the Paderborn, Germany-based Wincor Nixdorf looks at the U.S., it sees a chance to make big waves in branch automation as American banks look to streamline branches through strategies that remove paper and bring about other efficiencies. And like all American bank IT shops, the London-based Misys - which already provides a suite of treasury and capital markets systems in the U.S. and other markets - hopes to cash in on the Dodd-Frank frenzy, introducing a new risk and regulatory product line designed to tackle the tough, still developing, U.S. regulatory overhaul. Misys's acquisition by Vista Equity Partners, which includes a merger with risk management provider Turaz, should provide more ammo for risk and compliance efforts in the U.S.
Of course, the U.S. isn't the only market targeted by international IT firms. Opportunities in the EMEA region abound, and large U.S. bank tech firms such as Fiserv and FIS also have vigorous international expansion plans of their own.
In the following profiles, we take a closer look at Wincor Nixdorf, Misys, Evry ASA, Ingenico and Temenos, and the stories of their plans for local and global expansion. -By John Adams
In a June report, Forrester Research ranked Temenos Group AG (TEMN) as one of the top global banking platform vendors with an excess of 35 deals done in more than six global regions in 2011. Only five of these were in North America, the majority closing in Europe and Asia/Pacific.
The Geneva-based firm competes with the likes of Oracle, Infosys, and SAP to sell banks a platform that includes core banking, mobile banking, branch solutions, and risk management. The heart of this platform is T24, a service-oriented architecture (SOA). "T24 comes with a huge set of parameters," says Jost Hoppermann, vice president, banking applications and architecture at Forrester Research in Cambridge, Ma. "By changing the parameters, customers can change the user interface, workflow, protocol for dealing with currencies, and organizational structures, all without changing the source code."
There are currently about 560 installations of T-24. "These are mainly universal and retail banks," says John Schlesinger, chief architect at Temenos.
Temenos is rolling out Enterprise Frameworks Architecture (TEFA), which Schlesinger says will be complete in about three years. "Right now a typical T24 installation has about 50 user interfaces," Schlesinger says, "but at JP Morgan Chase it is more like 4,800 interfaces. The TEFA data framework will make T24 much more scalable in environments like this."
TEFA is also designed to facilitate integration with third-party products such as the PWM (private wealth management software) Temenos acquired in 2010 with the acquisition of Odyssey Group SA, a Luxembourg firm. "Odyssey is still not fully in line with T24," Hoppermann says, "and, while TEFA looks like a nice architecture, I haven't seen enough of the details yet to evaluate whether or not it can do this kind of integration."
Aimed more at smaller customers is the Temenos Model Bank, an accelerator designed to speed up implementations. "It (Model Bank) is essentially a 'bank out of the box,'" says Hoppermann. "New and existing customers could implement quickly and then modify. Most banking platform vendors are trying to build accelerators like this." -By Mark Leon
Already one of the largest makers of point-of-sale terminal hardware in Europe, Ingenico is moving aggressively into services, mobile payment systems, and the U.S. market.
The Paris-based vendor's acquisition in 2009 of EasyCash, a German payment services company, seems to have paid off. "Ingenico saw a 28% growth in its services revenue last year," says Rachel Hunt, head, EMEA (Europe Middle East Asia), IDC Financial Insight. "This partly offset a decline in hardware sales."
Ingenico and U.S. rival VeriFone are almost neck and neck in reported 2011 revenues with Ingenico coming in just under, and VeriFone slightly over $1.3 billion. Hunt estimates that fifty percent of Ingenico's business is in EMEA, but the company's acquisition last year of the U. S. portion of Hypercom signals a strong intent to compete more vigorously on VeriFone's home turf. "Going forward, Ingenico may have an advantage in the U.S. migration to EMV cards, due to their depth of EMV experience in Europe," says Hunt.
In February, Ingenico acquired a controlling interest in ROAM Data, a rival of Square that makes systems to turn tablets and mobile phones into POS devices. "We have seen a rapid shift in the last eighteen months to mobility," says Christopher Coonen, executive vice president, global sales, marketing and strategy for Ingenico.
Ingenico also makes its own mobile payment device dubbed iSMP, a sleeve that converts an iPhone or iPod Touch into a POS terminal that accepts EMV, magstripe, and non-contact payment cards.
The bulk of the business for both Ingenico and VeriFone is still in traditional POS systems for banks, retailers, and merchants, according to Hunt, who estimates that mobile accounts for less than two percent of cashless transactions. But, she adds, the trends are clearly in the direction of mobile payment. "NFC (Near Field Communications), particularly if Apple, as expected, releases an NFC enabled phone with mobile wallet attached could be a game changer." -By Mark Leon
In 2010, two Norwegian IT financial services firms, EDB Business Partner Holding AS and Ergo Group AS, merged to form EDB ErgoGroup, now renamed Evry ASA and based in Oslo. The company remains focused on the Nordic market but dreams of a more global presence.
"We have a lot of customers in the U.K.," says an Evry spokesperson. "Our Indian subsidiary, SPAM (Sweden Poland America Norway), has a healthy business in American bank and card services."
Evry's preferred development platform is Oracle. Like most service companies, Evry also competes with Oracle Financial Services for customization and integration. It has similar relationships with IBM and SAP.
The intellectual property that is Evry's core business was developed for the Norwegian market where banks historically have invested with a 15-20 year lifecycle expectation for financial software solutions. Part of the company's strategy to go more global is to reduce time to market for new functionality so customers can be more business focused.
While Evry is not a platform vendor, the lines between the services it provides and the software that support them is often blurred.
Choosing a services company such as Evry is very different from going with a platform vendor such as Temenos.
"Both approaches have advantages," says Jost Hoppermann, vice president, banking applications and architecture at Forrester Research in Cambridge, Mass. "A platform vendor will likely provide a more out-of-the-box solution. A services firm like Evry will likely do a custom-built integration. Which option a bank chooses depends on requirements and cost, and corporate culture; that is, the willingness to change business practices at a detailed level."
Evry is feeling the squeeze from SEPA (Single European Payments Area), which requires EU countries to make international payments on the same cost basis as domestic. Another driver of innovation and cost containment is increased competition particularly from Asia as Indian giant Tata shows itself more in European markets. -By Mark Leon
London-based Misys claims 1,800 customers in 120 countries. Its customer list includes 47 of the world's 50 largest banks and 13 of the top 20 asset managers, according to the company.
Vista Equity Partners announced June 1st that it had acquired Misys and merged it with Turaz, which sells Kondor+ risk management software. Other key software packages provided by Misys include Summit FT, a treasury and capital markets system that specializes in derivatives and structured products for global investment banks, and Loan IQ, a commercial lending system used by 15 of the top 25 syndicated loan book runners. The Misys business serves four main verticals in the U.S., with dedicated experts within each segment: capital markets, commercial lending, banking and the buy side, says Rick Salk, Misys's North America sales director.
Adding Turaz strengthened Misys's risk management and front-office capabilities, he says. Misys has had "significant client expansion" in the U.S. with its Summit and Loan IQ software packages, according to Salk. In 2011, the company had 28 "new name" sales across its various businesses.
In the U.S., more banking clients are looking to consolidate their systems to reduce operational costs and increase return on investment, and more are investing in fee generation businesses, he said.
"Misys is uniquely positioned in the market (because) we can provide multiple solutions to our clients, as well as integrated best-of-breed cross-asset solutions," Salk says.
For its U.S. customers, Misys has created new risk and regulatory solutions to meet the requirements of the Dodd-Frank Act. The company has also introduced a client portal that works with its major products and allows Misys Loan IQ to support mid-market lending, complementing its syndicated lending capabilities. -By Keith Button
Paderborn, Germany-based Wincor Nixdorf Inc., which provides hardware and software solutions for banking and retail industries with a focus on improving customer service and reducing costs for branches, is in the same boat as a number of large firms as it navigates a tough international economic climate.
Wincor Nixdorf is projecting earnings before interest, taxes and amortization of about $127 million for the fiscal year ending Sept. 30, 2012, following EBITA of about $207 million for the previous fiscal year. This projected drop in operating profit includes a $51 million charge for an extensive restructuring that will cut more than 500 positions from the company's 9,200-employee workforce, mostly in Western Europe. Half of the cuts are to be completed in the current fiscal year, and half in the 2012-2013 fiscal year.
According to the company, the goal of the restructuring is to substantially strengthen its global competitiveness and target business activities faster in emerging markets. Oliver Weber, CEO of Wincor Nixdorf U.S., says the restructuring will benefit the company's U.S. business, because it aims to allocate research and development investments into markets with the biggest growth opportunities.
"We have invested in the build-out of our sales, service and operations organization in the last (several) years and we will continue to do so," Weber said. "Since the U.S. market represents a very attractive growth opportunity for us, we expect positive results from these investments."
Besides new deposit automation technology, the next wave of modernization will include consolidating deployed technologies to completely remove paper from the branch, Weber says. This will improve sales and service at the branch level while driving down costs. -By Keith Button