Temenos is the World Cup of core banking-really popular overseas and working hard to gain a foothold in the States. But when it comes to seizing a big share in the U.S., it's getting late in the game.

TowerGroup senior research director Robert Hunt recently reported that pressures on banks to reduce costs, battle efficient foreign bank competitors, meet a demand for new deposit products and mitigate the risk of multiple day service outages inherent in the batch update architecture are creating pressure on banks to implement modern, real-time capable core processing systems. Citigroup's plan to upgrade to a core processing application from FIS, and market chatter that Bank of America's core is "in play," means the long-awaited wave of core replacements in the U.S. may be near. This puts added pressure on Temenos, and its T24 Model Bank solution, to position itself quickly or lose out.

Temenos-which provides software systems to 700 customers in 120 countries and can claim that institutions running its software have a 62 percent higher return on capital, a 54 percent higher return on assets and a cost/income ratio that is 7.2 points lower than non-Temenos customers-has long wanted to make inroads in the U.S. Its 2007 agreement with Metavante to co-develop an advanced core platform was scuttled after the FIS deal.

Bob Meara, a senior analyst at Celent, says that Metavante might have been "the last best hope" for Temenos in the U.S. market. But Greg Green, svp of the Americas region for Temenos, says the target market in the U.S. is private banking and wealth management; international institutions; credit unions and community banks with assets under $1 billion; and regional banks with assets up to $50 billion.

Green says two strategic partnerships announced in 2009 "will play a major role in the company's North American strategy." One is with Cognizant Technology Solutions, a provider of information technology, consulting and business process outsourcing services. The second is with Microsoft, an agreement intended to deliver core banking solutions with T24 and Microsoft SQL Server. "Our recent partnership with Microsoft provides us both a platform and a partner with which to focus on the credit union and community banking segments," Green says, adding Temenos is also focused on finding an outsourcing or data center partnership or acquisition.

Another hurdle may be GRC. Joe Pagano, managing director of banking and capital markets in Microsoft's worldwide financial services industry group, says Microsoft is well versed in GRC through its work around the world, particularly with Basel II requirements. But Christine Barry, a research director at Aite, says U.S. banks want U.S. regulatory expertise and Microsoft's familiarity with Basel II may not be enough to satisfy them. "They need another partner, someone stronger in banking than Microsoft," she says.

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