October 2012 ANNUAL SPECIAL REPORT

TOP 10 IN FINTECH CORE Find out who made the upper echelon of this year’s ranking of OVERHAULS fi nancial technolo�y providers. First Community and Team Capital share the stories behind their recent core conversions. Plus: Citi’s #1 FIS multi-year project rolls on. Page 24

#2 Tata

#3 Fiserv

#4 Sungard

#5 NCR

ALSO INSIDE How to Manage Cloud Vendors The Big Risks of Big Data THE The Benefi ts of GLOBALIZATION Merchant-Funded Rewards OF FINTECH Forty percent of this year’s top 100 fi nancial A SUPPLEMENT TO technolo�y companies are overseas.

americanbanker.com/fi ntech100

C1_FINOct12 1 9/24/2012 11:27:00 AM Contents

OCTOBER 2012

2 The Year in Review On the whole, 2011 was a good year for fi nancial technolo�y companies. 3 The FinTech 100 Rankings The 100 most successful fi nancial technolo�y companies, ranked by revenue. 5 Methodolo�y How the FinTech 100 rankings are calculated. 6 The Enterprise 25 Rankings The top tech companies that serve fi nancial services and everyone else. 14 The Impetus Behind Core Overhauls Why so many are doing major IT refreshes this year. 18 FinTech Around the World Overseas companies are making headway in the U.S. market. 20 Managing the Cloud Cloud vendor relationships come with unique challenges and risks. 21 The Branch is Not Dead Yet Branches are still relevant and will most likely never completely go away. 22 The Promise of Merchant-Funded Rewards The many reasons banks should consider merchant-funded programs. Frank Martire, 23 Old Models Must Go Chairman and CEO, FIS Banks’ business and IT operating models are in dire need of upgrade. 8 FinTech Titans 24 The Risks of Big Data A look at what’s on the drawing boards and in the leadership philosophies of Big data management worries include privacy and scalability issues. those at the helm of the top 10 FinTech companies.

Neil Weinberg Karl Elken Karen Massey Editor in Chief, American Banker EVP & Managing Director, Banking and Capital Markets Groups Senior Analyst, Consumer Banking Penny Crosman Liesbeth Severiens David Potterton Editor in Chief, Bank Technolo�y News Publisher, Bank Technolo�y News Vice President of Research for the Global Banking, Insurance, Capital Markets and Risk Management Practices John Adams David Cleworth Executive Editor, Bank Technolo�y News Publisher, American Banker Magazine Jeanne Capachin Research Vice President Hope Fitch Customer Service 800�221�1809 Group Art Director [email protected] Marc DeCastro Research Director, Consumer Banking Pablo Turcios Reprints: Joylyn Yaw 800�368�3989 Associate Art Director Aaron McPherson Public relations support provided by the William Mills Agency Practice Director, Payments and Security Richard Melville Michael Versace Group Editorial Director, Banking and Capital Markets Research Director, Global Risk

www.idc-�i.com, info@idc-�i.com Published as a supplement to American Banker Main Number 508�620�5533 a SourceMedia publication One State Street Plaza, New York, NY 10004 212�803�8200

americanbanker.com american banker | fintech 100 |october 2012 

001_FINOct12 1 9/21/2012 5:13:20 PM FinTech 100 | Overview

and IT services. Two acquisitions occurred in 2011 by payment providers: electronic payment processor Verifone acquired US-based Hypercom upon Hypercom’s divestiture of its U.S. payment systems business per regula- tory approval; and payments firm ACI Worldwide acquired S1, one of the last stand-alone Pent-up Merger payments and channels solu- tion companies in the U.S. These three round out the M&A list: IBM acquired Algo- rithmics of Canada, provider Activity Builds of risk management solutions. Wolters Kluwer Financial Ser- vices acquired compliance and By Karen Massey risk management company FRS Global of Belgium. Misys acquired capital markets firm Sophis of Ireland. This year we welcome 14 new entrants to the FinTech echnology is icantly in 2011. In 2009, there 100: Genpact (N.Y.), Computer the backbone of were only two acquisitions Services Inc. (Ky.), Simplex , among the FinTech and there Consulting Inc. (Japan), BRQ enabling efficiency were four in 2010. In 2011, that IT Services (Brazil), NIIT Tech- and driving innova- number doubled to eight Fin- nologies Inc. (GA) , Silverlake T tion in products and services. Tech providers acquired over Axis (Malaysia), Carlisle & And when financial institu- the course of the year. The Gallagher Consulting Group tions are faced with business increase in M&A activity, still (NC), ARGO (TX), TransCen- or regulatory challenges, they way below pre-financial crisis tra Inc.(formerly Regulus) frequently turn to technology levels, is primarily attributable (GA), GBST Holdings Limited consultants and providers to pent-up demand and cur- (Australia), Diasoft (Russia), for guidance and solutions. tailed activity in the previously TAS Group (Italy), eFront S.A. Some of the prominent issues sour economy. Five of the (France), and Primatics Finan- that vendors are paying atten- eight acquired vendors were cial (VA). tion to are compliance and from outside the U.S., further In the top 10, the largest governance; big data and evidence of the increasing glo- revenue increases come from “We expect to see continued analytics; evolving business balization of the FinTech 100. Tata Consulting Services models, including payments; Acquisitions in 2011 were (TCS) and Cognizant, both IT merger and acquisition optimal utilization of cloud dominated by providers of services providers and out- activity in this space since the and outsourcing; and meeting IT services, payments, and sourcers, which proves the customers’ changing demands. risk management. IT services prominence of outsourcing number of providers is still Three things in particular and outsourcing were due for and services providers in the strike me about this year’s consolidation given matura- industry. First Data also rose large and financial institution FinTech 100: tion and the search for cost in the rankings among the top clients continue to exert cost • Impressive revenue efficiencies. We expect to see 10 from #8 to #7. growth: FinTech 100 vendors continued M&A activity in The Enterprise 25 also saw containment pressure.” collectively grew their rev- this space since the number two new entrants. Financial enues from $53 billion in 2010 of providers is still large and management provider Intuit to $64 billion in 2011, almost clients exert continued cost enters the Enterprise rank- a 20% increase. Gross World containment pressures. ing at #24. Also joining the Product grew 3.5% during this Globalization will be a con- Enterprise 25 is outsourcing same time. tinued theme, as evidenced provider of managed com- • Increasing globalization: by U.S.-based IT services firm puting Savvis, a CenturyLink 40% of the FinTech 100 hail iGate’s acquisition of Indian Company based in Missouri, from outside the US. outsourcer Patni Computer debuting at #25. IBM and HP • Predominance of Systems. Consultant and out- continue to dominate the top outsourcers and service pro- source provider Capgemini spots. Microsoft achieved the viders: Almost 50% of FinTech acquired a majority interest greatest upward movement, providers are in this category. in CPM Braxis, a Brazilian IT jumping from #6 in 2010 to #3 After several years of services company. Business this year. ■ anemic merger and acquisi- processing and tech manage- tion activity, the pace of ment firm Genpact acquired Karen Massey is senior acquisitions among the U.S.-based Headstrong Ser- analyst, consumer banking, at FinTech 100 accelerated signif- vices, a provider of consulting IDC Financial Insights.

 american banker | fintech 100 | OctOber 2012 americanbanker.cOm

002_FINOct12 2 9/21/2012 3:24:15 PM FinTech 100 | Ranking Top 100 Companies in FinTech

RANK CY 2011 REVENUE (MILLIONS) 2012 2011 COMPANY NAME OWNERSHIP TOTAL FINANCIAL SERVICES % FS 1 1 FIS Jacksonville, FL Public $5,746 $4,999 87 2 3 Tata Consultancy Services Limited (TCS) Mumbai, India Public 9,767 4,250 44 3 2 Fiserv, Inc. Brookfield, WI Public 4,337 4,120 95 4 4 SunGard Wayne, PA Private 4,499 3,190 71 5 5 NCR Corporation Duluth, GA Public 5,443 2,999 55 6 6 Diebold, Incorporated North Canton, OH Public 2,836 2,639 93 7 8 First Data Corporation Atlanta, GA Private 10,714 2,574 24 8 12 Cognizant Technology Solutions Teaneck, NJ Public 6,121 2,518 41 9 9 Nomura Research Institute, Ltd. Tokyo, Japan Public 4,109 2,489 61 10 10 Infosys Limited Bangalore, India Public 6,825 2,418 35 11 7 Lender Processing Services Jacksonville, FL Public 2,090 2,027 97 12 11 Wincor Nixdorf Inc. Paderborn, Germany Public 2,983 1,969 66 13 13 Total System Services, Inc. (TSYS) Columbus, Georgia Public 1,809 1,809 100 14 14 CA Technologies Islandia, NY Public 4,754 1,807 38 15 15 DST Systems Kansas City, MO Public 1,744 1,116 64 16 17 SAS Institute Cary, NC Private 2,725 1,090 40 17 16 CoreLogic Santa Ana, CA Public 1,339 1,030 77 18 18 Jack Henry & Associates, Inc. Monett, MO Public 994 994 100 19 31 Misys , UK Public 897 897 100 20 19 Equifax Atlanta, Georgia Public 1,960 804 41 21 22 EDB Ergo Group , Public 2,108 801 38 22 NR Genpact New York, NY Public 1,600 669 42 23 36 Ingenico Paris, France Public 1,300 611 47 24 21 Broadridge Financial Solutions, Inc. Lake Success, NY Public 2,167 520 24 25 27 FICO Minneapolis, MN Public 634 501 79 26 24 Experian Group Limited Costa Mesa, CA Public 4,337 477 11 27 25 Temenos Group AG Geneva, Switzerland Public 473 473 100 28 34 ACI Worldwide Naples, FL Public 465 450 97 29 32 Syntel, Inc. Troy, MI Public 642 450 70 30 30 Fidessa group PLC London, UK Public 445 445 100 31 28 Murex Paris, France Private 445 445 100 32 26 IPC Systems, Inc. Jersey City, NJ Private 506 439 87 33 20 Oberthur Card Systems S.A. Nanterre, France Private 1,185 415 35 34 29 Itautec S.A. São Paulo, Brazil Private 923 401 43 35 41 D+H , Canada Public 733 390 53 36 33 Open Solutions Inc. Glastonbury, CT Private 383 383 100 37 37 SS&C Technologies, Inc. Windsor, CT Public 371 371 100 38 38 Polaris Financial Technologies Chennai, India Public 372 365 98 39 48 Wolters Kluwer Financial Services Minneapolis, MN Public 340 340 100 40 42 Advent Software, Inc. San Francisco, CA Public 326 326 100 41 23 MphasiS (An HP Company) Bangalore, India Private 913 326 36 42 44 Moody’s Analytics New York, NY Public 722 325 45 43 45 TransFirst Holdings, Inc Broomfield, CO Private 865 311 36 44 43 Harland Financial Solutions Lake Mary, FL Private 286 286 100 45 46 3i Infotech (Includes 3i Infotech Billing & Payments) Mumbai, India Public 427 267 63 46 70 Six Payment Services Zurich, Switzerland Private 424 265 64 47 47 SimCorp A/S Copenhagen, Denmark Public 252 252 100 48 54 L&T Infotech Mumbai, India Private 643 249 39 49 67 Pegasystems Inc. Cambridge, MA Public 417 234 56 50 51 Aegis Global Communications Irving, TX Private 700 231 33

American Banker/Bank Technology News/Financial Insights FinTech 100 (2012)

americanbanker.com american banker | fintech 100 |october 2012 

003_FINOct12 3 9/21/2012 5:03:00 PM FinTech 100 | Ranking Top 100 Companies in FinTech

RANK CY 2011 REVENUE (MILLIONS) 2012 2011 COMPANY NAME OWNERSHIP TOTAL FINANCIAL SERVICES % FS 51 49 GFT Technologies AG Stuttgart, Germany Public $352 $229 65 52 61 Calypso Technology San Francisco, CA Private 220 216 98 53 64 Fundtech Ltd. Jersey City, NJ Private 210 210 100 54 55 Charles River Development Burlington, MA Private 208 208 100 55 58 Collabera Morristown, NJ Private 441 205 46 56 52 Ness Technologies Teaneck, NJ Public 569 193 34 57 53 GlobeOp Financial Services London, UK Public 221 189 86 58 57 Linedata Services S.A. Neuilly-sur-Seine, Paris Public 185 185 100 59 59 BancTec, Inc. Irving, TX Private 254 178 70 60 NR Computer Services, Inc. Paducah, KY Public 174 174 100 61 NR Simplex Consulting, Inc. Chuo-ku, Japan Private 170 170 100 62 63 Interactive Data Corporation Bedford, MA Private 868 156 18 63 62 Online Resources Corporation Chantilly, VA Public 155 155 100 64 79 Virtusa Corporation Westborough, MA Public 262 151 58 65 NR BRQ IT Services Sao Paulo, Brazil Private 187 140 75 66 72 Hundsun Technologies INC Hangzhou, China Public 166 140 84 67 86 VASCO Data Security International, Inc. OakbrookTerrace,Illinois Public 168 137 81 68 80 Luxoft Moscow, Russia Private 252 128 51 69 74 Open Link Financial Uniondale, NY Private 267 127 48 70 71 NICE Actimize New York, NY Public 124 124 100 71 NR NIIT Technologies Inc Atlanta, GA Public 311 121 39 72 NR Silverlake Axis Kuala Lumpur, Malaysia Public 122 120 98 73 73 Bravura Solutions , Australia Public 123 119 97 74 83 Bottomline Technologies Portsmouth, NH Public 211 118 56 75 78 Eagle Investment Systems LLC Wellesley, MA Public 115 115 100 76 81 Clear2Pay Diegem, Belgium Private 111 111 100 77 75 SmartStream London, UK Private 109 109 100 78 84 Hexaware Technologies Ltd. Navi Mumbai, India Private 308 105 34 79 77 Viewpointe New York, NY Private 100 100 100 80 NR Carlisle & Gallagher Consulting Group Charlotte, NC Private 96 95 99 81 82 Callatay and Wouters Brussels, Belgium Public 94 94 100 82 68 ISGN Corporation Melbourne, FL Private 93 93 100 83 91 Scorto Corp. Cupertino, CA Private 125 92 74 84 NR ARGO Richardson, Texas Private 86 86 100 85 87 Celero Solutions Inc. Calgary, Canada Private 81 81 100 86 NR TransCentra Inc. Norcross, GA Private 161 81 50 87 NR GBST Holdings Limited Milton, Australia Public 76 76 100 88 NR Diasoft Moscow, Russia Private 76 75 99 89 99 Financial Technologies (I) Ltd Mumbai, India Public 75 72 96 90 94 Eze Castle Integration Boston, MA Private 70 70 100 91 90 COCC Avon, CT Private 69 69 100 92 89 Investment Technology Group, Inc. New York, NY Public 572 69 12 93 NR TAS Group Rome, Italy Public 64 58 90 94 96 Multifonds Luxembourg Private 51 51 100 95 NR eFront, S.A. Paris, France Private 51 51 99 96 97 WAUSAU Financial Systems Mosinee, WI Private 77 50 65 97 98 FNC, Inc. Oxford, MS Private 50 50 100 98 92 Nucleus Software Exports Ltd. Noida, India Public 49 49 100 99 NR Primatics Financial McLean, VA Private 45 45 100 100 100 Novantas, llc New York, NY Private 39 39 100

American Banker/Bank Technology News/Financial Insights FinTech 100 (2012)

 american banker | fintech 100 | OctOber 2012 americanbanker.cOm

004_FINOct12 4 9/21/2012 3:24:38 PM FinTech 100 | Methodology How the Rankings Are Calculated

DC Financial Insights relied on many sources to gather the data used in the Fin- Tech 100 and Enterprise 25 rankings. Managing security systems at the new World Trade Center I The research firm, along with American Banker, Bank is more than a challenge. It’s an honor. Technology News and William Mills Agency, requested finan- cial information from several thousand technology compa- nies globally. Publicly available resources such as Hoovers, Edgar, company filings, and company Web sites were used to validate and augment data. IDC Financial Insights also used proprietary research, previously published reports, internal research under way, and IDC resources. IDC Financial Insights deter- mined eligible revenue. To be included, revenues must origi- nate from software, hardware and IT services sold to financial institutions. Not included are revenues from any network, telecommunications, electronic exchanges, or data service (e.g., market/credit) providers. For vendors that provide qualifying services and solutions in addi- tion to nonqualifying ones, we used just the qualifying portion of their revenue as the basis for our rankings. This is why ven- dors appear on the FinTech 100 list with revenues below 33%. Companies on the FinTech 100 list are financial services technology providers that derive more than one-third of their total global revenue from the financial services industry. Enterprise 25 companies are horizontal technology firms that derive less than one-third of their revenues from financial institutions. IDC Financial Insights and American Banker made a concerted effort to include all possible candidates for the rankings. Some companies in qualify- ing industries that submitted forms did not make the rank- ings because of insufficient Diebold’s security integration connects an array of systems, giving operators revenue or inability to validate unified control and citizens peace of mind. It’s another example of Diebold submitted data. For companies doing more to build relationships. Relationships that have inspired us to become outside the U.S., we calculated leaders and innovators in the banking industry for more than 150 years. U.S. dollar figures using IDC’s standard exchange rate for the For more information, call 1.800.806.6827 or visit Diebold.com/innovation. year end 2011. ■

americanbanker.com american banker | fintech 100 |october 2012 

005_FINOct12 5 9/21/2012 4:34:39 PM FinTech 100 | Ranking Top 25 Enterprise Companies in FinTech

RANK CY 2011 REVENUE (MILLIONS) 2012 2011 COMPANY NAME OWNERSHIP TOTAL FINANCIAL SERVICES % FS 1 1 IBM Armonk, NY Public $107,000,000,000 $31,030,000,000 29% 2 2 Hewlett-Packard Palo Alto, CA Public $127,200,000,000 $13,992,000,000 11% 3 6 Microsoft Redmond, WA Public $72,001,000,000 $8,640,120,000 8% 4 3 Dell, Inc. Round Rock, TX Public $62,071,000,000 $7,448,520,000 12% 5 4 Limited Tokyo, Japan Public $54,000,000,000 $7,020,000,000 13% 6 7 Accenture Dublin, Ireland Public $28,659,000,000 $5,649,000,000 20% 7 5 Cisco Systems, Inc. San Jose, CA Public $44,900,000,000 $5,388,000,000 12% 8 8 Oracle Corporation Redwood Shores, CA Public $35,600,000,000 $4,984,000,000 14% 9 10 Intel Santa Clara, CA Public $53,999,000,000 $4,859,910,000 9% 10 9 Hitachi Tokyo, Japan Public $118,998,920,000 $4,759,956,800 4% 11 12 EMC Hopkinton, MA Public $20,007,590,000 $4,201,593,900 21% 12 11 Thomson Reuters New York, NY Public $13,807,000,000 $4,004,030,000 29% 13 14 Capgemini Paris, France Public $13,477,000,000 $2,787,000,000 21% 14 13 CSC Falls Church, VA Public $15,965,000,000 $2,714,050,000 17% 15 16 Wipro Technologies Bangalore, India Public $7,210,000,000 $1,946,700,000 27% 16 17 ATOS Origin S.A Bezons, France Public $8,277,260,000 $1,903,769,800 23% 17 15 Deloitte & Touche Tohmatsu New York, NY Private $28,800,000,000 $1,872,000,000 7% 18 18 SAP AG Walldorf, Germany Public $18,464,000,000 $1,506,000,000 8% 19 19 CGI Group Inc. Montreal, Canada Public $4,207,257,000 $1,058,890,000 25% 20 24 HCL Technologies Ltd Noida, India Public $3,901,000,000 $1,014,260,000 26% 21 22 Logica Reading, U.K. Public $6,029,000,000 $966,000,000 16% 22 23 Unisys Blue Bell, PA Public $3,853,800,000 $847,836,000 22% 23 25 Teradata Corporation Dayton, Ohio Public $2,362,000,000 $661,360,000 28% 24 NR Intuit, Inc. Mountain View, CA Public $4,054,000,000 $362,000,000 9% 25 NR Savvis, a CenturyLink company St. Louis, MO Private $1,039,000,000 $296,335,000 29%

American Banker/Bank Technology News/Financial Insights FinTech 100 (2012)

Biggest Movers These companies made large jumps up or down in our rankings in 2011. We provide clues as to why

PLACES RANK CLIMBED/DECLINED 2012 2011 WHY

FinTech 100 Six Payment Services +24 46 70 SIXmergedSIXMultipay,SIXPayandSIXCardSolutions. Vasco Data Security +19 67 86 Landedseverallargetransactionsinthebankingmarket. Pegasystems +18 49 67 Significantcustomerwins,includingalargeU.K.bank. Virtusa Corporation +15 64 79 AcquiredALaSConsultingLLC,afinancialservicesconsultingfirm. MphasiS -18 41 23 Percentageoffinancialservicesrevenuedroppedfrom42%to36%. ISGN -14 82 68 Revenuedroppedfrom$126millionto$90million. Oberthur -13 33 20 Percentageofrevenuefromfinancialinstitutionsdroppedfrom55%to35%. Itautec S.A. -6 34 29 Revenue dropped from 2010 to 2011 while financial services percentage stayed the same.

Enterprise 25 HCL Technologies Ltd. +4 20 24 Companyisseeingstrongdemand,signedseveralnewcontractsin2011. Microsoft +3 3 6 Totalrevenueisupwhilefinancialservicespercentagestayedthesame. Teradata +2 23 25 TwoformerEnterprise25companiesdroppedout,lettingTeradatamoveup. Cisco -2 7 5 CiscoexitedtheFlipcamerabusiness,reorganizedandfacedstrongcompetition. Deloitte & Touche Tohmatsu -2 17 15 Challengingmarketconditions.

 american banker | fintech 100 | OctOber 2012 americanbanker.cOm

006_FINOct12 6 9/21/2012 5:14:37 PM 007_FINOct12 1 9/24/2012 11:02:54 AM FinTech 100 | Top 10 2

Fresh off of a couple of big partnership deals, Tata Consul tancy Services is wielding an Meet the expansion strategy that covers growth in new mobility and old school geography. “We have to find new ways to grow,” says N. Ganapathy top 10 Subramaniam. “[Banks] are saying, ‘Can I have a clean bal We asked the leaders of the top 10 FinTech companies what’s ance sheet?’ That’s what they ahead for them and what it takes to be a great tech boss are looking at from a balance perspective, but they are also

cial technology products. around fraud, around emerging manage their back office.” “It’s something that stuck competitors.” Martire says everyone at FIS with me throughout my whole That will inevitably cause is on-board for the change that’s career. I want to get results,” banks to outsource some of on the way. Martire says. “The attitude of their systems. Norcross projects Employees in departments my employees to our clients is that by 2015, most banks, if not ranging from sales to IT are on a reflection of me personally. all of them, will be doing some call to handle the needs of FIS’s Fiserv Either we do it well or we don’t sort of back office processing in customers. That’s why FIS only do it.” the cloud. recruits from within the finan- FIS It’s a strategy that has served Banks “are going to have cial services industry. Martire 1him well. This year, FIS is number one in the FinTech 100, having racked up $5.7 billion in rev- HQ: Jacksonville, Fla. “The attitude of my employees to our clients enue in 2011, 87 percent of it Frank Martire, Chairman and CEO is a reflection of me personally. from the financial services Either we do it well or we don’t do it.” industry. But FIS’s business is con- stantly changing. On the horizon are managed services Frank R. Martire learned one of the most important lessons that the company plans to of his career in the 1970s, when he was in his 20s, working at offer to banks. Those bank to turn themselves more into pledges — individually, and to Connecticut National Bank. clients are having to compete marketing engines,” Norcross every one of FIS’ customers The development of new mobile banking and payment The chairman and chief executive of Fidelity National with a host of potential disrup- says. “They are going to have — that anyone that leaves a mes- products remains Fiserv’s top priority, as it was last year. Information Services was then fresh out of Sacred Heart Uni- tive competitors — including to compete and drive, but sage will get a call back in less “The financial institution market is, as we all know, fairly chal versity of Fairfield, Conn., and exhausted after working all financial technology start-ups because of these non-financial than 24 hours, even if that call lenged right now,” Yabuki says. “We’re putting a lot of focus on night on a project that he just couldn’t complete. and expanding prepaid card institution competitors, they’ll back is from him. those products and services we can develop and deliver that The goal of the project wasn’t important, but what he was companies. have to really come into the “What I can’t guarantee to help financial institutions generate more revenue, increase their about to hear from his boss was. “As we speak, the industry is market in a meaningful way,” he you is that we will never make efficiency, and build more loyalty within their customer base. “I said: ‘I did everything I could. I did the best I could and going to have to get more effi- says. “They are going to have a mistake,” says Martire, who Mobile is one of the ways we can do that; it’s becoming an impor we just didn’t get the project done,’” Martire recalls. “But cient in the delivery of products to change the way that they do speaks in a hushed but stern tant part of creating loyalty and relationships while increasing he [answered]: ‘Mr. Martire don’t ever confuse [effort] for and services,” says Gary Nor- sales.... And financial institu- tone. “But what I can tell you efficiency by better extending the self-service channel.” results.’” cross, FIS’s president and chief tions, unless they are in the top is I have zero tolerance for Person-to-person payments are in “the first inning of what That is now one of the guiding principles of FIS’ business, operating officer. “With the 50 in the world, they are not non-responsiveness.” will be ultimately be a nine-inning game,” Yabuki says. “P2P is an which includes core processing among a broad suite of finan- increased burdens around risk, going to be able to completely —By Sean Sposito intriguing opportunity because it’s the intersection of potentially

 american banker | fintech 100 | OctOber 2012 americanbanker.cOm

008_FINOct12 1 9/21/2012 4:16:45 PM FinTech 100 | Top 10

options include colocatoin, The mobile wallet technol- going forward. managed hosting and cloud ogy will enable bill payment, Subramaniam says that delivery. TCS BaNCS includes remittances, mobile top-up as a leader of a large team Tata a group of pre-configured and payroll deposit, as well as of programmers and other customizable banking prod- marketing, redemption and technologists, it’s vital to be ucts such as core banking, targeted analytics based on transparent when linking 2 payments, compliance, and real-time transaction behavior. discussions of economic per- treasury management. The partnership also includes formance to corporate strategy. HQ: Mumbai, India Subramaniam sees a trend the Mozido Mobile Vault, a “I think people understand the N. Ganapathy Subramaniam, among financial institutions real-time digital payment economic situation, and they president, TCS Financial Solutions toward expanded use of man- processing platform that’s are comfortable if, as a leader, aged service offerings as a way designed to improve cash han- you can look in their eyes and to free themselves from IT dling. “Payments is one area tell them what you plan to do,” and application management where everyone wants to take a he says. chores and respond to devel- shot,” says Subramaniam. He also says the tech talent opments in payments and TCS seeks to compete with pool is changing, and that mobility. “On the customer firms such as Infosys in a chal- requires a management strat- Fresh off of a couple of big looking at regulatory issues, side, how can I improve the lenging economic environment egy that puts a premium on partnership deals, Tata Consul- financial crime and mobility.” customer experience on things for outsourcers. In its most teaching multiple tech skills tancy Services is wielding an In July, the firm partnered like iPhones, Pads, etc?” Sub- recent financial statement, TCS and providing a variety of tasks expansion strategy that covers with Century Link and Savvis ramaniam says. said revenues grew 13.1 percent for staff. growth in new mobility and old to allow the TCS BaNCS suite TCS in April entered into to about $2.72 billion, while net “When I first joined the firm school geography. to be offered on a cloud- a partnership with Mozido income increased 1.36 percent [more than 20 years ago], I “We have to find new ways enabled hosted environment to expand that firm’s enter- to about $604 million. The firm grew up in a programming cul- to grow,” says N. Ganapathy in North America. The plat- prise cloud payment network. reported strong performance ture where you looked at one Subramaniam. “[Banks] are form includes core banking, Mozido’s mobile wallet plat- in banking and financial ser- thing. Young people today are saying, ‘Can I have a clean bal- payments and anti-money form will be integrated with vices, especially in U.S. and more comfortable with multi- ance sheet?’ That’s what they laundering technology, as well TCS’s mobile point-of-sale European markets. However, tasking. If you give them only are looking at from a balance as corporate actions and insur- system and TCS Rewardz, a the firm also said foreign one thing they will get bored.” perspective, but they are also ance. Savvis’s IT infrastructure customer loyalty program. exchange volatility posed risks —By John Adams

manage their back office.” the last bastion of check and no limit on what people can How does Yabuki inspire, Martire says everyone at FIS cash payments — the roughly do,” Yabuki says. Geolocation encourage, promote and exe- is on-board for the change that’s $11 billion in payments a year and the ability to combine dif- cute good ideas? that are transacted among ferent streams of information “Isn’t that the question of Employees in departments consumers, largely in check on a mobile device will pro- the day?” he says. Fiserv has ranging from sales to IT are on and cash.” vide new ways to bank from a increased R&D spending over call to handle the needs of FIS’s Fiserv In the fourth quarter of mobile device, he believes. He the last several years, he says. customers. That’s why FIS only this year, Fiserv will intro- expects Fiserv to roll out new “One of our five values is ‘create recruits from within the finan- duce real-time person to products along these lines over with purpose’ — what can we cial services industry. Martire person payments, the ability the next six to eighteen months. do to help solve everyday prob- for people to move money Such added convenience lems for our clients and their to another individual’s bank and capability calls for more customers? HQ: Brookfield, Wis. account immediately. “That security, he concedes. “I do “It’s also important, at least “The attitude of my employees to our clients Jeff Yabuki, CEO3is necessary to truly be able think it raises the stakes on for me, to have our people is a reflection of me personally. to take the place of check security and authentication, understand they’re part of Either we do it well or we don’t do it.” and cash,” Yabuki says. “We making sure that as you think something much larger than believe that will provide some about new transactional capa- what they do,” he says. “When revenue opportunities for bilities, security stays at top someone is working on core financial institutions.” of mind and is integrated at banking or mobile or debit or The payments will ride the applications,” he says. “If ACH or risk, that’s really impor- on existing debit networks, people don’t feel secure, that tant. But to the extent that it pledges — individually, and to including Fiserv’s own Accel/ changes the trajectory of usage comes together and creates a every one of FIS’ customers The development of new mobile banking and payment Exchange, which supports 40 pretty quickly. I think the unique experience for clients, — that anyone that leaves a mes- products remains Fiserv’s top priority, as it was last year. million cards. Point-of-sale industry is doing a good job of that’s where the win is. sage will get a call back in less “The financial institution market is, as we all know, fairly chal- transactions will occur as real- that and I’ve seen new authen- “Having 20,000 people than 24 hours, even if that call lenged right now,” Yabuki says. “We’re putting a lot of focus on time memo debits and credits. tication methodologies that are understand that they’re part those products and services we can develop and deliver that Today, it’s not that easy to pretty exciting.” of something big and unique “What I can’t guarantee to help financial institutions generate more revenue, increase their conduct complex transactions Another area Fiserv has and is really changing the face you is that we will never make efficiency, and build more loyalty within their customer base. on a mobile phone because been working on is integrat- of financial services, that kind a mistake,” says Martire, who Mobile is one of the ways we can do that; it’s becoming an impor- of all the typing on tiny keys ing account aggregation with of energy does a lot to make speaks in a hushed but stern tant part of creating loyalty and relationships while increasing required, he points out. “But personal financial manage- people be their very best and tone. “But what I can tell you efficiency by better extending the self-service channel.” to the extent you can auto-fill ment. The company purchased to take some risks and do is I have zero tolerance for Person-to-person payments are in “the first inning of what information and find other CashEdge last year, which has everything they can to make will be ultimately be a nine-inning game,” Yabuki says. “P2P is an ways to allow people to more an aggregation service called their clients successful.” intriguing opportunity because it’s the intersection of potentially easily transact, there’s almost AllData. —By Penny Crosman

americanbanker.com american banker | fintech 100 |october 2012 

009_FINOct12 2 9/21/2012 4:16:49 PM FinTech 100 | Top 10 SunGard NCR

HQ: Duluth, Ga Michael O’Laughlin, senior vice president of financial services 6Thomas W. Swidarski, president and CEO HQ: Wayne, 4Pa. David Hamilton, president, banks 5 Pass Michael O’Laughlin’s office at members bank after hours. NCR headquarters, outside of Atlanta, This is the work O’Laughlin is most and you might mistake it for a con- excited about. ference room. A large, round table “Interactive teller [is part of that], a Thomas W. Swidarski knew What does it take to be a great uncertainty. — surrounded by six comfortable chairs, kind of a first step in that direction, and he had to change his ATM game tech boss? Yet in the last six months, and a speaker phone — is there instead mobile deposit withdrawal,” he says. “You soon after he was named the “Patience,” says David Ham- SunGard has launched a new of the oak desk you’d expect. are going to see some other things in the chief executive and president ilton, president of SunGard’s software product for commer- There are no family photos. No ferns. near term that I’m very passionate about.” of Diebold in 2005. banks business. To encourage cial credit lifecycle management. None of the accoutrements you’d find Indeed, he’s seldom at home. The pace of technology and promote good ideas, Ham- Earlier this year, SunGard familiar in any bosses’ workspace. In late August, O’Laughlin took a was quickening. Financial ilton does something he calls launched Ambit Concierge, an “We are all sitting around this table,” five-day tour of India where he met with technology start-ups were “picking a fight” — not with a spe- iPad app that customer service says O’Laughlin, NCR’s senior vice presi- NCR sales employees, and politicians, in just beginning to pop up. The cific competitor or person, but staff can use in the lobby of a dent of financial services. “It’s a meeting Mumbai. He also visited several other potential to disintermediate with a market situation or prob- branch to handle customers’ place for open ideas.” Southeast Asian cities. lem. “If we can identify those financial and non-financial Out of those meetings have come In September, NCR acquired Tran- challenges, that helps focus peo- requests. “Somebody with an some of NCR’s biggest thoughts around soft International of Cary, N.C. in an ple’s minds,” he says. “Once you iPad could walk up to a teller bank branch consolidation. effort to bolster its cash management have people’s minds focused, queue and satisfy a customer They include mobile cash withdrawal, software services. NCR will integrate it’s easy to fuel and encourage who simply wants to transfer which allows an ATM user to take out Transoft’s product suite and employ- thinking and innovation.” money from one account to cash from an automated teller machine ees into its financial services line of He also talks to his team another,” Hamilton says. “We without a card and PIN number. The business. NCR believes the cash man- First about providing software that see a lot of those sorts of queue technology relies on smartphones to agement segment is worth about $1 has opinions. “Our customers busting techniques in the relay pre-staged transactions. billion, industry-wide. don’t want us to explain to them branch lobby right now.” They also include video ATMs; NCR’s Also in September, NCR and Vendor- six ways they could solve their This fall, SunGard will Net completed the integration of the problem,” he says. An example announce Ambit Wealth VendorNet StoreNet In-Store Pickup ful- is a platform for mobile phone, Strategist, another iPad app fillment technology with NCR Advanced tablet, and online applications that enables private banking O’Laughlin struggles to talk Store point-of-sale software. This that SunGard launched late last and relationship managers to about himself. He’s not that kind accommodates online-only retailers that year called Ambit MyMoney, become more mobile. of guy. “It’s more about process- want to provide “locker” type pick-up primarily in Asia and the Middle To retain IT talent, Sun- es, people, and then technology. locations to serve the growing number of vice president of global product man East. “In Asia, the lines between Gard lets people move around shoppers for whom work or home deliv- a person’s personal financials between projects. “Whilst they How it all comes together.” ery is impossible or inconvenient. One and business interests are may be working on a tedious driver of this type of service is the fact blurry,” Hamilton says. “We back office system, we want that companies are increasingly imple- wanted to enable our customers them to know that once that Aptra Interactive Teller is designed to menting policies against employees and their small businesses to project is behind them, they extend bank branch hours by allowing receiving non-work-related packages at have a more flexible engage- can immediately move to an a teller to talk face-to-face with a user at work, eliminating for many online shop- From his perch at the center of the fiercely competitive ment model with their bank.” HTML5 project for mobile the ATM through a camera and a screen. pers the main avenue for ensuring quick payments game, First Data’s Mark Herrington can’t help but be The U.S. is a tricky market devices,” Hamilton says. “I’ve Earlier this year, NCR bought an and secure delivery of online purchases. amazed at other leaders who exert a sense of calm amid a storm for SunGard lately. “A lot of put some HMTL5 developers undisclosed minority stake in uGenius Back in Atlanta, O’Laughlin struggles of combatants. institutions in the U.S. in our on our, let’s call them nostalgic Technology, the company the ATM to talk about himself. He’s not that “Mike Krzyzewski [Duke’s basketball coach] seems to be a target market — the $3 billion transaction systems. At first maker collaborated with to launch this kind of guy. He’s the type of boss that tremendous game planner, and has a very calm way about him. to $40 billion-asset banks — are they grimace, shrug their shoul- special device that features a built-in would rather talk about his employees’ He also comes across as a humble guy, and that’s an important relying heavily on core banking ders and say why me? But they camera. Tellers can also remotely con- accomplishments. part of leadership,” says Herrington, executive vice president of providers for mobile and online come out of it having learned a trol these video-equipped ATMs. That’s just how he likes to lead. global product management and innovation for First Data. channel access,” Hamilton says. great deal about what it takes In August, FirstOntario Credit Union, “It’s [more] about processes, people, Herrington’s the “Coach K” for a team of 1,000 people who U.S. and European clients to build a resilient, scalable based in Hamilton, became the first and then technology,” O’Laughlin says. produce new digital payments tech for First Data. “For the have been cautious, due to product.” Canadian financial institution to deploy “How it all comes together.” next two to three years you will see a slugfest with a lot of value budget issues and regulatory —By Penny Crosman the NCR Aptra Interactive Teller, to let —By Sean Sposito added products,” he says, adding that “at some point we will

10 american banker | fintech 100 | OctOber 2012 americanbanker.cOm

010_FINOct12 3 9/21/2012 4:17:24 PM FinTech 100 | Top 10

stand the whole ecosystem.” “Making sure we aren’t so blinded by That realization led him to something that we call an ATM one conclusion: Why not just that we miss the forest for the trees. handle a bank’s ATMs for it? This is the biggest step for me. ” Roughly a year after becom- Diebold ing Diebold’s captain, he took one of his head salesmen off of some of the company’s largest accounts and started ground with its employees. nearly 70% of the country’s hunkering down and talking to And just last month, the internet banking transactions. customers. North Canton, Ohio company Diebold hopes to expand its Indeed, by 2009, the com- announced that it was open- Brazilian footprint. HQ: North Canton, Ohio pany had signed $75 million ing up two new data centers Today, especially in the U.S. 6Thomas W. Swidarski, president and CEO worth of contracts with its located in Richardson, Texas market, Swidarski says, it’s all managed services business, and Manassas, Va. Previously, about ATMs. doing all the back office pro- the company was handling “But, in the future you can 5 cesses and monitoring a bank its managed services out of be doing things on handheld needs to do to manage its ATMs. three data hotels near its devices, or tables,” he says. “I A year later, Diebold inked headquarters. want to be able to participate This is the work O’Laughlin is most roughly $150 million worth Some of the first Diebold in that, and help the company of those deals, and last year customers placed in those new thrive as the world changes.” “Interactive teller [is part of that], a Thomas W. Swidarski knew was there. And he knew, deep it grew this business to about data centers — one of which is Focusing on this aspect kind of a first step in that direction, and he had to change his ATM game inside, that what his company $600 million. located directly on Verizon’s of financial services will give mobile deposit withdrawal,” he says. “You soon after he was named the had to concentrate on next was Earlier this year, Toronto- fiber optic network in the Diebold a future, Swidarski are going to see some other things in the chief executive and president what it knew best. Dominion Bank handed over Lone Star State — went live in says. near term that I’m very passionate about.” of Diebold in 2005. And that is, “every aspect of the reins of its roughly 4,400 September. “Making sure we aren’t so Indeed, he’s seldom at home. The pace of technology what happens in an ATM net- ATMs to Diebold. The company Also in September, Diebold blinded by something that we In late August, O’Laughlin took a was quickening. Financial work, whether it’s a Diebold is monitoring those ATMs acquired Gas Tecnologia, a Bra- call an ATM that we miss the five-day tour of India where he met with technology start-ups were unit, or not... Whether we do remotely with its OpteView zilian internet banking, online forest for the trees,” he says. NCR sales employees, and politicians, in just beginning to pop up. The the software or someone else Resolve software — as well as payment and mobile banking This is “the biggest step for me.” Mumbai. He also visited several other potential to disintermediate does it,” he says. “We under- tending to those devices on the security company that protects —By Sean Sposito

In September, NCR acquired Tran- soft International of Cary, N.C. in an effort to bolster its cash management software services. NCR will integrate need to see an environment “We’re operating with a sense of urgency. Transoft’s product suite and employ- where these services can be If you’re going to fail, fail fast. ” ees into its financial services line of consumed in a ubiquitous business. NCR believes the cash man- First Data fashion.” agement segment is worth about $1 First Data, which pro- cesses payments for more Also in September, NCR and Vendor- than six million merchants comes partly under the is an open platform that lets Net completed the integration of the and thousands of credit card umbrella of First Data’s Univer- marketers and other publish- VendorNet StoreNet In-Store Pickup ful- issuers, believes it’s uniquely sal Commerce strategy, under ers electronically attach offers fillment technology with NCR Advanced positioned to take advantage which the company produces such as deals, e-coupons and Store point-of-sale software. This 7of the coming payments tech tools for digital payments, loyalty programs to a consum- accommodates online-only retailers that HQ: Atlanta revolution, as wallets, cash integrates disparate applica- er’s cards or mobile wallets. want to provide “locker” type pick-up Mark Herrington, executive and credit cards morph into a tions, provides intelligence for The company has also locations to serve the growing number of vice president of global product man- mobile-phone enabled portal shopping and deals, connects rolled out RapidComply, a shoppers for whom work or home deliv- agement and innovation for shopping and payments. stakeholders, and enables self-assessment questionnaire ery is impossible or inconvenient. One The Atlanta-based firm is computing devices to execute and vulnerability scanning tool driver of this type of service is the fact already providing the process- fast and compliant payments. that helps merchants maintain that companies are increasingly imple- ing rails for the Google Wallet, Mobile delivery is the hub of Payment Card Industry Data menting policies against employees and is turning its attention the model. Security Standard compli- receiving non-work-related packages at toward developing additional A number of new products ance. And it’s launched Global work, eliminating for many online shop- From his perch at the center of the fiercely competitive mobile and web-friendly have spun off of Universal Com- Gateway e4, an online payment pers the main avenue for ensuring quick payments game, First Data’s Mark Herrington can’t help but be digital payment products for merce, including the FD35 PIN service. and secure delivery of online purchases. amazed at other leaders who exert a sense of calm amid a storm merchants and consumers. Pad, which allows PIN-based “We have a good share of Back in Atlanta, O’Laughlin struggles of combatants. “We’re seeing consumers debit transactions and swipes the merchant community and to talk about himself. He’s not that “Mike Krzyzewski [Duke’s basketball coach] seems to be a empowered in a way that they traditional payment cards, are putting in place tech to kind of guy. He’s the type of boss that tremendous game planner, and has a very calm way about him. haven’t been in the past. They but also can accept chip and allow any combination of form would rather talk about his employees’ He also comes across as a humble guy, and that’s an important have so much access to so PIN (EMV), contactless cards, factors at the point of sale,” part of leadership,” says Herrington, executive vice president of much information where they mobile payments and key fobs. Herrington says. That’s just how he likes to lead. global product management and innovation for First Data. can quickly find a merchant Snap! is an iPad app for “We’re operating with a “It’s [more] about processes, people, Herrington’s the “Coach K” for a team of 1,000 people who that they want,” Herrington generating paperwork and col- sense of urgency. If you’re and then technology,” O’Laughlin says. produce new digital payments tech for First Data. “For the says. lecting electronic signatures so going to fail, fail fast,” Her- next two to three years you will see a slugfest with a lot of value The slew of new pay- merchants can begin accepting rington says. added products,” he says, adding that “at some point we will ments tech development payments quickly. Otherwise —By John Adams

americanbanker.com american banker | fintech 100 |october 2012 11

011_FINOct12 4 9/21/2012 4:17:46 PM FinTech 100 | Top 10

“Our clients are always look- to the table.” On the business media, for example, while ing at the equation of, where process outsourcing side, the others are more conservative.” in the world does the right Philippines is a significant con- Infosys uses a variety of Cognizant combination of cost, capability, tender, he says. techniques to marry a bank’s and talent exist to do a piece of Cognizant’s road map for demand for new tech with its work,” he says. “In the IT por- the next 18 months is focused business requirements, such tion of our business, the reality on the “smac stack” — social, as consulting and maturity is there isn’t enough talent in mobile, analytics and cloud. models that measure the the U.S. and Western Europe “We think there’s still a lot that institution’s development cycle 8 HQ: Teaneck, N.J. to meet our clients’ demands. can be done to maximize the and how that cycle may impact Francisco D’Souza, president and CEO The talent production in the impact of these technologies,” Infosys10 its business objectives. The U.S., if you look at the number D’Souza says. firm is also focusing on hosting of college graduates and so on, How does he see new ideas HQ: entire business units. “We have is not keeping up. Clients who through? “The challenge we Bangalore designed a set of platforms that want to remain competitive faced was how to identify, Mahesh Makhija, take a core function like HR, in the global market need to incubate and protect new ideas vice president and we host the entire function tap talent around the world.” that have great potential but in our data center from recruit Cognizant has delivery centers take time to come to fruition ment to retirement. It’s starting Outsourcing firm Cognizant business strategy of the com- in the U.S., Europe, Asia, and and contribute meaningfully to move into other core units,” has been growing fast and pany from day one. We created South America. “Our goal is to to revenue,” D’Souza says. “We Makhija says. makes its debut in the FinTech a financial model that lets us find the best talent in the world encourage employees not just Other new developments Top 10 this year. reinvest back into the business and bring that talent to bear on to give us ideas but to form include a new infrastructure “When we started the busi- for long-term growth to make a particular problem,” he says. teams to execute these ideas. As Infosys plots its expansion testing service, in which com ness 19 years ago, we saw a sure the products and services India and China have the The emerging technologies strategy following the tech panies can test the business very large market opportu- we offer our clients stay ahead largest tech talent pools, he organization reports directly to spending slumps of the past readiness and performance of nity ahead of us and made of where our customers are notes. “We see eastern Europe me so I can give it the air cover few years and stiff competition their IT infrastructure during a conscious and deliberate and where the market is.” being strong in pure comput- it needs to grow and operate from firms such as Tata Con- major changes such as data effort to capture it,” says Fran- While some outsourcers ing statistics and mathematics. with autonomy and indepen- sulting Services, it’s offering center consolidation, virtualiza cisco D’Souza, president and see a movement of U.S. banks’ We have centers in South dence, which is needed to expanded outsourcing options. tion and other tech upgrades. CEO. “We’ve orchestrated and work from overseas to the America that bring that time shepherd new good ideas.” These new services range from It also launched the Infosys engineered growth into the States, D’Souza does not. zone and the Spanish language —By Penny Crosman social media to the cloud to Cloud Ecosystem Hub, which expanded back office functions allows firms to create, adopt such as human resources. and govern cloud services. The But more than that, Infosys hub includes a decision-making about 80 percent of the Japa- partners for a U.S. expansion. is attempting to compete in tool that leverages more than nese mutual fund market and NRI is working on new devel- a new era for outsourcing, in 20 parameters such as qual are used by about 70 percent of opments in mobile channels which jobbing out specific func- ity of service, technology the participants in the Japanese and researching how to leverage tions for scale and cost cutting compatibility, regulatory com capital markets system. Oracle Exadata for a multiten- gives way to a mix of tech pliance needs and total cost of Two of NRI’s largest current ant platform as a service model. hosting, assessments, advisory ownership. initiatives involve expanding its Oracle Exadata is a package of services and management. Infosys’ adjustments have NRI Japanese base to include more servers, storage, networking and “Outsourcing is no longer not caused the economic pres smaller bank clients, and grow- software that is designed to con- about transaction process- sures to fade entirely. Barclays ing NRI’s presence in India. solidate tech systems, provide ing, but a bank’s leveraging Capital’s equities researchers NRI recently finished work data warehousing and online a global workforce for a tech in late August downgraded on a new hosted online bank- transaction processing. strategy,” says Mahesh Makhija, Infosys from an “overweight” ing system that will be aimed at The execution of these ini- vice president and head of the to an “equal weight” saying HQ: Tokyo9Japan’s 106 regional banks. In tiatives is reliant on finding IT financial services and insur- the firm was missing guidance Shin Kusunoki, senior vice president and addition to internally hosting people with knowledge of these ance practices for the Americas and possibly underestimating division manager for financial and asset online banking within NRI’s new technologies and keeping for Infosys. risk. Infosys reported $0.73 management solutions own data center, the new them happy. Kusunoki says that Infosys is hoping its per share for the most recent online banking service will also in Japan, most people work for expanded advisory, manage- quarter, missing the consensus come with customized advertis- one company in their careers. ment and hosting options will estimate by $0.01. ing and marketing campaigns. NRI recruits heavily from local help the outsourcing firm ben- Makhija says that when Outside of Japan, the firm universities in Japan, China and efit from the complexity posed dealing with economic chal established NRI FT India in India, and provides chances for by IT pressures on banks that lenges, Infosys has adopted a For Nomura Research Institute, attracting and retaining top Kolkata following the comple- staff to transfer to other jobs, as include risk and compliance strategy in which the nature of tech talent is a matter of giving them something they can sink their tion of its acquisition of Anshin well as collaborate on new ideas mandates, customer acquisi- the challenge, its impact and teeth into. Software. The new unit will for products, tech or strategy. tion challenges and budget how the business is respond “We motivate technologists by assigning more and more chal- offer customer support, IT As the firm expands further pressures. ing is communicated to each lenging projects,” says Shin Kusunoki, a senior vice president and services, financial services R&D outside of Japan, Kusunoki has Makhija notes that tech staff member. He says in such division manager for financial and asset management solutions in and software development, and to work harder to encourage the strategies don’t look the same cases consistency and trans NRI’s financial technology solutions division. includes about 200 new system cross-job skill sharing that it offers for all institutions. “There is a parency of the message and NRI, which gets about 60 percent of its revenue from financial IT engineers. Kusunoki also says developers. It has an annual off- ton of jargon in tech, and not plan is important “so even pro solutions, including banks, asset managers, broker-dealers and insur- NRI’s current priority is to site event in which tech staff from everyone wants to be on the grammers will hear the same ance providers, has a number of new projects underway to serve assist Japanese financial firms the firm’s different divisions share most bleeding edge of technol- message from their immediate a customer base that includes Credit Suisse, Barclays, HSBC, UBS, to expand their businesses out- ideas and experiences. ogy. Some banks want to move manager.” JPMorgan Chase, Nomura, ING and Mizuho. NRI’s solutions support side of Japan, but is also seeking —By John Adams more aggressively into social —By John Adams

12 american banker | fintech 100 | OctOber 2012 americanbanker.cOm

012_FINOct12 5 9/21/2012 4:17:45 PM FinTech 100 | Top 10

media, for example, while others are more conservative.” Infosys uses a variety of techniques to marry a bank’s demand for new tech with its business requirements, such as consulting and maturity models that measure the institution’s development cycle and how that cycle may impact Infosys10 its business objectives. The firm is also focusing on hosting entire business units. “We have designed a set of platforms that take a core function like HR, and we host the entire function in our data center from recruit- ment to retirement. It’s starting to move into other core units,” Makhija says. Other new developments include a new infrastructure As Infosys plots its expansion testing service, in which com- strategy following the tech panies can test the business spending slumps of the past readiness and performance of few years and stiff competition their IT infrastructure during from firms such as Tata Con- major changes such as data sulting Services, it’s offering center consolidation, virtualiza- expanded outsourcing options. tion and other tech upgrades. These new services range from It also launched the Infosys social media to the cloud to Cloud Ecosystem Hub, which expanded back office functions allows firms to create, adopt such as human resources. and govern cloud services. The But more than that, Infosys hub includes a decision-making is attempting to compete in tool that leverages more than a new era for outsourcing, in 20 parameters such as qual- which jobbing out specific func- ity of service, technology tions for scale and cost cutting compatibility, regulatory com- gives way to a mix of tech pliance needs and total cost of hosting, assessments, advisory ownership. services and management. Infosys’ adjustments have “Outsourcing is no longer not caused the economic pres- about transaction process- sures to fade entirely. Barclays ing, but a bank’s leveraging Capital’s equities researchers a global workforce for a tech in late August downgraded strategy,” says Mahesh Makhija, Infosys from an “overweight” vice president and head of the to an “equal weight” saying financial services and insur- the firm was missing guidance ance practices for the Americas and possibly underestimating risk. Infosys reported $0.73 Infosys is hoping its per share for the most recent expanded advisory, manage- quarter, missing the consensus ment and hosting options will estimate by $0.01. help the outsourcing firm ben- Makhija says that when efit from the complexity posed dealing with economic chal- by IT pressures on banks that lenges, Infosys has adopted a include risk and compliance strategy in which the nature of mandates, customer acquisi- the challenge, its impact and tion challenges and budget how the business is respond- ing is communicated to each Makhija notes that tech staff member. He says in such strategies don’t look the same cases consistency and trans- for all institutions. “There is a parency of the message and ton of jargon in tech, and not plan is important “so even pro- everyone wants to be on the grammers will hear the same most bleeding edge of technol- message from their immediate ogy. Some banks want to move manager.” more aggressively into social —By John Adams

americanbanker.com american banker | fintech 100 |october 2012 13

013_FINOct12 6 9/21/2012 4:18:33 PM FinTech 100 | Cover Story

A flurry of core processing upgrades and conversions have taken place around the country. Behind the

014_FINOct12 1 9/21/2012 4:18:34 PM A flurry of core processing upgrades and conversions have taken place around the country. Behind the activity: a drive for efficiency, compliance and competitiveness By Penny Crosman Photography by Tim Knox

015_FINOct12 2 9/21/2012 4:18:34 PM FinTech 100 | Cover Story

hrough late August and most of September of this year, First Community Bancshares “We’re looking forward to those enhancements.” in Bluefield, Va. maintained an online “countdown” to its core conversion at The bankers expect the new system to pro vide stronger security. “I won’t be specific there, www.fcbupgrade.com. (At press time, there were 23 days to go). The site features a video but we’re going to see a much tighter and more with soothing piano music in the background, in which CIO Steve Lilly touts some of the manageable security environment because we’re dealing with one vendor overall as benefits of the new core system being adopted, Jack Henry’s Silverlake. “It will allow us to opposed to several,” Lilly says. “We won’t have provide big-bank capability in the community banking style you prefer,” he says. to oversee as much as we have to today.” The bank is retaining its check processing platform. “We like it, we’ve had it since 1997, Lilly wasn’t crazy about performing in the talented,” Lilly says. “Our philosophy here is we sive,” Lilly says. and it has evolved,” Lilly says. “It made no sense video. “I’ll tell you what, being chief operating don’t want to run a development shop, we want Over time, the bank will evolve into iPad- for us to change it.” officer is what I need to stick to,” he jokes. “I to run a bank.” based account openings and paperless branches. First Community has also purchased Jack don’t believe my acting career is going very far. The just-completed conversion was conceived Branch staff are “elated” about the new system, Henry’s Synergy imaging and workflow system. I’m doing the best I can to get the message out.” five years ago, when a technology assessment Lilly says. “They’ve already done some testing, “We feel we can leverage that considerably across Banks rarely offer public announcements revealed the bank had too many manual processes. it will make life in the branch a lot better so that the enterprise, not only for deposits and loans about their technology upgrades until after “As we started looking at that, we structured all we can spend time talking to customers about but for a number of other functions within the they’re done, for fear of glitches that could cause of our major IT contracts to be coterminous in important things that matter, as opposed to cre- company,” Lilly says. errors, delays and outages. But at $2.8 billion- September of this year, in order to search for the ating a paper chase,” he says. Data validation has been critical to this project. assets First Community, “We feel like they have a best technology we could afford that provided best Certain HR functions have already been “You are taking over 300,000 accounts and right to know, particularly with the new internet integration and the highest degree of automation made paperless. “We want to expand on that,” moving them from point a to point b, the poten banking solution that’s going in,” Lilly says. that we could find,” Lilly says. Lilly says. “We also have a trust division and I tial for things to go wrong is very high without The new system would require customers A post-conversion feature CEO John Mendez think there’s a great deal of potential there as meticulous data verification and making sure to re-establish their online banking credentials. is looking forward to is a one-signature account well as in compliance and risk management. things convert and end up on other side of the “We figured it would be unfair to spring it on opening process. “Our account opening process We’ll migrate all those departments to paperless fence the same as they were before they trav them,” he says. could span 15-30 minutes depending on the type as soon as we can.” eled,” Lilly notes. “It is a very meticulous, time First Community Bank is part of a wave of of account, sometimes longer. We’re converting A new native mobile banking app for iPhone, consuming process to make sure those are right banks that have engaged in core banking trans- to a system that will populate all the necessary Android and BlackBerry devices that’s part of because you have thousands of codes, hundreds formations over the last year or so. applications and we’ll also be using electronic the upgrade “will be a quantum leap for our of thousands of accounts in the customer infor “Historically, transformations in the U.S. and signatures as we image those deposit documents.” customers” from the mobile browser the bank mation file. There’s a lot of diverse information Europe have stood at around 1-2% — considerably Customers will be able to sign up for an has had so far, Lilly says, including text messag- within our data.” lower than the rest of the world,” says Celent ana- account, online banking, bill payment and ing and bill payment. Another complication is that First Com lyst Stephen Greer. “Currently, we’re seeing that mobile banking through one paperless appli- In the Bluefield metro area (population munity acquired People’s Bank of Virginia in number rise to around 4-5%. It’s not consider- cation. There will be fewer FedEx packages around 60,000), local competitors include Richmond at the end of May and was going to ably higher this year, but considering how many between the bank’s headquarters in Bluefield, BB&T and several community banks. convert that bank’s IT to the Jack Henry plat banks there are in the U.S., this represents a lot of Va. and its 72 branches, which are up to 350 BB&T is a formidable competitor, particularly form over the same weekend. (People’s was banks.” These numbers are based on Celent’s esti- miles away. Compliance with anti-money laun- in the cash management arena for business using an FIS system before.) mates and conversations with clients, he says. dering, Regulation DD, Regulation CC, and other customers, Mendez says. Silverlake includes All in, include investments in storage and A quest for improved efficiency is one driver rules will all be handled by the software. support for commercial cash management. Jack signature pads, the bank has spent $3.6 million behind this conversion. The bank’s efficiency “We feel that’s very important in this day and Henry also has an iPad app for small businesses on this conversion. The return on investment for ratio — the amount it spends to make a dollar time to achieve compliance but not to impose it that helps them run their business from their the project is around 21%, based on reduced cost in revenue — is currently at about 57 cents per on our customers to the point where it’s offen- iPad “anywhere, at any time,” Mendez says. of processing transactions. dollar, or 57%. Industry averages hover in the high 60s. “Our goal is to get it as close to 50 as we practically can,” Lilly says. Compliance issues were another driver of this project. “Monitoring compliance, making Citi’s Global Core Conversion ChuGs on sure we got it right and that we were able to satisfy regulators, continued to be based on The largest core conversion project in the U.S. in phases. Southeast Asia is complete, for ex- spokesperson said. manual processes rather than trying to stitch remains Citi’s, which the bank says is meant to ample, and in the U.S. the bank has completed Critics have slammed Citi for going with a batch improve customer service and support. It is due the first of several phases. processing, rather than a real-time transaction databases together to get the information in the to be completed in 2013. right places at the right time,” Lilly says. “It’s Project Rainbow, as the project is called system. But the bank’s more ambitious goals The project is a multi-year effort to develop a internally, began in South East Asia. “We first may be around customer analytics, for which it been one of our bigger headaches. Another has single, customer-centric banking platform that used the Rainbow name due to the seven initial recently purchased IBM’s Watson. been our debit card processing, there’s been a will span all channels and consumer products in countries that came together onto the common In a press release in March, the bank said lot of manual process in getting a Visa card in North America Consumer Banking, according to platform to create something truly magnificent,” it “will assess ways to use a first-of-a-kind the hands of our customers.” a Citi official. “Our customer support and sales the official says. customer interaction solution combined with experts will benefit from a streamlined application When this project has been completed, Citi Watson’s deep-content analytics, natural lan Also behind the change was the fact that the environment and can more easily extend consis- bank’s IT staff was spending a lot of time writing “will be able to give consumers more personal- guage processing, decision support, and evi tent service across all channels,” she says. The ized solutions and a consistent client experi- dence-based learning to continue to advance and customizing code to get external modules, platform is reportedly FIS’ Systematics. ence whenever and wherever they interact with digital banking.” With 200 million customer such as online banking, bill payment and debit The overall core platform project is global. Each Citi, whether online, in a branch, through a call accounts in more than 140 countries, the bank card processing software, to talk with the incum- of Citi’s four regions is approaching the project center, on a mobile device, or at an ATM,” the has a wealth of consumer data to mine. bent core system (Fiserv Signature). The bank has two developers. “They’re very good and

16 american banker | fintech 100 | OctOber 2012 americanbanker.cOm

016_FINOct12 3 9/21/2012 4:18:48 PM hrough late August and most of September of this year, First Community Bancshares “We’re looking forward to those enhancements.” The bankers expect the new system to pro- vide stronger security. “I won’t be specific there, www.fcbupgrade.com. (At press time, there were 23 days to go). The site features a video but we’re going to see a much tighter and more with soothing piano music in the background, in which CIO Steve Lilly touts some of the manageable security environment because we’re dealing with one vendor overall as benefits of the new core system being adopted, Jack Henry’s Silverlake. “It will allow us to opposed to several,” Lilly says. “We won’t have to oversee as much as we have to today.” The bank is retaining its check processing platform. “We like it, we’ve had it since 1997, and it has evolved,” Lilly says. “It made no sense Over time, the bank will evolve into iPad- for us to change it.” based account openings and paperless branches. First Community has also purchased Jack Branch staff are “elated” about the new system, Henry’s Synergy imaging and workflow system. Lilly says. “They’ve already done some testing, “We feel we can leverage that considerably across it will make life in the branch a lot better so that the enterprise, not only for deposits and loans we can spend time talking to customers about but for a number of other functions within the important things that matter, as opposed to cre- company,” Lilly says. Data validation has been critical to this project. “Most conversion projects require additional Certain HR functions have already been “You are taking over 300,000 accounts and overhead,” Desai says. “We had the right team made paperless. “We want to expand on that,” moving them from point a to point b, the poten- Turning iT inTo of people, all wearing multiple hats. Also, there Lilly says. “We also have a trust division and I tial for things to go wrong is very high without a ProfiT CenTer was support from a strong project management think there’s a great deal of potential there as meticulous data verification and making sure Up until a year ago, Chan Desai, CIO of Team team from Open Solutions.” well as in compliance and risk management. things convert and end up on other side of the Capital Bank, was relying on what he calls “bank The bank is running the hosted option of We’ll migrate all those departments to paperless fence the same as they were before they trav- in a box” – a hosted service with one vendor pro- the software; it’s paying to run everything eled,” Lilly notes. “It is a very meticulous, time viding everything for the bank’s IT. Team Capital, out of Open Solutions’ Cherry Hill data center. A new native mobile banking app for iPhone, consuming process to make sure those are right which is based in Bethlehem, Pa., is a de novo “Because we went with best of breed, not all the Android and BlackBerry devices that’s part of because you have thousands of codes, hundreds that started in 2005. “There was no IT, there apps we use are from Open Solutions, there are the upgrade “will be a quantum leap for our of thousands of accounts in the customer infor- was no back office — there were the investors third-party apps in the mix as well,” he says. customers” from the mobile browser the bank mation file. There’s a lot of diverse information and an idea,” Desai says. At the time, the all-in- Desai hopes to make money off the new has had so far, Lilly says, including text messag- within our data.” one solution from Fiserv made sense. system by building add-on applications that Another complication is that First Com- But by 2009, it became clear to senior man- work with the Open Solutions core platform and In the Bluefield metro area (population munity acquired People’s Bank of Virginia in agement that at the rate the bank was growing, selling them to other Open Solutions customers. around 60,000), local competitors include Richmond at the end of May and was going to the existing technology wasn’t going to carry it “A lot of community banks look at their back BB&T and several community banks. convert that bank’s IT to the Jack Henry plat- into the future. “The problem with a bank-in-a- office as a cost center,” he says. “We wanted to BB&T is a formidable competitor, particularly form over the same weekend. (People’s was box approach is you get everything from one go to that next level of transforming ourselves in the cash management arena for business using an FIS system before.) vendor, and that really limits you when you’re into a profit center.” customers, Mendez says. Silverlake includes All in, include investments in storage and looking for a certain type of mobile banking or In the past year and a half, Desai, another support for commercial cash management. Jack signature pads, the bank has spent $3.6 million social media [product],” Desai says. developer and a new hire have built about 15 Henry also has an iPad app for small businesses on this conversion. The return on investment for “We wanted a strong core platform and the commercial-grade applications using Open Solu- that helps them run their business from their the project is around 21%, based on reduced cost flexibility to make decisions as our needs change tions’ DNACreator. iPad “anywhere, at any time,” Mendez says. of processing transactions. down the road, so we can swap something out “There’s been tremendous interest from that’s not working and extend something that is clients in some of our products,” Desai says. A working,” he says. credit union in Hawaii has already bought one. The now $900 million-assets bank came up The applications the bank is building also are with a short list of vendors — Fiserv, Jack Henry meant to help internally, to eliminate operations lobal Core Conversion Chugs on and Open Solutions — and conducted a shoot- costs wherever possible. out. “We wanted a vendor that would not only Desai’s group recently created an ACH origina- in phases. Southeast Asia is complete, for ex- spokesperson said. allow us to keep our operating costs low but con- tion platform that automates formerly manual ample, and in the U.S. the bank has completed Critics have slammed Citi for going with a batch tinue to reduce them,” Desai says. “I know that’s ACH processes. “It’s a lights-out process, nobody processing, rather than a real-time transaction asking a lot. has to do anything,” Desai says. “The app validates Project Rainbow, as the project is called system. But the bank’s more ambitious goals “This was a huge deal for us, because we the file, customer, and limit; it generates excep- internally, began in South East Asia. “We first may be around customer analytics, for which it used the Rainbow name due to the seven initial recently purchased IBM’s Watson. weren’t just looking to replace the core, but also tions and exception emails; there are approval our merchant capture system, our online bank- links attached to the emails, somebody in author- countries that came together onto the common In a press release in March, the bank said platform to create something truly magnificent,” it “will assess ways to use a first-of-a-kind ing system, our business online banking system, ity for that customer has to approve those.” customer interaction solution combined with our data warehouse system, our enterprise These development projects have moved When this project has been completed, Citi Watson’s deep-content analytics, natural lan- reporting system, our wiring system, and our quickly. “These are not eight-hour days, we “will be able to give consumers more personal- guage processing, decision support, and evi- ACH platform,” he says. “This was a complete put a lot of sweat equity into building all these ized solutions and a consistent client experi- dence-based learning to continue to advance ence whenever and wherever they interact with digital banking.” With 200 million customer overhaul of the technology layer.” Ultimately applications for our bank and turn around and Citi, whether online, in a branch, through a call accounts in more than 140 countries, the bank the team chose Open Solutions. The project market them to other clients of Open Solutions,” center, on a mobile device, or at an ATM,” the has a wealth of consumer data to mine. began in April 2010 and went live Feb. 2011. One Desai says. unusual element: no additional IT resources “Our ulterior motive is to turn our IT opera- were summoned for the conversion. tions into a profit center.” ■

americanbanker.com american banker | fintech 100 |october 2012 17

017_FINOct12 4 9/21/2012 4:18:57 PM FinTech 100 | Global

“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 acqui- sition of Odyssey Group SA, a Luxembourg fi rm. “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. FINANCIAL Most banking platform vendors are trying to build accelerators like this.” — INGENICO 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. TECHNOLOGY 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 off set a decline in hardware sales.” Ingenico and U.S. rival VeriFone are almost neck and neck in reported 2011 rev- enues with Ingenico coming in just under, and VeriFone slightly over $1.3 billion. Hunt SANS FRONTIERES estimates that fi fty 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 com- PAYMENTS, COMPLIANCE AND ike a lot of executives at tech fi rms based out- provider Turaz, should provide more ammo for risk and pete more vigorously on VeriFone’s home turf. “Going forward, Ingenico may have an side the U.S., Shin Kusunoki is seeking a path compliance eff orts in the U.S. advantage in the U.S. migration to EMV cards, due to their depth of EMV experience in MOBILITY SPELL BIG REVENUE IN that leads to IT back offi ces in the States, and Of course, the U.S. isn’t the only market targeted Europe,” says Hunt. the big client wins that can result. But that by international IT fi rms. Opportunities in the EMEA In February, Ingenico acquired a controlling interest in ROAM Data, a rival of Square ALMOST EVERY CORNER OF THE path isn’t easy. region abound, and large U.S. bank tech fi rms such as that makes systems to turn tablets and mobile phones into POS devices. “We have seen L“In order to get into the U.S. market, we feel we need Fiserv and FIS also have vigorous international expan- a rapid shift in the last eighteen months to mobility,” says Christopher Coonen, execu- WORLD. FOR FINANCIAL a partnership with a local company,” says Shin Kusu- sion plans of their own. tive vice president, global sales, marketing and strate�y for Ingenico. TECHNOLOGY PROVIDERS noki, a senior vice president and division manager for In the following profi les, we take a closer look at Ingenico also makes its own mobile payment device dubbed iSMP, a sleeve that con- fi nancial and asset management solutions in NRI’s fi nan- Wincor Nixdorf, Misys, Evry ASA, Ingenico and Teme- verts an iPhone or iPod Touch into a POS terminal that accepts EMV, magstripe, and LOOKING TO HIT TOUGH EARNINGS cial technolo�y solutions division. nos, and the stories of their plans for local and global non-contact payment cards. The Tokyo-based NRI does most of its fi nancial expansion. —By John Adams The bulk of the business for both Ingenico and VeriFone is still in traditional POS TARGETS IN A FIERCELY services business in Japan, but is expanding into other systems for banks, retailers, and merchants, according to Hunt, who estimates that parts of Asia and India, and, as Kusunoki mentioned, is mobile accounts for less than two percent of cashless transactions. But, she adds, the COMPETITIVE ENVIRONMENT, seeking possible partners for U.S. expansion. trends are clearly in the direction of mobile payment. “NFC (Near Field Communica- NRI is not nearly alone, as almost all of the major TEMENOS tions), particularly if Apple, as expected, releases an NFC enabled phone with mobile GROWING MARKETS IN ASIA AND technolo�y fi rms outside the U.S. look to expand or move In a June report, Forrester Research ranked Temenos wallet attached could be a game changer.” — inside the U.S. in a larger way. From the big outsourcers Group AG (TEMN) as one of the top global banking plat- THE U.S. ARE AN ENTICING TARGET. like Tata Consulting, which has inked a North American form vendors with an excess of 35 deals done in more U.S. TECH FIRMS WOULD BE partnership to deliver broader cloud capabilities, to core than six global regions in 2011. Only fi ve of these were banking providers like Temenos, which has long sought in North America, the majority closing in Europe and EVRY ASA WISE TO BE ON GUARD. to bring its T24 solution to American banks, most of Asia/Pacifi c. In 2010, two Norwegian IT fi nancial services fi rms, EDB Business Partner Holding AS these fi rms have established a fi rm beachhead in the U.S. The Geneva-based fi rm competes with the likes of and Ergo Group AS, merged to form EDB ErgoGroup, now renamed Evry ASA and And they’re now looking for more as American banks Oracle, Infosys, and SAP to sell banks a platform that based in Oslo. The company remains focused on the Nordic market but dreams of a scramble to follow new rules, adopt new mobile chan- includes core banking, mobile banking, branch solu- more global presence. nels and migrate to new digital payment models. tions, and risk management. The heart of this platform “We have a lot of customers in the U.K.,” says an Evry spokesperson. “Our Indian Examples abound. Ingenico’s purchase of the U.S. is T24, a service-oriented architecture (SOA). “T24 subsidiary, SPAM (Sweden Poland America Norway), has a healthy business in Ameri- portion of Hypercom suggests the Paris-based payments comes with a huge set of parameters,” says Jost Hop- can bank and card services.” fi rm has its eyes squarely on VeriFone’s lunch. When permann, vice president, banking applications and Evry’s preferred development platform is Oracle. Like most service companies, the Paderborn, Germany-based Wincor Nixdorf looks architecture at Forrester Research in Cambridge, Ma. Evry also competes with Oracle Financial Services for customization and integration. It at the U.S., it sees a chance to make big waves in branch “By changing the parameters, customers can change has similar relationships with IBM and SAP. automation as American banks look to streamline the user interface, workfl ow, protocol for dealing with The intellectual property that is Evry’s core business was developed for the Nor- branches through strategies that remove paper and bring currencies, and organizational structures, all without wegian market where banks historically have invested with a 15�20 year lifecycle about other effi ciencies. And like all American bank IT changing the source code.” expectation for fi nancial software solutions. Part of the company’s strate�y to go more shops, the London-based Misys — which already provides There are currently about 560 installations of T�24. global is to reduce time to market for new functionality so customers can be more busi- a suite of treasury and capital markets systems in the U.S. “These are mainly universal and retail banks,” says John ness focused. and other markets — hopes to cash in on the Dodd-Frank Schlesinger, chief architect at Temenos. While Evry is not a platform vendor, the lines between the services it provides and frenzy, introducing a new risk and regulatory product Temenos is rolling out Enterprise Frameworks Archi- the software that support them is often blurred. line designed to tackle the tough, still developing, U.S. tecture (TEFA), which Schlesinger says will be complete Choosing a services company such as Evry is very diff erent from going with a plat- regulatory overhaul. Misys’s acquisition by Vista Equity in about three years. “Right now a typical T24 instal- form vendor such as Temenos. Partners, which includes a merger with risk management lation has about 50 user interfaces,” Schlesinger says, “Both approaches have advantages,” says Jost Hoppermann, vice president, banking

18 american banker | fintech 100 | OctOber 2012 americanbanker.cOm

018_FINOct12 7 9/21/2012 3:24:46 PM “but at JP Morgan Chase it is more like 4,800 interfaces. The TEFA data framework will applications and architecture at Forrester Research in Cambridge, Mass. “A platform make T24 much more scalable in environments like this.” vendor will likely provide a more out-of-the-box solution. A services fi rm like Evry will TEFA is also designed to facilitate integration with third-party products such as the likely do a custom-built integration. Which option a bank chooses depends on require- PWM (private wealth management software) Temenos acquired in 2010 with the acqui- ments and cost, and corporate culture; that is, the willingness to change business sition of Odyssey Group SA, a Luxembourg fi rm. “Odyssey is still not fully in line with practices at a detailed level.” T24,” Hoppermann says, “and, while TEFA looks like a nice architecture, I haven’t seen Evry is feeling the squeeze from SEPA (Single European Payments Area), which enough of the details yet to evaluate whether or not it can do this kind of integration.” requires EU countries to make international payments on the same cost basis as Aimed more at smaller customers is the Temenos Model Bank, an accelerator designed domestic. Another driver of innovation and cost containment is increased competition to speed up implementations. “It (Model Bank) is essentially a ‘bank out of the box,’” says particularly from Asia as Indian giant Tata shows itself more in European markets. —By Hoppermann. “New and existing customers could implement quickly and then modify. Mark Leon Most banking platform vendors are trying to build accelerators like this.” —By Mark Leon

MISYS INGENICO London-based Misys claims 1,800 customers in 120 countries. Its customer list includes Already one of the largest makers of point-of-sale terminal hardware in Europe, Ingenico 47 of the world’s 50 largest banks and 13 of the top 20 asset managers, according to the is moving aggressively into services, mobile payment systems, and the U.S. market. company. The Paris-based vendor’s acquisition in 2009 of EasyCash, a German payment Vista Equity Partners announced June 1st that it had acquired Misys and merged it services company, seems to have paid off . “Ingenico saw a 28% growth in its services with Turaz, which sells Kondor+ risk management software. Other key software pack- revenue last year,” says Rachel Hunt, head, EMEA (Europe Middle East Asia), IDC ages provided by Misys include Summit FT, a treasury and capital markets system that Financial Insight. “This partly off set a decline in hardware sales.” specializes in derivatives and structured products for global investment banks, and Ingenico and U.S. rival VeriFone are almost neck and neck in reported 2011 rev- Loan IQ, a commercial lending system used by 15 of the top 25 syndicated loan book enues with Ingenico coming in just under, and VeriFone slightly over $1.3 billion. Hunt runners. The Misys business serves four main verticals in the U.S., with dedicated estimates that fi fty percent of Ingenico’s business is in EMEA, but the company’s experts within each segment: capital markets, commercial lending, banking and the acquisition last year of the U. S. portion of Hypercom signals a strong intent to com- buy side, says Rick Salk, Misys’s North America sales director. provider Turaz, should provide more ammo for risk and pete more vigorously on VeriFone’s home turf. “Going forward, Ingenico may have an Adding Turaz strengthened Misys’s risk management and front-offi ce capabilities, advantage in the U.S. migration to EMV cards, due to their depth of EMV experience in he says. Misys has had “signifi cant client expansion” in the U.S. with its Summit and Of course, the U.S. isn’t the only market targeted Europe,” says Hunt. Loan IQ software packages, according to Salk. In 2011, the company had 28 “new name” by international IT fi rms. Opportunities in the EMEA In February, Ingenico acquired a controlling interest in ROAM Data, a rival of Square sales across its various businesses. region abound, and large U.S. bank tech fi rms such as that makes systems to turn tablets and mobile phones into POS devices. “We have seen In the U.S., more banking clients are looking to consolidate their systems to reduce Fiserv and FIS also have vigorous international expan- a rapid shift in the last eighteen months to mobility,” says Christopher Coonen, execu- operational costs and increase return on investment, and more are investing in fee gen- tive vice president, global sales, marketing and strate�y for Ingenico. eration businesses, he said. In the following profi les, we take a closer look at Ingenico also makes its own mobile payment device dubbed iSMP, a sleeve that con- “Misys is uniquely positioned in the market (because) we can provide multiple solu- Wincor Nixdorf, Misys, Evry ASA, Ingenico and Teme- verts an iPhone or iPod Touch into a POS terminal that accepts EMV, magstripe, and tions to our clients, as well as integrated best-of-breed cross-asset solutions,” Salk says. nos, and the stories of their plans for local and global non-contact payment cards. For its U.S. customers, Misys has created new risk and regulatory solutions to meet The bulk of the business for both Ingenico and VeriFone is still in traditional POS the requirements of the Dodd-Frank Act. The company has also introduced a client systems for banks, retailers, and merchants, according to Hunt, who estimates that portal that works with its major products and allows Misys Loan IQ to support mid- mobile accounts for less than two percent of cashless transactions. But, she adds, the market lending, complementing its syndicated lending capabilities. —By Keith Button trends are clearly in the direction of mobile payment. “NFC (Near Field Communica- tions), particularly if Apple, as expected, releases an NFC enabled phone with mobile In a June report, Forrester Research ranked Temenos wallet attached could be a game changer.” —By Mark Leon Group AG (TEMN) as one of the top global banking plat- WINCOR NIXDORF form vendors with an excess of 35 deals done in more Paderborn, Germany-based Wincor Nixdorf Inc., which provides hardware and soft- than six global regions in 2011. Only fi ve of these were ware solutions for banking and retail industries with a focus on improving customer in North America, the majority closing in Europe and EVRY ASA service and reducing costs for branches, is in the same boat as a number of large fi rms In 2010, two Norwegian IT fi nancial services fi rms, EDB Business Partner Holding AS as it navigates a tough international economic climate. The Geneva-based fi rm competes with the likes of and Ergo Group AS, merged to form EDB ErgoGroup, now renamed Evry ASA and Wincor Nixdorf is projecting earnings before interest, taxes and amortization of about Oracle, Infosys, and SAP to sell banks a platform that based in Oslo. The company remains focused on the Nordic market but dreams of a $127 million for the fi scal year ending Sept. 30, 2012, following EBITA of about $207 mil- includes core banking, mobile banking, branch solu- more global presence. lion for the previous fi scal year. This projected drop in operating profi t includes a $51 tions, and risk management. The heart of this platform “We have a lot of customers in the U.K.,” says an Evry spokesperson. “Our Indian million charge for an extensive restructuring that will cut more than 500 positions from is T24, a service-oriented architecture (SOA). “T24 subsidiary, SPAM (Sweden Poland America Norway), has a healthy business in Ameri- the company’s 9,200-employee workforce, mostly in Western Europe. Half of the cuts comes with a huge set of parameters,” says Jost Hop- can bank and card services.” are to be completed in the current fi scal year, and half in the 2012�2013 fi scal year. permann, vice president, banking applications and Evry’s preferred development platform is Oracle. Like most service companies, According to the company, the goal of the restructuring is to substantially architecture at Forrester Research in Cambridge, Ma. Evry also competes with Oracle Financial Services for customization and integration. It strengthen its global competitiveness and target business activities faster in emerging “By changing the parameters, customers can change has similar relationships with IBM and SAP. markets. Oliver Weber, CEO of Wincor Nixdorf U.S., says the restructuring will benefi t the user interface, workfl ow, protocol for dealing with The intellectual property that is Evry’s core business was developed for the Nor- the company’s U.S. business, because it aims to allocate research and development currencies, and organizational structures, all without wegian market where banks historically have invested with a 15�20 year lifecycle investments into markets with the biggest growth opportunities. expectation for fi nancial software solutions. Part of the company’s strate�y to go more “We have invested in the build-out of our sales, service and operations organiza- There are currently about 560 installations of T�24. global is to reduce time to market for new functionality so customers can be more busi- tion in the last (several) years and we will continue to do so,” Weber said. “Since the “These are mainly universal and retail banks,” says John ness focused. U.S. market represents a very attractive growth opportunity for us, we expect positive While Evry is not a platform vendor, the lines between the services it provides and results from these investments.” Temenos is rolling out Enterprise Frameworks Archi- the software that support them is often blurred. Besides new deposit automation technolo�y, the next wave of modernization will tecture (TEFA), which Schlesinger says will be complete Choosing a services company such as Evry is very diff erent from going with a plat- include consolidating deployed technologies to completely remove paper from the in about three years. “Right now a typical T24 instal- form vendor such as Temenos. branch, Weber says. This will improve sales and service at the branch level while driv- lation has about 50 user interfaces,” Schlesinger says, “Both approaches have advantages,” says Jost Hoppermann, vice president, banking ing down costs. —By Keith Button �

americanbanker.com american banker | fintech 100 |october 2012 19

019_FINOct12 8 9/21/2012 3:25:07 PM FinTech 100 |

ject to in the event of a breach that can be tracked back to negligence or fraud on the part of the provider. How to Manage • Square peg, square hole. As mentioned at the start of this piece, banks contracting for public cloud services are Vendors in the buying into a commodity. For most banks, public cloud services are being considered because they can deliver computing capacity at a Public Cloud lower price than on-premises options. However, banks have By Jeanne Capachin higher service requirements than the average business, and some service levels cannot be compromised to reduce costs. Banks must ensure that they anks are moving aware that banks are contract- the bank uses to manage its trust their guts and make sure are making the right kinds of away from having ing with cloud providers, but owned assets. One common they have confidence in the trade-offs when they procure direct control over little guidance is provided. question that is missed is provider’s ability to maintain a cloud services, and are choos- their technology The bottom line from the about how the provider con- culture of vigilance. ing a provider that can support assets to increased FFIEC is that financial institu- trols access to backup data • Plan for the unexpected. a bank’s requirements – now B reliance on managing technol- tions should use the same and disaster recovery. Banks Just as wealthy older grooms and in the future. ogy through contracts. approach to cloud computing will tour primary processing require their younger, Fortunately, public cloud As banks move to public that they currently use with locations, but will often not impoverished brides to sign providers make their con- cloud providers, they are traditional outsourced tech- use the same diligence when pre-nuptial agreements, bank- tract terms and service level recognizing that procuring nology. This is good as far as it probing the provider regard- ers need to plan for the worst agreements publicly avail- cloud services may require a goes, but there are some best ing the complete data life at the start of the relationship. able, so banks can educate shift in contract negotiation practices we have compiled cycle. Providers should offer Part of the contract nego- themselves about the standard and vendor management. from our discussions with details on where back-ups are tiation process must address options each offers. Although Buying public cloud services banks and providers. Follow- stored, how chain of custody termination. Banks must have low-cost providers may be moves software and process- ing are a few points to consider is tracked, how data is secured explicit exit clauses that docu- attractive, requiring too much ing environments into the and discuss with legal counsel in transit, and how retired ment those conditions that customization or additional realm of commodity services and your procurement group. assets are wiped clean after will nullify the contract and requirements can diminish the — providing much less room to • Security and data protec- assets are re-deployed or after allow the bank to take over economic returns for the pro- negotiate contract terms and tion. We have to start with data retention time periods processing. In addition to vider, and may not adequately have been met. Banks must setting the legal parameters, protect the bank. also consider the geographic the bank must also plan for Best practices dictate that locations where all data will be the logistical aspects when banks seek providers whose Human error — whether true kept at rest or in transit, and a processing arrangement standard offerings provide a ensure that there are no con- terminates. Banks must be higher level of service, and mistakes or those that have flicts due to legal jurisdictions. clear about the format of the can guarantee that they been coaxed along with social • People. In addition to data they will receive in an can comply with banking making sure that data is pro- extract, specify a reasonable regulations and availability engineering — are among the tected, banks must also ensure timeframe for delivery, and requirements. that the provider has well- make sure that all definitions Although most banks biggest risks in any trained staff. Human error and schema are also provided have experience with tradi- — whether true mistakes or by the vendor. tional outsourcing, and even processing environment. those that have been coaxed Short of termination, near-cloud services such as along with social engineering there are other unforeseen card networks, check image — are among the biggest risks circumstances that can occur. warehouses, and co-location service level agreements. security as that tops every in any processing environ- Contracts or service level services – for many, the word Most bank technology bank’s list of concerns about ment. All staff from operators agreements will include the “cloud” gives them pause. In organizations use traditional public cloud. Unfortunately to executives must be trained vendor’s incident response many ways, accessing shared technology procurement though, banks often focus in to be vigilant so that they can plans and when and how sus- assets through shared net- practices. But with cloud, the the rear view window as they recognize attacks underway pected or actual events must works is same old, same old contract is for use of pre-estab- review providers’ security and not fall prey to rapidly be communicated to the bank. for banks. But there are some lished commodity services. controls. Providers tell us evolving techniques. IDC Liability for data security real differences that banks With commodities, margins that banks are overly focused Financial Insights has yet to breaches must be addressed, should focus on when they are slimmer, customization on physical security, while find an easy way to measure as well as making sure that the engage with cloud service doesn’t occur and there is paying much less attention this capability, as it’s more vendor has adequate insur- providers. ■ little room for negotiation. to more common attack vec- about the culture of the pro- ance coverage to support their The recent FFIEC statement tors. This is probably due to vider than about checking off level of indemnity. Coverage Jeanne Capachin is research on external cloud computing an over-reliance on leveraging boxes with training programs. should include any penalties vice president with IDC shows that U.S. regulators are the same kinds of controls This is where bankers need to or fines the bank may be sub- Financial Insights.

20 american banker | fintech 100 | OctOber 2012 americanbanker.cOm

020_FINOct12 9 9/21/2012 3:24:57 PM FinTech 100 | Branch Automation

Your customers are visual, auditory or kinesthetic. The visual learners like We Are Still to see things, the auditory learners like to listen, and the kinesthetic learners like to touch. While most people Banking In a have a dominant character- istic, many people need a combination of two or more modes before making a final Physical World decision. This holds true in bank- By Marc DeCastro ing and financial decisions. On the banking side, one may start a process based on something they have seen – this could be an electronic n the movie “Monty respondents to identify how battle cries that online bank- This still requires that the message from the ATM, from Python and the Holy Grail,” they have interacted with their ing will be “stone dead” just banks and credit unions have online banking, or driving by there is an often quoted financial institutions over the like the branches! It is unlikely a physical presence, despite a branch and seeing a great scene where the town last 30 days. The 2012 survey either will be obsolete any all the access to technology rate on some product. They officials are picking up the had 2,663 respondents; the time soon. that helps us skip the teller may have started learning I deceased from the plague and 2011 survey had 2,560. This particular survey has line. This actually makes from the visual side, but need loading them into a cart as the staffing the branch more of a more input. They then hear a official screams out “bring out challenge, not knowing when friend talking about the great your dead.” One particular old ConsuMer Banking CHanneL usage those transactions may occur rate that they got from the man is being loaded into the 2012 2011 and ensuring a good experi- same institution, and now it cart who is not exactly fully ence for the customer once at resonates that this may be for deceased. The dialog goes like Branch teller 85.1 78.5 the branch. them. this: Internet 84.8 85.3 If customers were not They go online, look up Cart-Driver: “He says he is Branch ATM 81.8 71.3 interested in branch networks, more information, then head not dead.” Debit card purchase 78.4 67.1 we would see a much higher into the branch to apply for Townsman: (with old man Debit card with cash back 54.9 41.8 penetration of customers that product. Why didn’t they draped over shoulder): “He is At another ATM 48.3 39.5 willing to use 100 percent go online and finish the trans- quite ill.” Mobile 43.8 23.2 online institutions. Time will action? Perhaps it is because Old Man: “I am getting Call Center 38.3 24.9 tell if the recently launched to them it is more important better.” Simple (formerly known as to be able to talk to someone, Townsman: “No you are BankSimple) will be successful particularly if it is a complex not, you will be stone dead in The most often cited trans- been conducted annually for with their “leave your bank” transaction. This has not a moment.” action type in 2012 was at the the last four years and the program, which is a product changed, no matter how much It is easy to compare the branch with a teller. In fact, results speak for themselves. basically built around a debit technology we throw at the card with online and mobile customer. banking. As we continue to see new If history is an indica- channels added in banking, Year after year, the branch continues to defy tor, Simple will encounter the reality is that we are just significant head winds with- increasing and spreading the critics and is in fact not going to be out a teller network. It is out the transactions across “stone dead” any time soon. not just a physical ATM that both physical and digital customers want, they want a worlds. The ATM took some teller or platform representa- transactions away from the tive when they walk into a teller, online took some from old man to today’s branch net- across all age groups, the teller The trend continues to be branch. In fact, with remote the ATM, and mobile is taking work. Everyone keeps saying transaction was still being that each channel is seeing an mobile deposit, even making some from online. What is the branch is dead, that there used at least once a month. increase in customer interac- a deposit has become easier, not changing is that at the is no need for it anymore with This despite the fact that tion, but not necessarily in thus it may put even more of core, the face-to-face meet- all the advances in technology. nationwide branch foot traf- number of transactions con an emphasis to want to bank ing cannot be ignored. If you From a technical standpoint, fic continues to dwindle and ducted with each channel. For with an organization that has a know how the scene ends in there is some truth to those new technology continues to example, the branch transac- physical presence. “Monty Python’s Holy Grail,” beliefs. However, year after decrease our need to interact tion for many has contracted From a psychological you know that ultimately the year, the branch continues to with a human. In fact, all chan- from once a week to twice a standpoint, let us look at old man ends up in the cart. I defy the critics and is in fact nels, with the exception of month or less. If this were the the way most people digest don’t see a similarly gloomy not going to be “stone dead” online, saw an increase in indi- case for all customers, then information and educate ending for our branch net- anytime soon. viduals using the channel at the total number of branch themselves on any particular work — at least not for a long Let us look into why the least once in the last 30 days. transactions would have topic. There are three modes time. ■ branch is in fact not dead Interestingly, the main reason decreased by 50%, but the of learning styles that define yet. In IDC Financial Insights’ for the decline in online is the same number of people will most customers. This research Marc DeCastro is research Consumer Channel Prefer- rise of mobile, so perhaps at be conducting transactions at has been around since the director, Consumer Banking at ence Survey, we asked our some point we will hear the least once a month in a branch. 1920’s and still resonates today. IDC Financial Insights.

americanbanker.com american banker | fintech 100 |october 2012 21

021_FINOct12 10 9/21/2012 3:25:06 PM FinTech 100 | Retail Channels

willingness on the part of government to establish price controls and restrictions on financial institutions, while non-banks, seen as value creators, are allowed to grow unchecked. In order to escape from this trap, banks must find Why You Should Care ways to exert greater influence over their customers’ eco- nomic lives. Reward programs offer a About Merchant- way to do this that builds on the information assets that banks already possess – the transaction history of the con- Funded Rewards sumers that use their payment instruments. By Aaron McPherson Through their use of services such as Google and Facebook, consumers have strongly signaled that they are willing to sacrifice some per- n the last five years, a customer relationships. sonal privacy in exchange for number of financial insti- This is a substantial para- meaningful benefits. tutions, including Bank digm shift, requiring financial Financial institutions can of America and Regions institutions to fundamentally get their customers’ consent Bank, have extended rethink their business model. to participate in targeted mar- I their card reward programs Instead of zealously guarding keting by: with targeted offers generated their customer information, • Explaining the far richer by merchants. The essential they must be willing to share it, rewards that can be earned features of the model are as for a price. through the new system; follows: However, in a time where instead of pennies on the • Merchants define a target the traditional business model dollar, consumers can get group of consumers, based on is under attack from all sides, 20% or more. Linking the new such variables as age, income incumbents must be willing to rewards to the well-under- range, address, and total move beyond that model and stood coupon can help aid spend in a particular mer- meet their attackers on their understanding. chant category. own territory. • Providing consumers • An intermediary, such What is often mistakenly with full control over how as Affinity Solutions, Cartera referred to as “disinterme- many offers they receive, and What is often mistakenly Commerce or Cardlytics, diation” is in fact just the through which channels. referred to as “disintermediation” sends a query to its partner opposite, intermediation, • Giving consumers an easy financial institutions, asking the insertion of a third party way to opt-out of the rewards is in fact intermediation, the for a list of customers that between the service pro- altogether. belong to the target group. vider and the customer. In • Partnering with local insertion of a third party between • Customers on the list who most industries, this occurs businesses to encourage have opted in to the targeted to improve efficiency and participation. the service provider and the offer program are sent the achieve economies of scale. By acting as a channel customer, improving efficiency. offer via e-mail, banner ad For example, in consumer for targeted rewards, finan- on the online banking site, or packaged goods, distribu- cial institutions can make in-line messages appearing tors reduce the number of themselves more relevant to underneath related historical interconnections between businesses and increase their transactions on the online manufacturers and retailers, leverage in negotiations over banking site. keeping a share of the savings fees, sales of core financial What all of these programs for themselves in the form of products, and participation have in common is that they a markup. in emerging mobile payment enable the financial institution The threat to banks is schemes. to act as a marketing channel not so much to their existing If, on the other hand, finan- for non-financial businesses. business as to their growth cial institutions stay in their Where the traditional bank prospects; with non-banks safe but confining traditional loyalty program was focused seizing most of the new oppor- markets, they will face dimin- on increasing usage and sales tunities to add value, banks ishing opportunities. ■ of bank products, these new are trapped in a low-growth, programs are focused on non- low-margin business, seen Aaron McPherson is bank products. The revenue primarily as utilities rather practice director, comes in the form of a com- than value creators. This has Payments and Security, mission tied to new sales or led directly to the increasing at IDC Financial Insights.

22 american banker | fintech 100 | OctOber 2012 americanbanker.cOm

022_FINOct12 11 9/21/2012 3:25:15 PM FinTech 100 | Innovation

their age as data process- ing throughput increases alongside the number of new How to requirements that need to be reflected in legacy technology environments — new products, new channels, new risk man- Change Your agement reporting mandates, and so on. Incidences of oper- ational outages and failures have been well publicized in Business Model the past and will become even more frequent as legacy core By David Potterton systems are taken to the point of breaking. Against this backdrop of legacy infrastructure, chang- ing technology, and real he financial services guy to make. ity, consistent interactions, management, and policy business need, we believe industry continues Unfortunately, these are greater customization and administration to make sure solution providers are in an to be challenged by exactly the types of decisions preference recognition. they are aligned to support ideal position to help financial a number of factors that we believe bankers, as For financial institutions, the new end user. A critical institutions focus on the future including regula- well as their solutions provid- these new expectations component of this review is and build a more coopera- T tory/compliance changes and ers, need to reject. Instead, we necessitate a redefining of the employees themselves, tive environment that will be constant cost pressure. In see a need for dramatic shifts numerous areas including who must have the skills and more efficient and allow banks addition, formerly reliable in the banking business to customer centricity, cus- tools to deliver quality and to create truly differentiated sources of revenue are drying adjust to current and future tomer service, and customer service to their customers. services. For these providers, up, especially in the U.S. and demands, especially as tech- preferences. For example, in some depart- partnering with IT will be criti- many European nations. nologies such as mobile are Ultimately, the challenge ments there might be a need cal to success. Some key areas Therefore, financial institu- changing the landscape and for companies is how to to use smart mobile devices; to start include: tions should be thinking more have put consumers in charge develop the products and either their own or supplied • Change the IT operating strategically around how to of when and how they want services necessary to deliver by the organization. model to drive cuts but also redefine their business model to deal with financial institu- value based on these new This bring your own device work across channels for more in this new era including iden- tions. Change for the industry expectations. Therefore, (BYOD) debate is currently effective decision making tifying new sources of revenue can longer be incremental and companies need to think taking place in most if not all around IT choices. and cost containment. slow moving as more nimble strategically about key areas companies today and has a • Implement technology To accomplish these goals, competitors continue to offer of interaction impacted by profound impact on how IT solutions that provide a single however, financial institutions new products and services. changing technology includ- can and should support both view of the customer through need to take a good, hard, While regulation does not ing their solution strategy, OS current and future employees. secure integrated channels objective look at their current make for a level playing field, environment, and cost effec- • IT Transformation — The and a consistent experience. business model and begin to that is not to say that banks tive access management. In increasing number of access • Provide key business take some bold steps to move need to sit on the sidelines addition, companies need to channels, mobile devices, and information such as tracking end user/employee expecta- customer sentiment, usage, tions presents particular and profitability through challenges for IT. analytics. From discussions with financial services For financial institutions to Realistically, however, we be successful today, IT can no believe most financial institu- professionals over the year, we have come to an longer dictate how end users tions in the near term will unfortunate conclusion: most bankers do no yet and the enterprise interact but continue to implement rela- instead must understand the tively minor changes within recognize that the pre-2008 world no longer exists. changing dynamics brought existing business silos to about by these technologies manage short term profitabil- and adjust accordingly. This ity expectations. takes true IT and business The unfortunate result in the direction of their cur- pining for the good old days. determine the level of person- alignment which starts with will be a continued erosion rent and potential customers. Here are a few of the proof alization and customization understanding the chang- of profitability under existing However, from our discus- points we see as to why banks they will deliver to their end ing business issues in the business models. For those sions with financial services must adapt. users. marketplace. willing to move more aggres- professionals over the past • End User Transformation • Enterprise Transforma- Once IT has this knowledge sively towards the future, we year, we have come to the — The consumerization of IT tion — Once organizations and understands the value of believe the time to do so is unfortunate conclusion that has the net result of mobile have decided how they will supporting this model within now. ■ most bankers have not yet smart devices and apps touch- address their external end the enterprise, it can review recognized that the world as it ing most if not all commerce user demands for products the organization’s policies, was pre-2008 no longer exists. applications. In addition, end and services, a key next step is tools, and technology deci- David Potterton is vice presi- It appears we have gone back users today have higher expec- to look inwardly at their abil- sions to help differentiate their dent of research for the Global to business as usual: a small tations for the companies they ity to deliver. This includes a organization. Banking, Insurance, Capital upgrade here, a software choose to do business with review of crucial departments Buffeting this need for Markets and Risk Management tweak there, and let’s leave including bundled products, such as operations, customer change are back-end sys- practices of IDC Financial the hard decisions for the next 24/7 cross channel capabil- support, marketing, product tems that continue to show Insights.

americanbanker.com american banker | fintech 100 |october 2012 23

023_FINOct12 12 9/21/2012 3:25:40 PM FinTech 100 | Data Management

applied to the big data trend? 5. Model governance — Analytics and modeling excel- lence are core to success in our industry. As big data, mod- eling and analytic excellence rise in importance as a differ- entiating business capability and compliance requirement, what steps must be taken for financial firms to re-orient GRC programs and explicitly focus on frameworks, goals, Can Big Data Become and best practices for model governance? Over at least the last decade, data management A Big Liability? has been in a reactive mode, responding to gaps in the environment exposed by By Michael Versace inefficiencies, breaches and failures, which have led many times to new legal or regulatory imperatives. These he world’s informa- create solutions and intercon- oversight. ernance. Can big data become reactions have fueled both the tion ecosystem runs nect trillions of things that The third platform a big liability? The answer is retrofit of existing processes increasingly on what directly or indirectly affect is already playing out in undoubtedly yes. Poor big for governing data (e.g., creat- we at IDC describe our lives. Most banking execu- financial services, as seen data governance will most ing Sharepoint storage pools as “third platform” tives agree that they must in the continued build-out likely lead to management for unstructured content and T technologies. The conver- be successful at embracing of cloud infrastructure and and system failures, breaches, file based data classifications gence of intelligent devices these new technologies and mobile banking platforms and missteps, which in turn schemes) and the acquisition (consumer products such as the capabilities they enable, worldwide. But of the four will generate standards, and of new point solutions to ease smartphones and tablets, as or else lose traction in the major third platform trends, potentially regulatory guid- the pain of satisfying new well as smart buildings, smart continuous march toward the implications of big data ance. So now is the time for requirements, such as elec- infrastructure, smart cities, competitive advantage and and analytics, and the infra- the industry to engage in tronic discovery. Now enter etc.), social networking, per- improved profitability. structure enabling big data discussions on a number of the era of big data. applications seem to be big data governance issues, The big data trend pro- least understood, based on including these top five: vides yet another chance to recent interviews with bank 1. Evolution of governance address what has been missing Almost 48% of firms recently IT executives earlier this year. programs — How data gov- for many — proactive, strate- However, more recent data ernance and organizations’ gic thinking about the data surveyed have implemented, suggests the fog is clearing. models will evolve with the governance challenge. Data At the end of 2011, IDC advent of big data. management is no longer only are implementing, or are Financial Insights forecasted 2. Ownership and privacy about messaging, databases, that over 40% of all Tier 1 protection — What will be and storage, feeds and speeds. evaluating financial applications firms would gear up to execute the impact on personal and The big data trend should built with big data technologies big data / analytics business corporate privacy and owner- force management once again and technology strategies in ship protection policies when to see the degree to which such as Hadoop and MapReduce. 2012. external data is on-boarded data is permeating the orga- Today, this forecast and intermingled with enter- nization and becoming more appears conservative, as prise data. than ever the currency of third vasive broadband networking, Business architecture, almost 48% of firms we 3. Scalability of security platform financial services. and analytics will undoubtedly including everything from recently surveyed have imple- – Can existing information pro- The business challenge redefine the relationships brand positioning to products mented, are implementing, or tection and security systems now is to govern this trend between bankers and their and marketing strategies, are evaluating third platform and technologies properly without restricting innovation, customers and partners. to customer engagement financial applications built scale to maintain a sustainable by ensuring that all big data Banks will use this “third and operating models, to with big data technologies risk profile when assessing the is known, declared, classified platform” to create prod- performance of governance such as Hadoop and MapRe- confidentiality, integrity, and and managed to maximize ucts for small to enterprise functions will be challenged duce, and over 21% plan to availability requirements of value and minimize risk. business users, consumers, by these technological invest more than $1 million big data applications. Sustainable big data gover- students and travelers that will advances as many firms look on their big data strategies in 4. Lifecycle management nance has to become part of provide content and experi- for sustained profitability and 2012, with a small perentage of – Are there new information the DNA of the organization ences more tightly linked growth. Success will be more firms, less than 4%, planning lifecycle management, data and, like quality controls, to their individual pursuits, difficult to come by given cur- to invest over $100 million. inventory and classifica- embedded in every business needs and wants. rent economics, as brands Many discussions around tion requirements? How process. ■ These applications and continue to be negatively big data trends and applica- should decades-old records services will be built on inno- impacted by performance, tions in banking and other management standards Michael Versace is a research vative mash-ups of the third media and shareholder pres- regulated industries quickly of accountability, custody, director at IDC platform’s four pillars and will sure, and increased regulatory turn to issues of risk and gov- stewardship, and so forth be Financial Insights.

24 american banker | fintech 100 | OctOber 2012 americanbanker.cOm

024_FINOct12 13 9/21/2012 3:25:25 PM