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 Bank 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 banks 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 1 001_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 financial services, 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. 2 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 London, UK Public 897 897 100 20 19 Equifax Atlanta, Georgia Public 1,960 804 41 21 22 EDB Ergo Group Oslo, Norway 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.