First Details Of Forrester’s 2013 Global Banking Platform Deals Survey

Forrester began surveying global banking platform deals in 2005. For 2013, we evaluated about 1,600 banking platform deals submitted by 29 vendors and located in about 130 countries. Shortly, we will publish the final results of this evaluation. Today, I want to offer some initial trends:

  • Counted deal numbers are the second highest ever. The number of counted new named deals is the second level we have yet recorded. The number of new-named deals shrunk; extended business deals increased and the banking platform market grew. 
     
  • The banking platform market shifted gears again. Top 10 vendors still represented the vast majority of new named deals that we counted, but fewer vendors than in 2012 enjoyed more than ten percent of all counted deals.
     
  • Banks' total assets indicate three vendor categories. One group of vendors won very small banks only and another group’s projects reached up to medium sized-banks. Only six vendors’ clients touch the total assets range of tier 1 banks (and go beyond it).

All the details will be available with a series of forthcoming reports focusing on the success of the participating vendors, the regional success perspective, as well as delivered functionality. If you do not want to wait: I will share some of the results during a Forrester Teleconference on February 27 As always, let me know your thoughts: jhoppermann (at) forrester.com.

Sophisticated Online, Internet, And Mobile Banking Solutions Help Banks Differentiate And Contain Costs

The bank I mainly use for my daily banking needs does not offer that many examples of great customer experiences. The two reasons why my family continues to use that bank are the high number of ATMs in the area where we live and a very customer-oriented branch advisor. Our most recent interaction with that bank (but not with that advisor) delivered yet another example of “great” customer service across channels, an experience that will likely cause us to look for a new bank. The chances that this yet-to-be-determined bank can offer better cross-channel capabilities at least at some point in the future are not bad at all: Many financial services firms are evolving beyond using just a single channel to get in touch with their customers (see the figure below)

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Haste Makes Waste — Take Your Time When Selecting Business Applications

When my teenage son is interested in purchasing a mobile phone, some PC equipment, or a games console, he will typically spend weeks gathering the necessary information to arrive at a well-informed decision. He once told me that he feels this is necessary to make the best use of his savings — a trait that I do not always observe banks around the world exhibiting.

Recently I had a phone call with a few people from the business side of a medium-size bank somewhere in the world. Their challenge? They wanted to use the best method to find the mobile banking application most suited to their bank. Their real challenge? They had no time to make a deeper assessment of their individual business and technology situation and only wanted to get proof that their approach would be the right one. They wanted a clear recommendation within a few days.

Unfortunately, it’s not that easy. When I know nothing about a bank’s business environment, its supporting application landscape, and its underlying technology, I am very reluctant to offer more than a long list of business applications, regardless of whether the topic at hand is mobile or cross-channel solutions, core banking, or something else. This is in line with a research report about best practices for banking platform transformation that Forrester published some time ago. At the time, we identified a few key reasons common to major banking platform transformation failures. One of those reasons: ill-designed shortcuts.

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Influence Forrester’s Future Banking Apps Coverage

Forrester’s latest survey on financial services architecture shows that financial services firms in general, and banks in particular, put a high priority on a few selected topics (see the figure below). Our banking-specific research for AD&D professionals has focused on topics like banking architecture, banking platforms including core banking, Internet and mobile banking (to be published soon), and multichannel enablement. Forrester’s more industry-neutral research has covered aspects such as analytics, business intelligence, big data, customer relationsship management and other, less industry-specific, areas of business applications.

We have also started preparing a report about the key building blocks of today’s risk management solutions. However, my recent discussions with Forrester clients have covered plenty of additional topics, including anti-money-laundering, branch apps, private wealth management, lending in retail/consumer banking, corporate/commercial lending and its syndicated flavors, mortgages, trading, and treasury, just to mention a few.

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2011 Wasn’t Good, 2012 Was Great: Global Banking Platform Deals 2012

Next week, I will present first results of Forrester’s 2012 global banking platform deals survey. A total of 28 banking platform vendors submitted their 2012 deals for evaluation. One year ago, the same set of deals would have included at least one more vendor: Sopra Banking Software’s solution portfolio now includes those of past survey participants Callataÿ & Wouters and Delta-Informatique. These theoretically 29 participating vendors submitted a total of close to 1,900 banking platform deals, a steep increase compared with the about 1,000 submitted deals for 2011.

We had to classify a large share of these 1,900 banking platform deals as extended business or even as a simple renewed license — if the vendors did not already submit them with the corresponding tag. Forrester’s rules of the game did not allow us to recognize further deals; for example, if a non-financial services firm signed a deal, that deal was “only” about pure services or application infrastructure. Overall, Forrester counted close to 350 of the submitted deals as 2012 new named customers. 2012 is the first year with double-digit growth in banking platform deals since 2006.

For the first time, Forrester did not only count new named clients, but also scrutinized (and counted) extended business deals at a very detailed level. This provides two perspectives on the global banking platform market: How well do vendors play the game of expanding the client portfolio, and thus their market footprint? What is a vendor’s level of success in a given year? The outcome: Market dynamics have changed, and many vendors have moved up or down in the global success pyramid – and some barely defended their traditional positions.

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Are You Ready To Move Away From Deterministic Build Or Buy?

 

One of our recent surveys on business applications shows that more than 60% of business and business technology (BT) decision-makers consider consolidating, rationalizing, and transforming their business applications a high or critical priority — business applications drive three of the top four software initiative priorities (see the figure below). If we include closely related analytics, business intelligence (BI), and decision support tools, we cover all four top priorities.

 

At the same time, business and BT execs responsible for a variety of different business and IT domains across multiple industries typically explain that customer experience has moved to center stage; digital value has increasing importance in an information society and an information economy; and better use of things like real estate, intellectual property, available inventory, skilled personnel, and digital assets has become mandatory to manage costs and create new revenue streams. Managing and reducing costs in a continuously changing business and IT environment remains a key driver for functional departments in many firms.

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Banking Platform Functionality Includes Support Of Regulatory Compliance

During the past decade, I have worked with many analyst relations (AR) people as well as specialist AR firms. I have never blogged about them in the past, and I have no intention to do so in the future. Earlier this week, however, I saw that an employee of one of the specialist AR firms authored and published a comment on my most recent report: “Global Banking Platform Deals 2011: Functionality”.

This comment gives the impression that my report only provides common wisdom in that it only suggests that “one of the key differentiators for system selection is a strong track record.” The author also explains that this “may be at odds with the current market landscape as new regulations are set to change the way that the capital markets work and vendors are all developing new functionality to cope” – just to mention a few examples.

My perception is that the author either did not read my entire report or preferred to focus on the six-and-a-half-line summary of an eleven-page report – with a comment that is longer than the summary. Why this perception? First of all, the report is about banking platforms, and Forrester’s definition of banking platforms does not even mention capital markets. More importantly, I do not disagree at all with the author’s statement as far as the relevance of supporting new regulation is concerned – just the opposite, albeit more from the perspective of retail/consumer, private, or corporate/commercial banking.

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The 2012 Financial Services Architecture Survey Has Started

When designing application infrastructure strategy, planning for the renewal of their application landscape, or assessing their overall strategic position, banks and other types of firms in financial services typically like to know the answer to the question: “What are the others doing?”

Source: November 8, 2010, “Financial Services Firms Again Seek To Renew Their Application Landscape” Forrester Report

It is time now to update the survey results: Forrester has just started surveying banks in North America, Europe, and further geographies about the current state of their application landscape, their key issues and concerns, and their plans for the future. At a high level, the survey is designed to answer the question: “What are others doing?” Phrased in a different way, it targets the question: “What are the key trends regarding the transformation of the application landscape in financial services in its multiple facets?”

To make this survey successful, Forrester needs your help. If you are working in financial services in any role that is related to financial services architecture and application delivery (including the more planning-and-strategy-oriented aspects of application delivery), please participate in Forrester’s Global Financial Services Architecture Survey 2012. Please contact Reedwan Iqbal (riqbal@forrester.co.uk) who will send you a link to the online survey.

Thanks a lot for your help,

Jost Hoppermann

2012: The End of The World Or The Year Of Banking Platform Mergers And Acquisitions?

Some people say that the old Maya calendar predicts that the world will end in the year 2012. Will this happen? Most likely no. Without judging anybody’s beliefs in this ancient calendar: Some experts say that the Maya calendar is like a five-digit odometer in your car: When it reaches 99,999 kilometers or miles, it will restart at 0. However, 2012 is beginning to show the ingredients of the long-expected stronger consolidation in the banking platform space.

While it is not yet clear whether Misys and Temenos will merge to move out of the gap between gorillas and antelopes, French software and services company Sopra announced “a project to acquire a majority stake in the Belgian company Callataÿ & Wouters (C&W).” For obvious reasons, it is too early to provide any detailed comment on this announced merger. However, I see two initial areas of interest:

  • Sopra’s ability to integrate the new capabilities technology-wise and organizationally. Sopra has acquired firms in the past. However, its acquisition speed has accelerated enormously: It acquired Delta-Informatique in October 2011 and proposed the acquisition of Tieto Corporation’s UK financial services product business and the UK subsidiary of Business & Decision on February 13 — just four days ago.
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The Merger Of Misys And Temenos — Moving Out Of The Gap Between Gorillas And Antelopes

Less than a week ago, initial information became public that Misys and Temenos may intend to merge. On February 7, 2012, a press release stated that “Temenos and Misys today confirm that they have reached agreement in principle on certain key terms and are in continuing discussions regarding a possible all share merger of the two groups.“ Now Misys and Temenos have about one month to finalize their merger — or abandon it. It is obvious that this merger has the ingredients to become one of the most significant mergers in the banking industry in the past few years. With the probability of the merger now sufficiently high, here is my initial take.

There are two obvious reasons for this potential endeavor of Temenos and Misys (let’s call the combined company MIsys-TemeNOS [“MiNos”] for the time being to avoid terms such as “new company” or “NewCo”):

  • A broader and deeper product portfolio for banking and capital markets. While Temenos has been a Global Power Seller in Forrester’s global banking platform deals survey for years, Temenos has so far struggled to win a large number of major banks as customers for its banking platform. The combined portfolio could make “MiNos” more attractive for larger as well as smaller potential customers — with an even broader set of point solutions as well as integrated apps offerings such as banking platforms.
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