Temenos Ag · SIX:TEMN
Temenos — Investor Day (February 2015)
108 slides from Temenos's investor day presentation, Feb 11, 2015
Slide 1: Customer success in the digital age
Customer success in the digital age Analyst & Investor Event 11 February 2015
Slide 2: Disclaimer
Disclaimer Any remarks that we may make about future expectations, plans and prospects for the company constitute forward-looking statements. Actual results may differ materially from those indicated by these forward-looking statements as a result of various factors. In particular, the forward-looki
Slide 3: Today's agenda
Today’s agenda 10.00 to 10.45 Strategy and vision David Arnott, CEO 10.45 to 11.15 A new era in banking Juan Pedro Moreno, Accenture Global Senior Managing Director - Banking Industry 11.15 to 11.30 Coffee 11.30 to 12.00 Experience driven banking Dharmesh Mistry, Product Director UXP 12.00 to 12.30
Slide 4: Key takeaways
Key takeaways • The structural drivers for technology renewal are stronger than ever • We are extremely well placed with the best products and record of customer success • We are executing against a very clear strategy • We are focussing on key strategic initiatives • We expect strong software licen
Slide 5: Structural drivers
Structural drivers
Slide 6: The structural drivers for technology renewal are stronger than ever
The structural drivers for technology renewal are stronger than ever “Banks that are not prepared for new competitors like Amazon or Google face certain death.” “Banks urgently need to digitize their businesses, and should invest in areas that meet the best payoff […] like automation of back-office
Slide 7: Digitize or die
Digitize or die Changing competition Changing technology Changing regulation Changing customer Pressures coming from all sides 7
Slide 8: Market drivers accelerating
Market drivers accelerating North America Europe • Banks well capitalised, • IT renovation as only solution to and underinvested in higher ROE and digitalisation technology increasingly gaining acceptance • Digitalisation changes • Northern Europe recovering competitive landscape fastest, south show
Slide 9: Temenos well positioned to capture opportunity
Temenos well positioned to capture opportunity Europe North America • Technology and progressive • Trinovus and live clients renovation winning solution for all brings credibility, tiers and segments incumbents not strong • Best references/partner • Akcelerant expands our ecosystem footprint MEA • M
Slide 10: Temenos credentials
Temenos credentials
Slide 11: Temenos is extremely well placed
Temenos is extremely well placed State of the art architecture Best partner ecosystem Best track record of customer success Progressive renovation The building blocks are all in place 11
Slide 12: The best capabilities for experience-driven banking
The best capabilities for experience-driven banking User Single view Predictive of Experience Real-time Analytics customer & Platform data Bringing together data and context 12
Slide 13: The best capabilities for experience-driven banking (2)
The best capabilities for experience-driven banking (2) Channels Analytics 30 signings in 2014 30 signings in 2014 147% revenue increase vs 2013 24% revenue increase vs 2013 40 on-going implementations 130+ Insight customers Momentum in Channels and Analytics 13
Slide 14: Highly rated by industry analysts
Highly rated by industry analysts • T24 ranked no. 1 for past two years • Twice number of • “Leader” in Forrester Wave deals of nearest • Sole vendor to top both competitor pyramids for new and existing business • “Leader” in Magic Quadrant • 6th consecutive year “Most innovative use of technology”
Slide 15: Track record of customer success
Track record of customer success 135 50% Increase in number of Number of go-lives in 2014 implementations where partners were involved 42% Higher return on equity – Temenos customers Unrivalled levels of customer success 15
Slide 16: Case Study – Why we win
Case Study 1 – Why we win Major bank in LatAm, win against international competitor Value-based sales approach – detailed bottom up business case Country model bank approach reducing risk and implementation times Functional breadth – minimal gaps Key differentiators Progressive renovation Broad suit
Slide 17: Case study – extending footprint with existing customers
Case study 2 – extending footprint with existing customers 1999 2003 2012 2015 1998 2003 2012 2015- Front- and back-office Front- office Core Banking, Bahamas & Core Banking, Channel renovation across Singapore Islands, Spain renovation across full globe Asian business Tier 1 Global Private Bank Mor
Slide 18: Installed base opportunity
Installed base opportunity Customer numbers by product Total customer numbers* T24 Insight 653 US 131 c.1800 Triple’A Plus, WM ROW 112 TPS c.800 3 Connect 56 *excludes customers from Viveo acquisition Remains big opportunity to address existing customer needs 18
Slide 19: 2015 and beyond
2015 and beyond
Slide 20: Key planks of strategy
Key planks of strategy 1 2 3 EXTENDING LEAD IN CORE EXTENDING LEAD PENETRATING BANKING IN PRIVATE THE US MARKET WEALTH OPENING UP NEW MARKET SAAS – TAKING INDUSTRIALISING WITH DIGITAL 1ST MOVER SALES & PARTNER ENGAGEMENT ADVANTAGE ALIGNMENT PLATFORM 4 5 6 Strong licensing growth with an increasingly
Slide 21: Extending our lead in core banking
Extending our lead in core banking • Continued industry leading R&D spend • Further investment in state of the art technology • Packaged, upgradable model banks will shorten deployments even further • Strategic alliances (eg Accenture) target C-level in key accounts • Continued investment in geograp
Slide 22: Extending lead in private wealth
Extending lead in lead in private wealth Tier 1 Multiple Strategic Convergence references deployment partners options 200+ private wealth customers Developing unrivalled product and go-to-market capabilities 22
Slide 23: Penetrating the US market
Penetrating the US market $20 billion Largest core banking market in the 2013 Acquisition of Trinovus world 2014 First US Model Bank client live US financial institutions can prosper only by replacing legacy software with modern, real- 2014 Additional T24 signings time core systems, to improve custo
Slide 24: Taking the lead on SaaS
Taking the lead on SaaS New SaaS 5 4 new SaaS deals implementations signed in 2014 underway Go-to-market launches in Q1 6 2 SaaS go-lives in 2014 Temenos has taken its software, run it in the cloud and got banks in Africa to run with literally no IT staff Satya Nadella, Microsoft CEO Taking first mo
Slide 25: Key planks of strategy
Key planks of strategy 1 2 3 EXTENDING LEAD IN CORE EXTENDING LEAD PENETRATING BANKING IN PRIVATE THE US MARKET WEALTH OPENING UP NEW MARKET SAAS – TAKING INDUSTRIALISING WITH DIGITAL 1ST MOVER SALES & PARTNER ENGAGEMENT ADVANTAGE ALIGNMENT PLATFORM 4 5 6 Strong licensing growth with an increasingly
Slide 26: A new era in Banking
A new era in Banking February , 2015
Slide 27: Global financial crisis marks a turning point for the banking industry
Global financial crisis marks a turning point for the banking industry and financial system Complex Drivers Crisis Outcomes Deregulation Loss of Trust The Great Moderation Reconsider Role of Banks Global Imbalances Re-regulation Search for Yield Level Playing Field Under-appreciated Risks Deleverage
Slide 28: FS Challenges & Opportunities: Executing Strategic Transformation
“FS Challenges & Opportunities: Executing Strategic Transformation” in 1 slide Copyright © 2015 Accenture. All rights reserved. 28
Slide 29: FS Challenges & Opportunities: Executing Strategic Transformation
“FS Challenges & Opportunities: Executing Strategic Transformation” in 1 slide The challenge: lower average ROE industry Copyright © 2015 Accenture. All rights reserved. 29
Slide 30: FS Challenges & Opportunities: Executing Strategic Transformation
“FS Challenges & Opportunities: Executing Strategic Transformation” in 1 slide The challenge: lower average ROE industry The opportunity: • Next level of efficiency • Excellence in Capital & Risk Management • Winning the customer battle • Increasing revenue from adjacent businesses Copyright © 2015
Slide 31: FS Challenges & Opportunities: Executing Strategic Transformation
“FS Challenges & Opportunities: Executing Strategic Transformation” in 1 slide The challenge: lower average ROE industry The opportunity: • Next level of efficiency • Excellence in Capital & Risk Management • Winning the customer battle • Increasing revenue from adjacent businesses The Transformatio
Slide 32: The trends shaping the new era go far beyond the crisis
The trends that are shaping the new era go far beyond the outcomes of the crisis Macro Trends Ageing & Millennials Global middle class Emerging Markets Mobile technology Regulation Need for Competition New capital requirements a New Separation of activities Excess Capacity Risk managemen Business Di
Slide 33: Mega macro trends reshaping the world banks operate in
A set of mega macro trends are Macro Trends reshaping the world banks operate in Regulation Need for a New Business Competition Model in Banking The demographic agenda Legitimacy From ageing to the millennial generation, demographics shapes who banking customers are and what they need. Growth of the
Slide 34: Demographics shapes who banking customers are
Demographics shapes who banking customers are and what they need World Population Forecast and Age Composition (bn) World Population, bn 12 10 8 6 4 2 0 1950 1975 2000 2025 2050 2075 2100 65+ 29-64 % of world population aged >65 1990 2010 2030 2050 6.1% 7.7% 11.6% 15.6% Copyright Copyright © © 2014
Slide 35: Shifting engines of growth are changing where banks need to be
Shifting engines of growth are changing where banks need to be Global GDP Forecast to 2019 HNWI Wealth Forecast to 2016 by Region GDP current prices ($tn) HNWI Investible Wealth ($tn) CAGR % CAGR % 5.3% 6.9% 100.9 +7.2% 64.3 +6.0% 4.9% +5.3% +6.6% 52.6 74.0 +3.9% +2.3% 64.0 27.8 +4.7% 15.2 +7.1% 21.
Slide 36: Earnings and wealth more distributed in the multi-polar world
Earnings and wealth will be much more distributed in the multi-polar world Middle Class Population (m) Middle Class Consumption ($tn) 4,884 55.6 234 2.0 107 0.8 32.6 3,228 1,845 21.2 105 0.8 32 0.3 3.1 4.9 525 1.5 181 313 11.3 8.1 664 680 338 322 5.6 5.8 2010 2030 2010 2030 MENA Sub-Saharan Africa A
Slide 37: Regulation: new rules for the game
Macro Trends Regulation: new rules for the game Regulation Need for a New Business Competition Model in Banking A complete overhaul • One of the most important outcomes of the financial crisis is a Legitimacy complete overhaul of banking regulation, but the question remains: “Is the system safer?” N
Slide 38: Regulated Outcomes: Navigating the new regulatory landscape
Regulated Outcomes: Navigating the new Macro Trends regulatory landscape Regulation Need for a New Business Competition Model in Banking The regulatory change agenda requires a reappraisal of the bank’s role and strategic direction Legitimacy Economic Returns Adjust expectations to lower ROE but low
Slide 39: Competition in banking: a new role after the crisis
Competition in banking: Macro Trends a new role after the crisis Regulation Need for a New Business Competition Model in Banking Changes in regulation, market structure and business models are changing the nature of competition across Legitimacy banking markets Internal Pressures • Valuation & Retur
Slide 40: Bank market composition – structural differences
Bank market composition – structural differences continue to dominate competitive agenda The depth and market orientation of financial systems are among the key forces that define the banking system… Structural differences in market depth Structural differences in market depth and composition and co
Slide 41: Legitimacy: What trust means for today's customers?
Legitimacy: What trust means for today’s Macro Trends customers? Regulation Need for a New Business Competition Model in Banking Trust is the currency of banks and is, therefore, beyond a PR problem Legitimacy The decline of legitimacy Banking and FS are the least trusted industries Bank legitimacy
Slide 42: Legitimacy: What trust means for today's customers?
Legitimacy: What trust means for today’s Macro Trends customers? Regulation Need for a New Business Competition Model in Banking Trust is the currency of banks and is, therefore, beyond a PR problem Legitimacy The decline of legitimacy Banking and FS are the least trusted industries Bank legitimacy
Slide 43: Technology change
Macro Trends Technology change Regulation Need for a New Business Competition Model in Banking Will technology disrupt banking as it has done to other industries? Legitimacy Two driving forces Technology Convergence in Retail Banking Increasing flexibility for customers to switch • Low levels of tru
Slide 44: Recovering client satisfaction will require a digital transformation
Recovering client satisfaction will require Macro Trends a digital transformation Regulation Need for a New Business Competition Model in Banking Banks can now satisfy a broad range of customer life-cycle needs Legitimacy BANK AS VALUE AGGREGATOR Assembly components (financial and non financial, own
Slide 45: Transformation means responding to big questions
Transformation means responding to big questions Q How segmentation shall respond to the macro trends impacts: brand, products and services, relationship models? Q How to deal with talent and rewards Q How to rebuild trust and needs in banking? confidence in the new competitive landscape? Q What's t
Slide 46: Execution: mixing new technology enablers and business application
Execution: mixing new technology enablers and business application Technology enablers Business themes Big data Capital management Analytics tools & models Risk management Solutions As a service Opportunity Efficient enterprise : CtI Customer Interaction Digital Customer Mobility Copyright © 2015 Ac
Slide 47: Experience driven banking
Experience driven banking Dharmesh Mistry, Product Director UXP
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Slide 49: British Banker Association reports: 2.3m over 70 use Internet Banking
British Banker Association reports: 2.3m over 70 use Internet Banking 20% of the population over 80 use internet banking 450,000 over 60’s use mobile for banking
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Slide 52: «4DCASH An.
«4DCASH An. -XPRESSCASH ACCOUNTS.
Slide 53: $$$
$$$
Slide 54: Opportunity
Opportunity $$$ $$$ $$$
Slide 55: Slide 55
Slide 56: One Laptop Per Child
One Lap Top Per Child 2006 Goal to produce laptop <$100
Slide 57: One Laptop Per Child – Gates Foundation
One Lap Top Per Child 2006 Goal to produce laptop <$100 Gates Foundation “Our goal is to help the people in the worlds poorest regions improve their lives and build sustainable futures by connecting them with digitally-based financial services “
Slide 58: A top priority…
A top priority… $22 bn 89% Banks surveyed Global spend on plan to increase channels in 2015 spend on channels "The top priority for CIOs is delivering customer-centric banking services, allowing them access to accounts at any time, in any place, and on any device," says Kieran Hines, practice leader
Slide 59: …with real-world examples
…with real-world examples Over £1bn being spent on digital 7% increase in online transactions transformation versus a drop in all other channels 16% of branches closed in last 5years 90% all transactions completed outside of branch Early adopters of digital transformation are realising gains already
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Slide 62: Branch
Branch
Slide 63: Call Centre
Branch Call Centre
Slide 64: Internet
Branch Call Centre Internet
Slide 65: Mobile
Branch Call Centre Internet Mobile
Slide 66: A storm is brewing with mobile development
A storm is brewing with mobile development
Slide 67: A storm is brewing with mobile development
A storm is brewing with mobile development Vertical X1 Retail Customer X1 Mass Segment X1 Channel Direct X1 User Customer X3 Desktop Mobile Tablet Devices X8 Windows Windows Mac OS iOS Android Windows iOS Android Platforms Phone X MULTIPLE Mobile Mobile Mobile Mobile Mobile Mobile Mobile Mobile APPS
Slide 68: A storm is brewing with mobile development
A storm is brewing with mobile development Vertical X1 Retail Customer X1 Mass Segment X1 Channel Direct X1 User Customer X3 Desktop Mobile Tablet Devices X8 Windows Windows Mac OS iOS Android Windows iOS Android Platforms Phone X MULTIPLE Mobile Mobile Mobile Mobile Mobile Mobile Mobile Mobile APPS
Slide 69: Speed to market, Maintenance, Enhancements
Speed to market Maintenance Enhancements Resources Scalability Emerging technologies
Slide 70: A single UX Platform across all verticals, channels and devices
A single UX Platform across all verticals, channels and devices… 70
Slide 71: A single UX Platform across all verticals, channels and devices
A single UX Platform across all verticals, channels and devices… An industry first in core banking! 71
Slide 72: Componetised solutions
Componetised solutions Faster time to market, lower maintenance cost 72
Slide 73: Componetised solutions
Componetised solutions Faster time to market, lower maintenance cost 73
Slide 74: Independently validated
Independently validated “Real world case studies reflect these savings”…. Ovum 74
Slide 75: Independently validated
Independently validated edgeConnect can yield 60% development cost savings in first project rising to 95% on subsequent projects “Real world case studies reflect these savings”…. Ovum 75
Slide 76: Independently validated
Independently validated Speed to market can edgeConnect can be accelerated by up yield 60% to 4 x than traditional development cost development savings in first project approaches rising to 95% on subsequent projects “Real world case studies reflect these savings”…. Ovum 76
Slide 77: Independently validated
Independently validated Speed to market can edgeConnect can be accelerated by up yield 60% to 4 x than traditional The more development cost development edgeConnect is used, savings in first project approaches the greater the rising to 95% on savings subsequent projects “Real world case studies refl
Slide 78: Temenos Connect Mobile: A SmartHybrid solution
Temenos Connect Mobile: A SmartHybrid solution High fidelity / pixel Configurable Dynamic Screens & content perfect layout Shells & skins for iOS, High Intelligent caching Native Performance mechanism Android & Windows Device Access phone functionality: Ease of Dynamic updates, access Camera, GPS, P
Slide 79: Experience driven banking…
Experience driven banking… User Experience Customer Intimacy Convenience Experience Driven Contextual Banking and Relevant Omnipresence Banking for the segment of 1 79
Slide 80: Summary
Summary • Invested • Exploited • Innovated • Expanding • Leading Experience driven banking 80
Slide 81: Driving growth in North America
Driving growth in North America David Arnott, CEO, Temenos Jay Mossman, Founder & CEO, Akcelerant
Slide 82: The North American opportunity
The North American opportunity Temenos has a platform The market backdrop for significant growth • The largest financial services market in • Existing presence and expertise in US the world market and Canadian credit union market • Dominated by a few large vendors with little choice • TriNovus provi
Slide 83: Acquisition rationale
Acquisition rationale The US is a highly strategic market for Temenos Akcelerant is a market leading provider of collections software to US credit unions Client base of c.600 financial institutions including 18 of the top 25 US credit unions Leverages existing Canadian credit union experienc
Slide 84: Overview of Akcelerant
Overview of Akcelerant • A privately owned US provider of debt collection, loan/account origination, servicing, and profitability analysis software • Founded in 2000 and headquartered Malvern, PA (outside of Philadelphia) with c.130 employees. • Almost 600 financial institution customers with c.400
Slide 85: What Akcelerant brings to Temenos
What Akcelerant brings to Temenos A leader in Credit Union Complementary product Strong organic growth software portfolio • Established brand in US CU market • Strong Collections product • Strong organic and inorganic growth • Opportunity to introduce Temenos • Already have interfaces / reports sinc
Slide 86: Akcelerant's value proposition
Akcelerant’s value proposition Technology to improve relationships across an account’s life cycle 86
Slide 87: Product overview
Product overview .) akcelerant akcelerant FRAMEWORK elements akcelerant akcelerant PROFITWISE Spotlignt “é TEMENOS The Banking Software Company 87
Slide 88: Akcelerant's products: Framework
Akcelerant’s products: Framework c.500 customers Market focus on credit unions with USD 250million in assets or greater Direct sales staff plus alliances Solution focused • collections • recovery • consumer loan origination • new account origination • Service (ticketing) • marketing - future 88
Slide 89: Akcelerant's products: Elements
Akcelerant’s products: Elements c.100 customers Market focus on • credit unions with less than USD 250million in assets • community and regional banks • collections / recovery only Sales through partnerships • SWBC – White label called AutoPilot • Allied – referral 89
Slide 90: Akcelerant's products: Profitwise
Akcelerant’s products: Profitwise c.20 customers Market focus on • credit unions with USD 250million in assets or greater • community and regional banks Direct sales staff plus alliances Solution focused • costing • profitability • consulting 90
Slide 91: Akcelerant's products: Spotlight
Akcelerant’s products: Spotlight Will be the data warehouse and analytics for all of Akcelerant’s products Benchmarking based on Akcelerant’s product data 91
Slide 92: Akcelerant's customer base
Akcelerant’s customer base Presence across the US 92
Slide 93: Akcelerant's growth strategy
Akcelerant’s growth strategy • Akcelerant has an large installed client base for its collections product, particularly amongst the larger credit unions (18 of the top 25) • Its key growth drivers are: • expand collections to medium sized Credit Unions and Banks • develop new products to sell into th
Slide 94: Go-to-market strategy
Go-to-market strategy • Increase client awareness around differentiators (real-time core, rich channels, state of the art product set) • Launch branding campaign in the US following 2 acquisitions, live references and establishment of a strong management team • Target installed base of US competitor
Slide 95: Summary
Summary • The US is a highly strategic market for Temenos • Leverages existing Canadian credit union experience and Temenos’ US model bank • Revenue synergies coming from building and selling the T24 credit union model bank together with full Temenos product suite • Adds scale and accelerates our ro
Slide 96: Financials
Ve TEMENOS Financials Max Chuard, CFO é
Slide 97: A recap of FY 2014 financial highlights
A recap of FY 2014 financial highlights • LFL total software licencing growth of 3% • LFL maintenance growth of 6% • 9% pts improvement in non-IFRS services margin taking margin to 5% • Non-IFRS EBIT up 13% with margin of 27.3% • Cashflows of USD 190.3m, up 12% • Cash conversion of 113% with DSOs do
Slide 98: 2015 guidance
2015 guidance Total software licensing growth of 15% to 20% (implying total software licensing revenue of USD 164m to USD 172m) • includes software licensing growth of 10%+ (implying software licensing revenue of at least 149m ) Non-IFRS revenue growth of 8% to 13% (implying revenue of USD 482m to U
Slide 99: Updated medium term targets
Updated medium term targets Non-IFRS revenue growth of 5% to 10% pa (was 5%+) with • total software licensing growth of 15%+ • services contributing c.20% of group revenue (was 20% to 25%) Non-IFRS EBIT margin improvement of 100 to 150bps on average pa Cash conversion over 100% pa DSOs reducing by 1
Slide 100: Growth in 2015 and beyond
Growth in 2015 and beyond By geography By product • All regions in growth • All products in growth • Europe performing solidly • Core banking continuing to grow solidly • Strong growth from MEA driven by • Strong growth in BI and Wealth leadership in Islamic • Very strong growth in Channels • APAC a
Slide 101: A view on costs
A view on costs Cost breakdown • Cost of services falling as % of revenue: focus on “premium” services and leveraging fixed Cost of Services R&D G&A S&M costs 100% • R&D falling as % of revenue (although 80% increasing in actual amounts) 60% • G&A falling as % of revenue: leveraging fixed costs of r
Slide 102: Year-on-year margin expansion
Year-on-year margin expansion 100-150bps of margin expansion on average per annum in the medium term Medium term margin improvement to be driven by • economies of scale – leveraging R&D and G&A • improving services margin Licence growth funds investment; incremental maintenance delivers growth in pr
Slide 103: High quality earnings
High quality earnings DSOs 100%+ conversion of EBITDA into operating cashflow 250 10 to 15 days reduction in DSOs per annum driven by 200 • reducing implementation time • continued expansion of partner programme 150 Significant growth in operating cash, coupled with an 100 efficient tax and financin
Slide 104: Financial flexibility
Financial flexibility Use of funds Temenos is highly cash generative with a strong balance sheet which enables investment in the business as well significant cash return to shareholders Preference for M&A over returning additional capital to shareholders, providing suitable acquisition opportunities
Slide 105: A three-pronged approach to M&A
A three-pronged approach to M&A Increased scale Accelerated growth in key markets and A three-pronged segments approach Complementary products 2007 2008 2009 2010 2011 2012 2013 2015 105
Slide 106: M&A criteria and pipeline
M&A criteria and pipeline Strong financial metrics • EPS accretive within 12 months • IRR of at least 13% Most attractive and synergistic areas are • Core banking • Payments • Wealth management / asset management • SaaS / Cloud Good pipeline of opportunities • Broad geographic and market spread • Ra
Slide 107: Key takeaways
Key takeaways • The structural drivers for technology renewal are stronger than ever • We are extremely well placed with the best products and record of customer success • We are executing against a very clear strategy • We are focussing on key strategic initiatives • We expect strong software licen
Slide 108: Thank you
Thank you www.temenos.com