Temenos Ag · SIX:TEMN
Temenos — Investor Day (November 2003)
105 slides from Temenos's investor day presentation, Nov 26, 2003
Slide 1: Investors and Analysts Day, London November 26th, 2003
Investors and Analysts Day London November 26th, 2003
Slide 2: Welcome & Introduction
Welcome & Introduction George Koukis Chairman
Slide 3: Strategy for 2004 and Beyond
Strategy for 2004 and Beyond Andreas Andreades CEO
Slide 4: TEMENOS a Decade of History
TEMENOS a Decade of History Within a decade, TEMENOS has evolved into the leading provider of banking software systems TEMENOS was founded after the acquisition 2000 VDN acquisition with RADAR enhances asset 19931 management application. of GLOBUS from COS AG. Key statistics: 2 offices; 34 employees
Slide 5: Global Distribution – 26 Own Offices
Global Distribution – 26 Own Offices Luxembourg Amsterdam Zurich London Dublin Moscow Paris Frankfurt Madrid New York Bejing GENEVA Beirut Seoul Miami Mexico Dubai Hong Kong Manila Bankok Riyadh Chennai KL Singapore Quito Johannesburg Sydney TEMENOS presence Currently being set-up 05 December 2003
Slide 6: Business Model
Business Model • Initial Licence fees (incl. Development License Fees) • Maintenance – 5 year standard non cancellable, 18% • Services – Implementation support services, training 05 December 2003
Slide 7: Balanced Revenue Split
Balanced Revenue Split Europe Accounts for 47% of Revenue Mix (Based on 2003 Estimates) Revenue Mix 2003 Revenue Split by Region 2003 Revenues: USD145m = 100% Revenues: USD145m = 100% Implementation South America 36% 3% Services 3% Continental North America Europe 14% 27% Russian Federation, CIS & B
Slide 8: The Client Base has Grown to More than 300 live-sites
The Client Base has Grown to More than 300 460 live-sites Key deals since January 2002 317 – ING, Netherlands: First wholesale deal 300 of comparable size in history – Samsung, Korea: Important foothold in 272 Korea, Consumer lending – IBK, Korea: Large Retail Core banking deal, strengthening positi
Slide 9: TEMENOS Client Segmentation
TEMENOS Client Segmentation Size Tier 4 + 5 Tier 3 Tier 2 Tier 1 Asset [USD bn] <10 10-50 50-250 >250 Type Client Segments Retail Private Wholesale Universal HNWI1) > USD 1 m Covering all client Mass < USD 0.1 m SME < 1,000 segments Affluent USD 0.1-1 m employees Multinational >1,000 employees Regio
Slide 10: TEMENOS Signings
TEMENOS Signings More than 36% of our signings are with tier 1 and 2 banks – balanced portfolio across retail, wholesale and universal Signings split by tier 2002 Signings split by type 2002 USD58m = 100% USD58m = 100% Private 5% Tier 4 63% Universal 28% 36% Retail 1% Tier 3 Tier 2 15% 31% Tier 1 21
Slide 11: Products
Products • TEMENOS T24: Multi platform, multi database, open technology, non stop processing – Most functionally rich – Most technologically advanced, “disruptive technology” • TEMENOS CoreBanking: native MVS OS 390 – Leverage sunk investment in mainframe market – Leverages IBM alliance 05 December
Slide 12: T24 and CoreBanking Target Segments
T24 and CoreBanking Target Segments Retail Private Wholesale Universal Services Tier 1 X Core/T24 X T24 X T24 Implementation with Tier 2 X Core/T24 X T24 X T24 strategic partners Tier 3 X Core/T24 X T24 X T24 Implementation Tier 4 X T24 X T24 X T24 supported by own consultants Source: TEMENOS; Rolan
Slide 13: Partnerships
Partnerships • IBM relationship has evolved positively around TEMENOS CoreBanking • Other relationships (Oracle/ HP) particularly enabled through TEMENOS T24 • Execution at local level is satisfactory 05 December 2003
Slide 14: TEMENOS an Integrated Banking Solution
TEMENOS an Integrated Banking Solution Among hundreds of independent software vendors, TEMENOS is one of a few offering an universal banking solution Major players by segment Vendor Products Retail Banking Private Wholesale Universal Banking Banking Banking TEMENOS Globus/T24 I-Flex Flexcube, Bankma
Slide 15: Executive Board
TEMENOS Group AG is Led by an Experienced and Competent Executive Board Executive Board Andreas Andreades Chief Executive Officer Philip Stanning David Arnott Andre Loustau Max Chuard Marc Vernet Corporate Sales Chief Technical Investor Relations & Chief Financial Software Director Director Officer
Slide 16: Total Banking Software License Market Size
Total Banking Software License Market Size Total Banking software license spending of USD 12 billion 3rd party licenses & Maintenance [USD bn] USD 12 bn Office applications Front- Portfolio management middle Financial planning office e-advice Compliance Multichannel CRM Back Securities office Other
Slide 17: Deal Analysis
Deal Analysis Number of signings for back-office systems increased by 11% over the past 6 years – retail solutions are fastest growing segment Cumulated number of signings Signing of new customers [# of signings] 1997-2002 by category CAGR11% CAGR ∑ 1,452 97/02 318 290 275 Retail 111 29% Universal 8
Slide 18: TEMENOS Market Size of USD 2.3 Billion
TEMENOS Market Size of USD 2.3 Billion Initial License Fee and Maintenance [USD m] North Europe Asia Latin Middle Eastern Total America Pacific America East & Europe Africa 43% 32% 20% 3% 1% 1% Retail 655 273 263 39 13 13 1,256 53% Corporate 195 212 133 20 7 7 574 25% Private 100 295 92 14 5 5 511 2
Slide 19: TEMENOS Market Size of USD 2.3 Billion (cont.)
TEMENOS Market Size of USD 2.3 Billion (cont.) Initial license fee and maintenance [USD m] Spending for packaged banking software Annual growth rates per banking type licenses [USD m] [CAGR 2001/2005] ∑ 2,341 Private 22% Retail 13.7% Corporate 7.9% 53% 25% Retail Private 6.0% Corporate Source: Datam
Slide 20: Drivers of Growth
Drivers of Growth • Legacy applications too costly to run – more than 75% of maintenance market dates prior to 1990’s • CIOs expected to bring maintenance costs of legacy applications down • Transaction processing volume growth is exponential • Regulation – BASLE II will have over reaching effects •
Slide 21: Revenue growth 2001 to 2003 and investment commitments
2001 to 2003 • Revenues grew from USD 95.2 million to USD 145 million on a median ILF deal size of USD 1.4 million in 2000 to USD 2.4 million in 2003 • Maintenance revenues grew from USD 12 million in 2000 to USD 32 million in 2003 HOWEVER: • TEMENOS T24 R&D commitments of approximately USD 25 milli
Slide 22: 2004 to 2006 – Our Business Model
2004 to 2006 – Our Business Model • Focused business model around licencing of application software to banks – no diversion to services • Product superiority in all four segments, we are competing both on technology and functionality • Extensive distribution and sales capability • Mature partnership
Slide 23: 2004 to 2006 – The Next Three Years
2004 to 2006 – The Next Three Years • Market growth of between 5 and 10%; timing is uncertain • Without any market share gain by TEMENOS, we are looking at revenues of USD 192 – 216 million in 2006 VS 145 million in 2003 • We are leveraging the TEMENOS T24 and CoreBanking investment which is fully a
Slide 24: Revenue Guidance of USD 150 – 160 million vs USD 145 million for 2003
2004 • Revenue Guidance of USD 150 – 160 million vs USD 145 million for 2003 i.e. growth of 3.5% to 10% • EBIT Guidance of USD 15 – 20 million • Cost base largely at 2003 levels • Benefiting from USD 9.5 million additional maintenance revenues 05 December 2003
Slide 25: Conclusion
Conclusion • TEMENOS can gain market share in this industry in the next 3 years • We have the scale and products to achieve profitability at industry levels • We have proven the sustainability of our model and are coming out of the recession stronger than before • Management is focused on our core b
Slide 26: Financial Review & 2004 Plan
Financial Review & 2004 Plan David Arnott CFO
Slide 27: TEMENOS 2003
TEMENOS 2003 THE BANKING SOFTWARE STANDARD 05 December 2003
Slide 28: Forecast P&L - 2003
Forecast P&L - 2003 USD million Q1-3 ’03 Q4 ’03 2003 Guidance 2002 index ‘02 Revenues 102 37 145 130 113 +28% Operating costs 96 33 135 120 158 -15% EBIT 6 4 10 10 (44) - EBITDA 18 7 25 25 (32) - 05 December 2003
Slide 29: Financial Guidance - 2003
Financial Guidance - 2003 USD million Start of the Year Movement End of the Year Revenues Budgeted 130.0 Q1 & Q2 higher than budgeted signings + 1.2 Foreign Exchange + 2.6 Q3 & Q4 signings + 5.2 Revenues Expected (Net of Cost of Licence) 139.0 Cost of Licence 6.0 Revenues Expected (Gross of Cost of
Slide 30: Financial Guidance – 2003 (cont.)
Financial Guidance – 2003 (cont.) USD million Start of the Year Movement End of the Year Operating Costs Budgeted 120 South African / Asian Operations + 2.2 Investment in Northern America + 2.7 Disposal of Alphametrics (0.6) Restructuring of Corebanking (1.3) Other Restructuring + 1.0 Foreign Exchan
Slide 31: Quarterly EBITDA
EBITDA (cont.) USD million Quarterly EBITDA 10.0 7.0 7.0 e 5.9 4.9 5.0 2.9 2.6 0.0 Q1 2002 Q2 2002 Q3 2002 Q4 2002 Q1 2003 Q2 2003 Q3 2003 Q4 2003 -5.0 -10.0 -15.0 -14.4 -20.0 -25.0 -23.0 TEMENOS has generated USD17.8 million of EBITDA year to date compared to a loss of USD (8.9) million for the sam
Slide 32: Cash Flow (USD m.)
Cash Flow (USD m.) 2000 2001 2002 2003e Operating cashflow 10.0 (0.3) (4.8) 17-22 Capital spending, incl. Acquisitions (6.1) (25.7) (16.1) (5.0) Other, incl. Financing 1.2 89.8 (20.5) (7.0) Total cashflow 5.1 63.8 (41.3) 5-10 The business model is once again generating operating cash. Strong net cas
Slide 33: TEMENOS 2004
TEMENOS 2004 THE BANKING SOFTWARE STANDARD 05 December 2003
Slide 34: 2004 Budget Summary
2004 Budget Summary • Guided revenues of US$150m-USD 160m. and EBIT of US$15-20m. • Target ILF signings of US$m 68m. vs. US$56m expected for total 2003. • Prime driver for improved service revenues is improved contract profitability. • Cumulative effect of maintenance contributes US$9.5m. to revenue
Slide 35: Quota Cushion and Increasing Average Dealsize Support Budgeted ILF
Quota Cushion and Increasing Average Dealsize Support Budgeted ILF (USD m. except headcount) 2003 2004 Quota carrying salespeople: 19 22 Quota per salespeople 4 4 Total signings quotas 76 88 Assumed success vs. Targets 75% 75% Forecast 57 68 Signings by quarter Median ILF dealsize 35 3 30 2.5 25 2 (
Slide 36: Cause of Change on Revenues
Cause of Change on Revenues 2003 Revenues (USD m) 145 -3 -2 -1 0 1 2 3 4 5 6 7 8 9 10 11 12 13 Another years maintenance Service contract profitability ILF impact 2004 Revenues (USD m) 150-160 05 December 2003
Slide 37: Operating Costs Leverage Improves in 2004
Operating Costs Leverage Improves in 2004 Percentage of revenues 2002 2003 2004 Cost of licencing 3% 4% 4% R&D 28% 23% 20-21% Services 49% 33% 30-32% Sales & Marketing 39% 16% 16-17% G&A 21% 18% 16-17% Total 139% 94% 85-90% 05 December 2003
Slide 38: 2004 Summary
2004 Summary • Licensing assumption conservative: 2004 Q4 deals, our strongest quarter, do not contribute to our guidance. • Maintenance revenues will benefit from our cumulative maintenance effect. 2003 client wins have already contributed to US$7m of yoy growth in 2004 over 2003. • Services margin
Slide 39: 2004 — 2006 Strategic Plan
G TEMENOS 2004 — 2006 Strategic Plan THE BANKING SOFTWARE STANDARD
Slide 40: Even Conservative Growth Assumptions Drive EBIT Growth
Even Conservative Growth Assumptions Drive EBIT Growth (US$m). 2003 2004 2006 Revenues 145 150-160 192-216 Operating costs 135 130-135 160-165 EBIT 10 15-20 33-40 EBITDA 25 30-35 43-50 Percentage of revenues Revenues 100% 100% 100% Cost of licencing 4% 4% 4% R&D 23% 20-21% 17-18% Services 33% 30-32%
Slide 41: Revenue Recognition
Revenue Recognition • We recognise ILF revenues under US GAAP “SOP 97-2” • Historically most of our ILF revenues have been recognised under the % completion method as our offering has been less packaged. • Over recent years our licensing offering has become increasingly packaged as a result of high
Slide 42: Revenue Recognition (2)
Revenue Recognition (2) 100% unbundled and recognised on 80% milestones bundled (percentage 60% completion) % of total undbundled and 40% recognised at end 20% unbundled and recognised immediately 0% 2001 2002 2003e 2004e 05 December 2003
Slide 43: Investor Update
Investor Update Max Chuard Director, Investor Relations & Corporate Finance
Slide 44: Liquidity & Volumes
Liquidity & Volumes Liquidity End 2002 Today 1 month avge daily turnover in ‘000s shares 71 152 3 months avge daily turnover in ‘000s shares 86 104 Daily turnover / total outstanding shares (1 month) 0.14% 0.28% Daily turnover / total outstanding shares (3 months) 0.16% 0.19% Days of trading of outs
Slide 45: Shareholding Structure
Shareholding Structure Major Shareholders End 2002 Today Variance % % % George Koukis 35.5% 29.4% - 6.1% Kim Goodall 15.1% 10.8% -4.3% Global Technology 15.0% 0.0% -15.0% Global Finance 5.9% 10.3% +4.4% Fidelity International 0.0% 5.8% +5.8% Free-Float End 2002 Today Variance % Free Float 28.5% 50.5
Slide 46: Shareholdering Structure (cont.)
Shareholdering Structure (cont.) Free-Float Analysis End 2002 Today Institutional 30% 85% Almost all the increase in UK 48% 48% the free-float went to Switzerland 35% 38% institutional investors US 0% 5.5% Others 17% 8.5% Retail 70% 15% Summary • Better understanding of our shareholding structure •
Slide 47: Stock Price Last 12 Months
Stock Price Last 12 Months CHF 9.0 8.0 7.0 6.0 5.0 4.0 3.0 2.0 1.0 0 01 01 200 01 200 01 01 200 01 200 01 200 01 200 01 200 01 200 01 01 200 01 200 .1 .1 .0 .0 .0 .0 .0 .0 .0 .0 .0 .1 .1 1. 2. 1. 2. 3. 3 4. 5. 6. 7. 8. 9. 0. 1. 20 20 20 03 03 03 2 2 3 3 3 3 3 3 3 • Delivered on operation • Regain in
Slide 48: Goals / Opportunities
Goals / Opportunities • Broaden coverage • Attract new investors • Trading at peer group multiple or premium • Regular news flows • Increase liquidity • US investors 05 December 2003
Slide 49: Schroders’ Road to TEMENOS T24
Schroders’ Road to TEMENOS T24 Heinz Scheiwiller Deputy CEO of Schroders & Co Bank AG, Zürich
Slide 50: Schroders‘ Road to TEMENOS T24
Schroders‘ Road to TEMENOS T24 • Schroders • Evaluation and Implementation • TEMENOS T24 • Questions & Answers 05 December 2003
Slide 51: Schroders
Schroders Schroders has offices in all major markets, businesses in 12 European, 8 Asian and 7 American countries. Funds under Management: Employees worldwide: GBP 90 billion 2,300 05 December 2003
Slide 52: Option: Own Development
Option: Own Development + Tailored to business - High functionality demands to be satisfied - High maintenance efforts - High architectural and development risks 05 December 2003
Slide 53: Option: Outsourcing
Option: Outsourcing + Logistical problems to be solved by provider - Dependency on provider - Loss of flexibility and inhouse expertise Limited market offers Client acceptabilty +/- Costs 05 December 2003
Slide 54: Option: Best of Breed
Option: Best of Breed + Best functionality in individual areas - High integration efforts - Consistency problems - High costs and complexity 05 December 2003
Slide 55: Option: Standard Package
Option: Standard Package + Large functionality at reasonable price + Shared development and maintenance costs + Architectural issues to be solved by provider + Keeping pace with competitors - Purchase of not needed functionality - Missing functionality - To be adapted to company 05 December 2003
Slide 56: Selection Process
Selection Process Long list - Geos from SDS - Midas from Mysis - Urbis from Unisys - Quartz from TKS - Penta from Sobaco - Flexcube from i-Flex - Apsys from Sunguard Short List - GLOBUS from TEMENOS - Avaloq from Avaloq - Olympique from Eri Bancaire 05 December 2003
Slide 57: Why GLOBUS/ TEMENOS T24
Why GLOBUS/ TEMENOS T24 • System architecture – TEMENOS T24 • Broad core functionality • Large client base • International presence • Provider • Flexibility 05 December 2003
Slide 58: Overall Implementation
Overall Implementation 2 GLOBUS Instances Shared Developments Zurich London 05 December 2003
Slide 59: TEMENOS T24 Layout Switzerland
TEMENOS T24 Layout Switzerland Print C System M l a i TEMENOS r e T24 k n e t Web t Access s s 05 December 2003
Slide 60: Our aims for TEMENOS T24
Our aims for TEMENOS T24 • Additional functionality • Less risks • More scalability • Higher resiliency • Non-stop processing • Better interoperability 05 December 2003
Slide 61: Serving additional needs – TEMENOS T24
Serving additional needs – TEMENOS T24 Relationship Independant Portfolio Managers Asset Managers Managers Branches Clients Rep Offices Browser Web Services Multi- Server Non Stop COB 05 December 2003
Slide 62: GLOBUS: Limited Availability
GLOBUS: Limited Availability Inquiries Input Input B B End of day process Banking Day 1 BDay 2 B = Backup process 05 December 2003
Slide 63: TEMENOS T24: 24h Availability
TEMENOS T24: 24h Availability Close of business Inquiries Input End of day process B Banking Day 1 Banking Day 2 B = Backup process 05 December 2003
Slide 64: First test results
First test results Technical enhancements Installation of Temenos T24 relatively easy, no major problems Non Stop Module running in test environment MultiServer Module/ WebServices/Browser not tested yet Functional enhancements Performance attribution, modelling, constraints etc. tests started Compa
Slide 65: TEMENOS T24: The Advantages
TEMENOS T24: The Advantages André Loustau CTO
Slide 66: TEMENOS T24 Architectural Components
TEMENOS T24 Architectural Components Zero footprint Presentation C# Scale Browser GIB Internet Web Services Enterprise Console Development Network Dispatcher Web server e.g. Apache Tomcat J2EE App Server Web Layer HTTP Server e.g. WebSphere Scale J2EE XML EJB Container Linux, AIX, HP-UX, Application
Slide 67: TEMENOS T24 Design Objectives
TEMENOS T24 Design Objectives – To provide a modern, scalable non stop architecture • High performance and scaleability – 1,000 transactions per second – 10,000+ signed on bank users – 100,000+ signed on internet users Ensure – all existing 50,000,000 accounts • High Availability and true 24/7 suppo
Slide 68: TEMENOS T24 Features
TEMENOS T24 Features • Browser front end – Bowser based interface with a zero client footprint • Enterprise console – Ability to monitor and analyse system performance and status • Web services – Accessing TEMENOS T24 transactions as a web services • Open development environment – Allows local devel
Slide 69: TEMENOS T24 Features
TEMENOS T24 Features • Non stop processing – Removal of the off-line end of day processing window • Non stop database – In combination with the non stop module provides the ability to never go off-line • Global Processing module – Allows independent close of business processes in a multi company env
Slide 70: TEMENOS T24 – Features vs Components
TEMENOS T24 – Features vs Components (GP ssing le odu es e 2 ule ver ) Mod al Proc t ) (NS Stop M ) (WS mod servic (MS m en ase / DB r Tier ti Se atab iron ule ule cle env e b jBas W eb Non W eb Mul mod Glo ) j4 d Ora Browser 9 9 9 Enterprise Console 9 9 9 Web services 9 9 9 9 Open development envir
Slide 71: TEMENOS T24 – Features vs Components
TEMENOS T24 – Features vs Components (GP ssing le $ odu Indicates a cost option se es e taba 2 ule ver ) Mod al Proc t ) (NS Stop M ) (WS mod servic (MS m en / DB r Tier ti Se n da iron ule ule cle env e b jBas W eb Non W eb Ope Mul mod Glo ) Ora Browser 9 9 9 Enterprise Console 9 9 9 Web services 9
Slide 72: TEMENOS T24 Architectural Components
TEMENOS T24 Architectural Components Zero footprint Presentation C# Scale Browser GIB Internet Web Services Enterprise Console Development Network Dispatcher Web server e.g. Apache Tomcat J2EE App Server Web Layer HTTP Server e.g. WebSphere Scale J2EE XML EJB Container Linux, AIX, HP-UX, Application
Slide 73: Adding a Web Server
Adding TEMENOS Simple a Web Server T24 Configuration Zero Thin VB footprint client Presentation Browser Web server e.g. Apache Tomcat J2EE App Server Web Layer Web Server e.g. WebSphere XML Web Server Unix Application T24 Server Windows NT / 2000 Mainframe jBase environment Database Database J4 Univ
Slide 74: Scalability / Resilience
Scalability Adding a Web Server/ Resilience Thin VB Zero footprint client Presentation Browser Dispatcher Web server e.g. Apache Tomcat J2EE App Server Web Layer Web Server e.g. WebSphere Scale XML Unix Application T24 Server Windows NT / 2000 Scale T24 Server Mainframe jBase environment Database Da
Slide 75: Summary
Summary Summary • Upgrading on a ‘like for like’ functional basis will be a not require any additional investment • New functionality will be available at no additional cost – jBase environment – J4 database – Browser – Enterprise Console • Advanced TEMENOS T24 features will be a cost option – Open
Slide 76: Trends in Core Systems Replacement
www.celent.com Trends in Core Systems Replacement Octavio Marenzi omarenzi@celent.com 26 November 2003
Slide 77: The current technological environment is ripe for change…
www.celent.com The current technological environment is ripe for change… • Antiquated and obsolete technology • Inflexible systems • Multiple systems running simultaneously • Transaction as opposed to customer-centric focus • New regulations and demands • Old systems have been squeezed dry
Slide 78: The cycle of core systems at large banks…
www.celent.com The cycle of core systems at large banks… 1970s 1970s 1980s 1980s 1990s 1990s 2000s 2000s Widespread Maturity of Advent of Post Internet automation of core mainframe-based client/server hysteria: banking systems systems. Some technologies leads Emergence of new vendor packages many la
Slide 79: A quest for greater operational efficiency is driving core banking replacement
www.celent.com A quest for greater operational efficiency is driving many core banking replacement decisions…
Slide 80: Bank IT projects have a poor success rate
www.celent.com Bank IT projects have a poor success rate. The risk of failure needs to be carefully managed…
Slide 81: Software development shifting toward packaged applications
www.celent.com While a large majority of software development continues to take place on a proprietary basis, this is changing in favour of packaged applications… In-house Development vs. Packaged Applications
Slide 82: Core processing expected to become a top spending priority
www.celent.com Core processing is expected to become a top spending priority for banks going forward, but they are proceeding with caution… Area = expected shift 2003-05 Risk management Priority Branch automation Business continuity planning High Small business Cash Management Internet banking Multi
Slide 83: Large bank core system replacements
www.celent.com Large bank core system replacements A number of core system replacements are underway at major European banks, many of them are proprietary projects, e.g. SocGen, Europe Europe however, vendor-provided are gaining ground Most US banks deny any need for core system replacements and int
Slide 84: Examples of large banks engaged in core systems replacement projects…
www.celent.com Examples of large banks engaged in core systems replacement projects… Replacement of core Replacement of foreign branch systems, investment banking potentially home market systems too Replacement of Wholesale everything replacement Replacement of Internal re- multiple foreign engineer
Slide 85: The urgency for core replacement varies by region…
www.celent.com The urgency for core replacement varies by region… • European banks have been the most aggressive thus far with replacement due to the need for system flexibility with the creation of the EU and the euro. • Maintenance continues to comprise the majority of core spending • These number
Slide 86: Source of core banking system by size of institution in the USA…
www.celent.com Source of core banking system by size of institution in the USA… Outsourcing plays a dominant role at smaller US banks 100% 90% 80% 70% Most top US banks 60% rely on vendor 50% provided solutions. Notably CSC 40% Hogan, Fidelity 30% National and Metavante. All of 20% these rely on agi
Slide 87: The competitive landscape will become extremely fierce…
www.celent.com As demand grows, the competitive landscape will become extremely fierce with a few strong vendors leading the way… Source: Celent Communications
Slide 88: Initial license fees globally for integrated core banking systems…
www.celent.com Initial license fees globally for integrated core banking systems will accelerate in coming years… Accelerating $1,200 growth of approx. 15% $1,000 Low growth of approx. 4% $800 $600 $400 $200 $- 2001 2002 2003 2004 2005 2006 US$ millions
Slide 89: European banks are starting to replace aging legacy systems
www.celent.com European banks are starting to replace their aging legacy systems. A variety of factors is driving this… • Obsolete technology • Inflexible systems • Multiple core processing systems • Greater operational efficiency and straight through processing • Need to move to real time systems
Slide 90: Approaches to core system migration…
www.celent.com Approaches to core system migration… • Big bang • Regional migration • Line-of-business migration • Middleware layer, customer by customer migration
Slide 91: The total cost of replacing a large core banking system
www.celent.com The total cost for replacing a large core banking system are about US$400 million over a three to five year period…
Slide 92: Net cash flows from core system replacement are negative until year 5
www.celent.com The resulting net cash flows from core system replacement are negative until year 5, provided the project moves according to plan…
Slide 93: Basle II as a driver for core system replacements…
www.celent.com Basle II as a driver for core system replacements… • New regulatory requirements in terms of operational risk mainly, and to a more limited extent credit risk will require significant spending. However: – Requirements not yet finalized or clear. Final specs expected in 2005, with impl
Slide 94: Looking ahead…
www.celent.com Looking ahead… • Early movers will reap the benefits and set an example for the industry • For the next 3 years, only 10-20 large institutions per year will deploy new solutions, with momentum slowly picking up each year • Banks will increasingly move to vendor- built systems • Next g
Slide 95: The US Challenge
The US Challenge Mark Gunning General Manager, TEMENOS North America
Slide 96: Agenda
Agenda • History of TEMENOS in the US • Current organization and strength • Summary of the market • Market segmentation • TEMENOS target market • Competition • Plan 05 December 2003
Slide 97: History of TEMENOS in the US
History of TEMENOS in the US • Office opened in 1997 • Primary support, however: – 3 local sales – 10 sales from other regions – BJB implementation – Build substantial US functionality • May 2003 – Increased Sales & Marketing focus 05 December 2003
Slide 98: Current Organization and Strength
Current Organization and Strength • New York based National Bank of Greece, Canada Mellon Bank* Bank Julius Baer* • Representation in Miami Mashreq Bank Bumiputra ING* • 33 headcount TEMENOS New York Standard Bank • Experienced client services TEMENOS Miami Merrill Lynch Bank Boston Dresdner Bank Cr
Slide 99: Summary of the Market
Summary of the Market • Mature • Large (42% of global FSIT spend) • High volume of similar institutions: – Over 7,500 banks • Mature, entrenched, full service competitors • ‘Introverted’. No need to look outside US 05 December 2003
Slide 100: Market Segmentation
Market Segmentation • International • Domestic – Money centre (top 10) – Mid-tier (next 400-500) – Community/ Credit Unions (10,000+) 05 December 2003
Slide 101: TEMENOS Target Market
TEMENOS Target Market • Primary – Markets • International • Domestic mid-tier – Active marketing and selling • Secondary – Markets • Domestic Money Centre • Domestic Community / Credit Unions – Alternative routes to market and monitoring (ASP) 05 December 2003
Slide 102: Competition
Competition • Large and entrenched • Predominantly old core processing systems • Full service: – Includes related services such as item processing; card handling; compliance consulting; etc. 05 December 2003
Slide 103: TEMENOS’ Strengths in the US Market
TEMENOS’ Strengths in the US Market • Modern, attractive products • US customized platform • Referencable, names clients: – International – Domestic • Established global presence and reputation 05 December 2003
Slide 104: Plan
Plan • Brand recognition within the professional community: – Partner relations: IBM, Microsoft, Oracle, etc. – Trade shows – Web site; etc. • Build sales and pre-sales teams • Clear and monitored targets • Money Centre Banks – named accounts • Community banks – partner with existing providers • Ear
Slide 105: Q&A
G TEMENOS Q&A All THE BANKING SOFTWARE STANDARD