Swiss banking software powerhouse Temenos has swooped on privately held smart forms vendor Avoka Technologies, forking out an impressive US$245 million (AUD$339 million) to catch a ride on the rapidly digitising US banking market that the local SaaS vendor has cracked.
Best known for its customer onboarding suite of products, Avoka’s acquisition is certain to rate as one of the most lucrative software trade sales of the year for the best of breed specialist.
The deal size is roughly comparable to sales like Mincom and Tower Software but notably avoided the sometimes painful private equity route.
Founded in Manly amidst the wash-up of the dot com bust in 2002, the plucky independent vendor has forged an enviable reputation for securely digitising front-of-house processes across local government, financial services and regulated industries.
The company was early to arrive on the so-called omni-channel scene, cutting its teeth solutions that took user frustration out of previously arduous form filling process – like creating secure forms that allowed users to return an complete them rather than starting an application afresh.
For industries like lending and mortgages, credit cards and more complex transactions the return-and-complete capability is customer onboarding gold because it eliminates churn and referrals to other more expensive channels.
For buyer Temenos, the addition of a best of breed onboarding capability fits neatly with its expanding range of digital and mobile banking back-end capabilities built on its core banking systems offerings that have been picked up by retail, merchant and investment banks ranging from ABN Amro to Credit Suisse and UBS.
“By combining our strengths with Temenos’ expertise and reach, we will expand our scope and scale to deliver winning omni-channel, digital experience solutions to banks globally,” said Avoka’s chief executive and co-founder, Philip Copeland (pictured).
“The combination of Temenos and Avoka is an excellent fit for our customers and employees and will catapult our growth to the next stage.”
Catapult could be the operative word. The ability to crack the arguably legacy-riddled US banking market is a bonanza in the making for Temenos and its new acquisition as institutions and payment schemes finally move off signature based card transactions towards far more integrated app based products and service in the face of a serious challenges from platforms like Apple and Google.
Despite sizable efforts from the likes of Oracle and SAP to crack the digital core banking market in the US, mega-vendors have often struggled with affordable digital customer on-boarding because their products tended to be built on traditional software suites that proved cumbersome to customise.
At he same time, established systems like Hogan – now owned by DXC – have proved cumbersome for clients to repurpose for recent industry shifts like real time payments.
Government will be watching closely
While Australian banks and for profit businesses will take Avoka’s acquisition in their stride, if not applaud the tie-up with Temenos, the local vendor’s other big market here is government.
Although reserved in its publicity surrounding government wins, Avoka is known to have secured substantial work with Defence, Centrelink, Attorney General’s Department, Customs and Border Protection, AUSTRAC, Education, Home Affairs, Human Services and many state and local clients.
For Australian government agencies, the usual merry-go-round of figuring out what the transaction means moving forward starts as usual. Temenos has not yet outlined plans for the government side of Avoka, but it is not a necessarily difficult fit for the company to digest.
With Avoka having already made strong inroads in the US market, there’s no reason US government agencies would not also be ripe for the picking in terms of digitisation, especially given Avoka’s proven record in Australia and the UK.
Temenos said the transaction is due to be completed by early Q1 2019 and is subject to regulatory approvals.