Wednesday 3 rd March 2010 Deutsche Bank Winchester House 1 Great Winchester Street London, EC2N 2DB Misys BankFusion Analyst & Investor Event experience, solutions, results 1
Oct 30, 2014
Wednesday 3rd March 2010Deutsche Bank
Winchester House1 Great Winchester Street
London, EC2N 2DB
Misys BankFusionAnalyst & Investor Event
experience, solutions, results 1
experience, solutions, results 2experience, solutions, results 2
Forward looking statements
This communication contains forward looking statements. Those forward looking statements include all statements other than those made, solely with respect to historical facts. Forward looking statements may be identified by words such as believes, expects, anticipates, estimates, projects, intends, should, seeks, future, continue, or the negative of such terms, or other comparable terminology.
In addition, statements made in this communication about anticipated financial results, future operational improvement, and the results of the regulatory approvals, are also forward looking statements. Such forward looking statements are subject to numerous risks, uncertainties, assumptions and other factors that are difficult to predict, and could cause actual results to vary, materially, from those expressed in or indicated by them. Factors that could cause actual results to differ materially include but are not limited to legislative, regulatory, political and economic developments, changes in competitive and market forces, further exchange and interest rates, changes in tax rates, and future business combinations, or disposals.
Some of the central risks faced by Misys are set out in the company’s most recent annual report. Misys undertakes no obligation to revise or update any forward looking statement or to make any other forward looking statement, whether as a result of new information, future events or otherwise. Misys is not responsible for updating the information contained in this communication beyond the published date, or changes made to this communication by wire services or internet service providers today.
experience, solutions, results 3
Agenda
Refreshment Break
BankFusionTM Customer UpdateGuy Warren, EVP, Misys Solutions for Banking
Partnering with MisysRashik Parmar, IBM and Stuart Drew, HCL
Why Actinver chose MisysAlejandro Ramos, Actinver CTO
Summary and Question & Answer SessionMike Lawrie, Misys CEO
How BankFusionTM will Change Misys’ Financial and Business ModelStephen Wilson, Misys VP Group Finance
BankFusionTM Go to Market strategy Peter Scott, Misys BankFusion Solutions Management
BankFusionTM: A Radically New Way to Solve Operational ChallengesPeter Scott, Misys BankFusion Solutions Management
Banking Market Assessment: The challenges of legacy banking systems and routes to modernisationDon Free, Gartner
Exploiting our Unique Position in the Financial Services MarketMike Lawrie, Misys CEO
Drinks and Canapés
1
2
3
4
5
6
7
8
Including:
experience, solutions, results 4
Key messages
We have a strong installed base - our business challenge is to leverage this base
The first new core banking solution for Misys in over 7 years. BankFusion allows Misys to compete in the Unix space opening up 70% of the new business market
Allows us to upgrade our installed base over time whilst minimising risk to our customers
Building an eco-system of partners to help take our proposition and capability to market
Over time, BankFusion will fundamentally change the financial characteristics of Misys’ Banking business
experience, solutions, results 5
Leveraging the installed base
Significant cross-sellopportunity
150Other
1,230ALL(300)Multiple products
380Transaction Confirmation Matching
370Treasury and Capital Markets120Trade Services
510Core Banking
CustomersApplication
BankFusion creates new initial licence, professional services and maintenance events
Tier 4 banks right up to tier 1
Installed base of 1,200 customers
1,200 customers
120 countries
experience, solutions, results 6
Dependable Affordable Scalable
New World
Co-ordinated online, mobile, call centre, branch
Capital preservation & cost reduction
Increased regulation
Ability to change Business Processes quickly
Fast automation of new Banking products lowering risk
Quickly respond to changing market conditions and
opportunities
Increase flexibility, adding new functions and components while
lowering operating costs
Remove the risk of moving to new systems through our renovation
approach
BankFusion enables banks to:
Rapidly reconfigure business processes
Responding to changing customer needs
experience, solutions, results 7
• Leveraging and deepening our relationships with customers to increase the value we deliver
• Catapulting Misys into a technology leadership position
• Dramatically expanding our reach in new markets through our partnership network
BankFusion - Transforming the Misys Banking business
Over time, BankFusion will transform Misys Banking into an organic growth business
experience, solutions, results 8
The challenges of legacy banking systems and routes
to modernisation
Don Free, Research Director
2 The Industry Analyst View
© 2008 Gartner, Inc. and/or its affiliates. All rights reserved. Gartner is a registered trademark of Gartner, Inc. or its affiliates.<docname>_<date>_<author>
99© 2008 Gartner, Inc. and/or its affiliates. All rights reserved. Gartner is a registered trademark of Gartner, Inc. or its affiliates.
1. Business: Through 2010, only 30% of financial 1. Business: Through 2010, only 30% of financial institutions and business models will be institutions and business models will be restructured sufficiently to take advantage of a restructured sufficiently to take advantage of a return to growth. return to growth.
2. Technology: Through 2010, legacy technology 2. Technology: Through 2010, legacy technology landmines and landmines and ““run the bankrun the bank”” responses will keep responses will keep cost/income efficiency ratios above 50%cost/income efficiency ratios above 50%
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1010
Social Fabric Fractures
• Fracturing social fabric - aging, urban, exclusion/inclusion & personal identity. Traditional processes broken down
• Who is the customer - Demographic shifts & behaviors remain poorly understood and mass customization persists
• Personalization is cost of doing business, but product centricity still dominates bank mindset
• Micro lending moves from developing- to-developed world
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1111
Innovation Should Not be an Afterthought
•Risk aversion strategies dominate market
• Innovation attempts remain fragmented - strategy elusive
•Many banks go into hibernation and don’t build resources/capabilities to meet future recovery requirements
•What innovation occurs remains focused on products not experiences
•Emerging markets lead innovation initiatives
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1212
The Neighborhood Is Changing
Long-Term Threats Most-Immediate Threat
Threat to Digital Native Ownership
Type of Banking Competitor
Scal
e of
Com
petit
or
Non-Traditional Traditional
Lower Scale
Higher Scale Global Mega-Banks
Telcos
Utilities
Retail
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13
Product Innovation
Operational Efficiency
CustomerInformation
CustomerService
Core Banking Renewal Drivers
FunctionalGaps
Rigid Architecture
System Uncertainty
RegulatoryChange
ProcessChange
Long Development
Cycles
System Scalability
Slow Timeto Market
Business IT
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1414
Unleashing the Power of the CoreCore Applications:
SpecialtySpecialtyLoansLoans
PNCPNCInsuranceInsurance
SavingsSavingsCurrent Current
AccountsAccounts
CreditCard
MortgageConsumer Lending
Commercial Lending
CreditCards
Equity Lending
Fixed TermFixed TermLife andPensions
CorporateBanking
CorporateBanking
The End of Core Applications: 2015
Micro Lending
Deposit Services
Lending Services
Neg. Amort.
Lending
Customer Services
2010
© 2008 Gartner, Inc. and/or its affiliates. All rights reserved. Gartner is a registered trademark of Gartner, Inc. or its affiliates.<docname>_<date>_<author>
15
The Back Office in Transition: Reform or Transform?
Reformative Transformative
Benefits
Drawbacks
• slower pace of renewal reduces risk of program failure
• reduced impact on near-term business initiatives
• condensed timeframe results in faster time to market
• less retrofit due to fewer parallel short-term business initiatives
• resource intensive with higher risk of burnout
• limits near-term market opportunity
• less competitive in medium term
• higher risk of long-term market loss
Reformative StrategyLonger-term, incremental program to revise back-office technologies
Transformative StrategyShort-term, all-encompassing program to revise back-office
technologies
experience, solutions, results 16
BankFusion brings speed, simplicity and flexibility to
banking processes
Peter ScottBankFusion Solutions Management
3 BankFusion: a new way to run a bank
experience, solutions, results 17
What makes BankFusion unique?
• Fully process-driven core banking solution gives high flexibility
• BankFusion Workbench graphical design time accelerates development at a lower cost
• Use of Components makes adapting business process to desired workflow simple
• BankFusion Server automated code generation saves time and expensive IT resources
Applications Universal Banking
Shared Modules
Components Such as:
• Interest Accruals• Charges• Amortisation Rules
BankFusion Workbench
BankFusionServer
BankFusion Platform
RunTime
DesignTime
experience, solutions, results 18
• Over 30 years of banking domain knowledge
• Product Composer assembles banking products from a library of building components
• Takes process models and creates business applications from them
Using building block components accelerates development
BankFusion builds banking business processes
experience, solutions, results 19
• Financial components and activity steps assembled into business workflow
• Can be used by Business Analysts as well as developers
• Freedom to focus on business content
New business requirements rapidly deployed
Visual design environment - Product Composer
Cash Deposit Transaction
Capture
experience, solutions, results 20
Process Driven Application
Product Composer
Automated Code Generator
BankFusion has unique attributes to address these issues
CEO
Increase sales and grow profitably
Differentiated services based on
single customer view
Fast response to market opportunities
CIO
Raise flexibility
Easier localisation
Future proof the system
COO
Optimise customer relationships
Reduce expenses, streamline processes
Manage riskCha
lleng
esBankFusion solves banks’ challenges
experience, solutions, results 21
Industry Analysts rate BankFusion technology
“Business process-enabled core systems unlock banks’ potential to drive more aggressive and sustainable growth.”
“BankFusion provides updates that are error free… a true cost of ownership advantage.”
“Institutions are no longer constrained by arcane, restrictive, time-consuming and horribly complex practices… far greater degree of business control and ownership.”
“… has significant potential as a truly modern banking system… more effective than existing monolithic banking systems.”
“… highest score on depth of integration.”
experience, solutions, results 22
Scenario demonstration
Using the Product Composer, we show how BankFusion can be used to rapidly respond to
changing business requirements
How BankFusion solves operational problems
experience, solutions, results 23
4 strategic segments of BankFusion strategy
InternalRenovation
ExternalRenovationIndustry
Platform
BankFusionPlatform
UniversalBanking
experience, solutions, results 24
Publish
BankFusion Universal Banking
BankFusionDevelopmentWorkbench
Branch Operations
Deposits
Lending
Multi-Currency
Compliance
Current AccountsManagement
Reporting
Limits
Treasury
Pricing
Payments
Security
BankFusionRuntime
Environment
experience, solutions, results 25
4 strategic markets for BankFusion
ExternalRenovationIndustry
Platform
BankFusionPlatform
UniversalBanking
InternalRenovation
experience, solutions, results 26
Internal Renovation and Shared Module approach
Midas
Equation
Bankmaster
The Present The Future
Dedicated Developments Shared Modules
Charges
LoanOrigination
BranchSolution
CollateralManagement
Universal Banking
BankFusionEquation
BankFusionMidas
experience, solutions, results 27
4 strategic markets for BankFusion
ExternalRenovationIndustry
Platform
BankFusionPlatform
UniversalBanking
InternalRenovation
experience, solutions, results 28
Legacy Core Banking SystemsIn-house developedMoribund 3rd party solutionsProducts acquired but not evolving
BankFusion PlatformDesign-time and Run-time
BankFusion as External Renovation technology
Shared Modules such asLoan Origination, Customer Acquisition, Branch Solution
Common Components such asInterest Accrual, FX calculation rules, working days calculator
experience, solutions, results 29
4 strategic markets for BankFusion
ExternalRenovationIndustry
Platform
BankFusionPlatform
UniversalBanking
InternalRenovation
experience, solutions, results 30
BankFusion - Disruptive industry platform
• BankFusion adoption as an industry standard for financial industry developers
• Leveraging Misys’ leading market share in the banking applications market
• Misys opens up its community to 3rd
party developers and showcases their solutions
• Option to ‘white-label’ core banking for regional developers to add and support compelling local features
experience, solutions, results 31
BankFusion customer update
BankFusioncustomer update
Guy WarrenEVP, Misys Solutions for Banking
4
experience, solutions, results 32
Customer proof points
New system
TIME Bank
Upgrades Renovation
UniversalBanking
InternalRenovation
ExternalRenovationIndustry
Platform
BankFusionPlatform
experience, solutions, results 33
Bankmaster customers upgrading to BankFusion Universal Banking
• User Acceptance Testing completed with positive performance
• Go-live scheduled March
Status
• Fastest-growing Bank in Tanzania• 700,000+ accounts
Profile
• Bankmaster replacement• Ease of migration• Latest technology to underpin business• Improve customer service
Requirements
UniversalBanking
InternalRenovation
ExternalRenovationIndustry
Platform
BankFusionPlatform
experience, solutions, results 34
Equation customers selecting BankFusion Equation
InternalRenovation
UniversalBanking
ExternalRenovationIndustry
Platform
BankFusionPlatform
• Long-standing Equation customer• Almost 900 branches
Profile
• Expansion across domestic and international network• Best technology to support growth ambitions• Agility and innovation to maintain competitive edge
Requirements
• Currently implementing in Head Office• Scheduled roll-out to international branch network
throughout 2010
Status
experience, solutions, results 35
Why Actinver Chose BankFusion
Alejandro Ramos, CTO
BankFusion customer update4
experience, solutions, results 36
• One of the fastest growing financial services groups in Mexico
• Expanding from Brokerage and Fund Management to Banking
• 1,500 employees
• 72 Branches
• 200,000 Customers
• Daily transactions: 25,000
• Total assets: MXN $150 billion
Who is Actinver?
experience, solutions, results 37
What were we looking for?
• Deposits, Loans, Channels - Branch through to Back Office
• A customer-centric solution to improve the customer experience
• Customisation, not just changing parameter settings
• Most technically advanced Universal Banking solution on the market
• A platform on which to base our future growth
• A long-term partnership with the vendor
experience, solutions, results 38
Why Actinver chose Misys
• Revolutionary process-oriented approach
• Capability to meet complex regulatory reporting requirements
• Flexibility of the Workbench
• Integration approach
• Delivery capability, professional services and a proven track record
experience, solutions, results 39
We will bring to market a range of BankFusion
applications & tools to modernise banking systems
Peter ScottBankFusion Solutions Management
5 BankFusion: a new way to run a bank
experience, solutions, results 40
4 strategic markets for BankFusion
InternalRenovationUniversal
Banking
ExternalRenovationIndustry
Platform
BankFusionPlatform
experience, solutions, results 41
BankFusion Universal Banking
EXISTING CUSTOMERS NEW CUSTOMERS
Why will we win?• Low risk ‘upgrade’ for existing Bankmaster customers• Next Generation build and design• Lower Total Cost of Ownership• Excellent business agility
Who will we sell it to?
• Bankmaster customers • With growing business
aspirations• With functional and account
volume limitations.
• Domestic & Regional retail banks replacing core systems
• Tiers 3 & 4• Legacy systems, stretched by
competitive pressure and regulatory burdens
• New ‘start up’ banks
UniversalBanking
InternalRenovation
ExternalRenovationIndustry
Platform
BankFusionPlatform
2009 onwards
experience, solutions, results 42
Internal and External Renovation
EXISTING CUSTOMERS NEW CUSTOMERS
Why will we win?
Who will we sell it to?
• Equation and Midas users• Want to introduce more
flexible business processes• Receptive to Misys new
module Roadmap
• Low risk alternative to ‘Rip and Replace’• Raises the return on existing investments• Unique technology and business proposition• Business Roadmap from Shared Modules
• Monolithic legacy • Tiers 2 & 3• Require functional evolution• Need better process efficiency• ‘Rip and Replace’ too risky
InternalRenovation
ExternalRenovation
UniversalBanking
IndustryPlatform
BankFusionPlatform
2010 onwards
2011 onwards
experience, solutions, results 43
BankFusion will have a disruptive market impact when used by 3rd parties
Extending the BankFusion platform
NEW CUSTOMERS
• Application partners build software using BankFusion technology
• Misys vets and showcases 3rd party applications
• Local features from 3rd parties in ‘white labelled’ core banking offer
• Based on success in other segments and unique proposition
IndustryPlatform
InternalRenovationUniversal
Banking
ExternalRenovation
BankFusionPlatform
2013 onwards
experience, solutions, results 44
BankFusion Services - enhancing value to our customers
Business Process design Consultative
engagementDeeper
customer relationships
• Focus on business workflow
• Best Practice in Banking processes
• Misys Global Centre of Excellence
• Misys / Partner led
• Greater role in business transformation
• Design as well as implementation
• Early stage contribution to solution definition
• Continuing business partnership
• Increased cross-sell and up-sell over time
• Greater share of wallet
experience, solutions, results 45
Agent
DeliveryPartner
SolutionPartner
TechnologyPartner
Influencer/ Consultant
System Integrators
Complementary Solutions
Reach
Scale
Depth
BankFusion leveraging and expanding our partner network
experience, solutions, results 46
Partnering with Misys
6 Partnering with Misys
Stuart DrewSVP Financial Services
Europe
Rashik ParmarCTO, IBM Distinguished Engineer
Member, IBM Academy of Technology
experience, solutions, results 47
What is the value of this opportunity to Misys?
Stephen Wilson,VP Group Finance
7 Strategic and financial impact
experience, solutions, results 48
Value-based pricing model
• Pricing based on components and functions selected by customer
• Prices scaled according to volumes, e.g. accounts, user seats
• Multiple ILF events per customer over time
– Platform workbench– Modules – Applications
• Incremental Recurring Licence Fee (RLF)
Platform
Applications Universal Banking
Modules
experience, solutions, results 49
Revenue Model assumptions: 5-year horizon
1 ILF reflects typical ranges for 10-year term licenses sold to banks in the target tiers shown. In practice, pricing will vary more widely towards the extremes of our target markets and also according to volume-based price grids
2 Reflects the RLF generated over the life of a typical 10-year licence contract arising from an ILF deal, under a range of RLF rates, from basic service up to premium service
ILF event
1.8-2.4
1.8-2.4
1.8-2.4
RLF: ILF ratio 2
2
2,3
3,4
Market Tier
20-25
120-130
100-110
Total Deals
1.3-1.7£500K-£1mApplication modules & Developer Licences for 3rd
party applications
ExternalRenovation
1.0-1.2£200-500KWorkbench Licences & Application Modules for Equation & Midas customers
Internal Renovation
1.0-1.5£200-600KBankmaster replacements & Open Market
Universal Banking
Services : ILF ratio
ILF1Segment
Illustrative assumptions
experience, solutions, results 50
Progressive adoption of BankFusion
Internal RenovationMigration of Equation customers from 2010/11 and Midas customers from 2011/12
Universal BankingEarly impetus from migrating Bankmaster customers and selective competitive wins
External RenovationPlatform sales to 3rd party application customers materially from 2012/13
Cumulative BankFusion adoption
250 adopters over the next 5 years
0
20
40
60
80
100
120
140
160
2009/10 2010/11 2011/12 2012/13 2013/14 2014/15
Customers
Universal Banking
Internal Renovation
External Renovation
experience, solutions, results 51
Potential incremental revenue from the BankFusion strategy
• Initial Licence Fee (ILF) growth as adoption progresses
• Growing Professional Services multiplier as more complex projects are tackled over time
• Recurring Licence Fees (RLF) add progressively to existing base
• Normal margin framework but re-use of software components offers upside potential over time
Incremental BankFusion revenue over 5 yearsBased on illustrative assumptions
109
113
29
£183m
£250m
Initial Licences
58
Professional Services
44
Recurring Licences
81
0
50
100
150
200
250
Banking Division2008/9
BankFusion2010/11 - 2014/15
£m
Potential to add 6-8% per year compound to the revenue
base over 5 years
experience, solutions, results 52
BankFusion brings operational benefits to Misys
1
MISYSBENEFIT
2
3
45
6
7
8
Removal of product silos
Re-use of business & technical resources
Technology refresh: business agility & new
functionality
Higher returnson investment
Fosters creativity in product development
Simpler cross-sell
Accelerating functional roadmap
Process-based client consultation
experience, solutions, results 53
How will BankFusion change Misys?
Mike Lawrie, CEO
7 Strategic and financial impact
experience, solutions, results 54
Key messages
We have a strong installed base - our business challenge is to leverage this base
The first new core banking solution for Misys in over 7 years. BankFusion allows Misys to compete in the Unix space opening up 70% of the new business market
Allows us to upgrade our installed base over time whilst minimising risk to our customers
Building an eco-system of partners to help take our proposition and capability to market
Over time, BankFusion will fundamentally change the financial characteristics of Misys’ Banking business
experience, solutions, results 55
Get Fit Win More Lead
1 - 2 yearsComplete
2 - 3 Years 3 - 5 Years
BankFusion takes Misys into the Leadership phase
Technology LeadershipSales LeadershipServices Leadership
TIME Bank
BankFusion
experience, solutions, results 56
experience, solutions, results