The combination of Temenos T24 and Azure helps steer banks to a consumption based pricing model, enabling them to scale resources according to customer demand
The combination of Temenos T24 and Azure helps steer banks to a consumption based pricing model, enabling them to scale resources according to customer demand

As one of the major core banking applications vendors, Temenos is stepping up its push into the Cloud with a series of new initiatives. Recently Temenos launched its business intelligence, anti-money laundering and social media compliance solutions, all enabled for software-as-a-service (SaaS) deployment.

For years the Swiss-based vendor has maintained an entrenched presence in Europe and emerging countries such as Egypt. Now Temenos is keen on expanding its reach across regions via the Cloud by creating a dedicated SaaS division called Temenos Software Services (TSS) recently to reinforce its commitment to the growing market. The new unit is headed by Martin Kearsley, who joined Temenos in July 2014 after spending five years at Monitise, a mobile service provider.

As the cloud applications market generates increasing interest, Temenos will enhance its focus on its cloud-based T24 service to ensure existing and new customer organizations gain the maximum benefit from its core solutions as well as a growing portfolio of complementary applications.

T24 has been available from Temenos as a Cloud product since 2011 on the Azure platform, enabling clients such as Renaissance Credit to establish a new operation with minimum upfront capital investment and then use the scalability of the cloud to grow their customer base with 1,000 new customers each month since opening.

Ben Robinson (Chief Strategy & Marketing Officer), Marting Kearsley (Director of Temenos Software Services) and John Schlesinger (Chief enterprise Architect) talking about cloud adoption in the banking and financial industry & Temenos relationship with Microsoft Azure.

The combination of T24 and the Windows Azure platform, including SQL Azure, allows banks to move operations to a consumption based pricing model and enables them to scale resources effectively and increase volume according to customer demand. The first implementations of T24 on Windows Azure went live in May 2011 in six microfinance institutions located throughout different regions of Mexico, including Sofol Tepeyac, Grupo Agrifin, Findeca, Su Servicio Financiero and Capital Global. In other cases, Mexican financial institutions migrated their systems from a hosted environment to Azure.

US Expansion Moves

The second part of its Cloud expansion comes as Temenos moves aggressively into the US market by opening data centers in Georgia and Texas. National Bank of Andrews and AimBank have become the latest US banks to select T24 for Cloud deployment. In October 2014, Temenos announced that it is investing in a rapid implementation methodology called USA Model Bank and the creation of an onshore development center in the country.

The signing of these two community banks followed recent T24 selections by Clare Bank and Farmers Exchange Bank, along with the 2013 acquisition of TriNovus, which specializes in compliance services and core processing vendor in the Cloud for US community banks. TriNovus brought with it 800 customers that could start migrating to T24 via the Cloud and running other Cloud modules including: business intelligence (Insight), anti-money laundering (AML) suite, and social media compliance (SocialComply) solutions.

A key growth opportunity lies in the relicensing customers (or upgrading them to the T24 SaaS Version) reaching end of their 10-year license agreements, many of which are expected to be renewed over the next few years. Because the penetration rates at these customers are still fairly low with some below 20%, Temenos is expected to gain wallet share among customers that are beginning to standardize on its products.

Temenos T24 SaaS Customers include RenMoney, Homeless International, National Bank of Andrews, AimBank, Renaissance Credit, Clare Bank and Farmers Exchange Bank. All of Temenos SaaS customers are in the implementation phase.

While Temenos continues picking up new customers for core banking solutions for both on-premise and Cloud implementations, it has also managed to upsell them with an array of TRM products. Last year Temenos introduced Treasury Management Dashboard app for Windows 8, which allows treasury professionals to check the bank’s overall positions against the market without the need to source data from multiple places or scroll through detailed screens or reports. The app allows them to pull all essential data into a single point, again allowing for greater degree of risk management.

The transformation of Temenos appears to be on the right track. For its third quarter of 2014, Temenos posted a 30% growth in SaaS revenues to $2 million while its on-premise license sales rose 1% to $31 million. For the trailing 12 months ended September 30, Temenos’ Cloud revenues almost doubled to $7.4 million, while its license revenues increased 11% to $146 million.

Temenos expects the majority of banking and financial institutions worldwide to have either moved, or be planning to move to a ‘mixed service environment’ by 2018. The key driver of this change will be cost, with shared standard services delivered through the cloud significantly less expensive than deploying and maintaining in-house systems.

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Misho Markovski is Head of Research at APPS RUN THE WORLD, a leading technology market-research company devoted to the application space. Currently, Markovski leads a global team of researchers who work around the clock on various market research projects such as Digital First 500, Cloud Top 500, HCM Top 500, all of which are derived from APPS RUN THE WORLD’s proprietary database of 3,000+ software vendors and 185,000+ enterprise applications customers. Mr. Markovski is an accomplished speaker at tech and government-sponsored conferences in Eastern Europe and a digital strategist with years of experience in software programming, social media, and marketing automation practices. His career embodies the best attributes of a technologist and an industry analyst with his unique blend of innovative ideas, in-depth market analysis and proven software implementations to drive business value for a range of enterprise clients.