Over the past few weeks the major payment processing vendors have reported first quarter 2015 financial results, and they show a noticeable slowdown n y/y growth from 2014 (refer to NelsonHall Tracking Service articles for detailed analysis of the quarterly results). Summary results for Q1 2015 (in USD unless stated otherwise) are as follows: Card networks: Mastercard: +2.7%&nbs[...]

Capgemini announced today its intention to acquire IGATE. Capgemini is offering $48 per share, or $4.04bn, a premium of ~5% over current IGATE share price. IGATE had debt at end 2014 of $686m and cash on hand of $192m. This offer gives IGATE an enterprise value of ~$4.53bn. Capgemini is thus paying a massive 15.5 x 2014 earnings ($292m) and nearly 3.6 x 2014 revenues. The acquisition [...]

Banks have been struggling to adapt to changing, expensive regulations, and 2015 and 2016 will see further implementation requirements requiring large investments to achieve compliance. Here is a review of some of the more important ones and a look at the implications for bank operations strategy. Key regulations taking effect over the coming months are: EMV (Chip-based payment cards) for[...]

In Capgemini’s recent North America analyst conference, the company provided a compelling description of how its approach in North America has developed recently, together with examples of how this has succeeded, and shared its vision and a roadmap for the next few years. Confidence about prospects for 2015 is high. Capgemini’s 2014 revenues in North America were €2,230m, a gro[...]

Worldline, which IPOd in May 2014, has announced results for full year 2014 and has presented its views on the payments market, its business roadmap, and its successes to date. The results, below, are subject to adjustment when Worldline files its financial reporting statements in late March: Revenues were €1,149m, up 2.8% y/y  Operating margin be[...]

Q4 2014 results from the top five U.S. headquartered securities services firms indicate that revenue growth for securities and custody services is slowing down. The two largest global custodians, BNY Mellon and State Street, along with Citibank, reported revenue decline in calendar year Q4 2014. The figures below show change in securities services revenue versus the prior quarter (q/q[...]

Tech Mahindra has agreed to acquire SOFGEN to enhance its core banking systems integration (build, run, operate) capabilities. The acquisition is expected to close by the end of March. Swiss-headquartered SOFGEN is a specialist in Avaloq and Temenos platforms and also has capabilities in TCS BaNCS and Misys. SOFGEN has 450 employees, including >70[...]

Changes in banks’ regulatory capital requirements for businesses are leading banks to exit or downsize lines of business and increase the focus on other lines of business. Payments is an area where banks and non-banks are significantly increasing their commitments. Over the next five years the payments industry will change its entire shape, structure, and offerings. In the past, the complexi[...]

NelsonHall recently attended Accenture’s annual analyst meet in New York City. We had the opportunity to discuss operations (BPO and IT infrastructure management) market initiatives, a major focus area for Accenture, representing $6bn in revenues (~20% of total revenues), with Accenture executives. Accenture and is betting heavily on “Digital” to create the “new Accentur[...]

This week Wipro held its first analyst day in the U.S. in over 18 months. During this time, Wipro has conducted a strategic review of its approach to the market, and decided to change its method of engaging clients and prospects.    First CEO TK Kurien opened by describing Wipro’s view of the market: Enterprises were created prior to the current digital era. As a[...]

Visa has announced it is assessing whether to sell its investment in mobile payment software developer and transactions processor Monitise. Visa formed an alliance with Monitise in 2009 to provide Visa with mobile platform development services. The agreement runs through 2016. As part of the agreement, Visa made a capital investment in Monitise and received 14.4% of the company's equity. Ov[...]

Alliance Data is to acquire Conversant for $23bn to expand its digital marketing services capabilities. The acquisition will be paid for half in stock and half in cash (at tendering shareholders' discretion). Post closing, Conversant will operate as a part of Epsilon, a digital marketing services division of Alliance Data. The transaction is expected to close in Q4 201[...]

Mastercard, First Data, and TSYS have partnered with Apple to enable Apple Pay for mobile payments. Apple Pay is a mobile payment service. Apple Pay works with iPhone 5, iPhone 6, and Apple Watch through an NFC antenna design, a dedicated chip called the Secure Element, and Touch ID security. Apple Pay can be set up by users with their credit or debit card on file from their iTunes Store acco[...]

Mastercard and Visa are taking very different approaches to the payments market, resulting in very different operating outcomes. Mastercard is focusing on growth in emerging markets and merchant acquiring (especially consulting services for merchants); Visa is pursuing mature markets with aggressive cost control and sales incentives to drive revenue growth.  Top line results for [...]

TSYS has announced Q2 2014 revenues, for the period ending June 30, 2014, of $538.1m, up 34.2% year-over-year. Revenues including reimbursables were $602.0m up 30.4% year-over-year. Q2 2014 revenues (and revenue change) by activity, excluding reimbursables, were: North America: $233.2m (+8.7%) International: $84.7m (+10.6%) Merchant services: $108.3m (-4.1%) [...]

Wipro has partnered with the London Stock Exchange Group (LSE) to launch a hosted multi-tenant reconciliation utility. Each partner will provide:  LSE: UnaVista platform (proprietary platform which provides transactions, reconciliations, reporting, etc.) The platform overs all instrument types and is used by ~1,000 financial institutions  Data center hosting[...]

The banking crisis clearly meant that the banking industry needed to change. However, those changes have not yet been realized. Prior to the crisis banks were focused on selling new products (e.g., structured products) into mature markets. From 2008 to 2013, banks shifted focus to focus on emerging markets to sell existing services to emerging middle classes. Since 2013, banks have been consolidat[...]

IGATE held its analyst conference in NYC.  The key message was the company is making initial steps down a new path, one that is directionally the same as before, but with a stronger focus on fewer initiatives. IGATE is increasing its investments in developing IP to support its positioning of offering integrated IT/Operations (ITOPs) services within outsourcing engagements to deliver[...]

2013 was a very strong year for financial services BPO providers, especially transaction processors. However, not all vendors have fared well. Let's compare two card processing vendors headquartered in the U.S.: First Data and Alliance Data. First Data:  First Data announced Q4 2013 revenues were up 1% y/y to $2.8bn. Q4 2013 revenues (and y/y revenue gr[...]

J.P. Morgan has decided to exit its unprofitable U.K. fund transfer agency business. The exit will take place in 2014. The impact of the exit will be that funds currently with administration fee pricing as low as 0.04% will face pricing closer to 0.15 % (an increase of 375).  Transfer agency services include: Recording changes in share ownership  Canceling and issuin[...]