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A Perfect Core System that Never Made it to Market

If ever, or at least the past 45 years, there was a software marriage (integration) of two core systems that I considered the perfect transaction, it would have been Metavante's IBS and Temenos's T24.  My use of the word "perfect" is based on a legacy core system with functionality that grew during a 40-year development process plus a modern architecture ready to accommodate new modules easily.  In fact, in 2007, the two companies agreed to the marriage, hired Accenture, and entered into the execution phase of the joint venture. 

Early progress appeared strong, not just because the two co-developers/competitors got along with each other, but because the customer module was completed and ready for beta test.  When a key member of the project team visited me to tell me the good news, as a courtesy,  I was all ears even though I had no skin in the game.  But in 2009, FIS acquired Metavante and the project was aborted. 

Now, large banks looking for a digital banking platform have choices that provide either robust functionality or modern architecture, but not both.  Of the two companies in this case, Temenos is the clear winner because they focus on banks outside the USA.  In that market, open architecture is more important than robust functionality, for now.  While Temenos is selling a multitude of T24 systems offshore, FIS is selling one or two IBS systems per year in the USA.

I am writing this blog because for the past ten years I have felt sad for the "MetTem" baby that never lived to get a baby shower.  And while 61 core brands around the world are tooting their own horns for having the best core system, no one remembers what might have been if this project moved forward to completion.  I can at least toot a horn for what could have been - The best global core system bar none.

But there's a bit of good news at Fiserv (DNA) and Jack Henry (SilverLake).  The absence of a MetTem has resulted in robust annual core sales in the USA of 69% market share for the two vendors.  Thirteen other USA core companies get the remaining 31%.  Even without a perfect core.

I am not a believer in fairy tales when it comes to banking IT, but considering the billions of dollars being invested in new ideas, most carrying high risk, I would think a billion dollars invested in the integration of IBS and T24 might still be worth while. 

Disclaimer - I did not have a role in this project except as a core systems specialist, consultant and publisher.  But there are six prominent executives in the industry who know the details first-hand, including the Chairmen of Temenos and FIS.


Comments: (2)

Robert Burch
Robert Burch - Independent Consultant - Cotswolds 24 October, 2018, 15:38Be the first to give this comment the thumbs up 0 likes

Interesting article but I am not convinced even though I was working for Temenos at the time.  My experience of merging/integrating two systems is that, because the data models are inevitably different, one always ends up with a lowest common denominator system.  Using the Metavante experience to design new T24 modules rather than combining software would have worked, but would have been in danger of ending up with a US-centric system.  The advantage T24 has over most of the systems developed in the US is that it is truly international.

A Finextra member
A Finextra member 25 October, 2018, 16:06Be the first to give this comment the thumbs up 0 likes

Dear Mr. Burch,
Thank you very much for your valuable contribution to my blog. When Metavante sent Paul Danola to Dallas to brief me on the project, they knew I was skeptical about the lack of congruence between USA and International banking. Paul is not a salesman so I assumed the two parties had considered the matter carefully. Second, one billion dollars is a luxurious budget for the job, especially when one realizes the Top 4 USA banks each spend $40 B per year to run their total system. A safe target for this product is the top 600 USA banks. Third, I know nothing about International banking, but I know a lot about Main Street banking, whether it  be in New York City or Paris. Therefore even if the product favored USA banking, it would contain functionality whose boundaries are not geographic, but smart banking.  M&I Bank and the customer banks of M&I Data Services deserve credit for my smart banking assessment.  That's what IBS brought to the table. To handle the quirks of International laws and sensitivities, I would leave that to experts like yourself and another billion dollars. The ROI would still make sense. This from the heart and mind of a man without huge wealth.

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