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Author: Katharina Grimme, Douglas Hayward
T-Systems announced this week that it has formed a partnership with the Swiss bank Vontobel to build and operate an IT platform for securities processing. Vontobel will supply the central banking processes, while T-Systems will implement the project, operate the IT infrastructure and manage the application. Vontobel plans to use the collaboration to offer securities processing services to other banks in Switzerland. Vontobel already manages 320,000 customer accounts for Raiffeisen in Switzerland on the Avaloq software platform and also processes securities transactions for Raiffeisen customers.
Comment: This deal builds on the expertise that T-Systems has gained in the joint venture with HSBC Trinkaus & Burkhardt in Germany and further strengthens the company's position in the financial services sector, as well as its international coverage. Key to this deal will be to win further clients and rapidly scale up the platform.
It makes sense that Vontobel (rather than T-Systems) will be the lead service provider to banks. Despite in many ways leading the charge into outsourcing, many banks are reluctant to outsource what they see as core or near-core banking processes (such as payments) to a professional IT service provider. However, they are more open to outsourcing transaction processing services to another bank.
For this reason, we see joint ventures with banks as a way into such sensitive niches for IT services providers, since JVs provide the credibility that the IT supplier lacks by itself. For this reason too, we'd expect to see more acquisitions by IT services suppliers of BPO businesses owned by banks (or by consortia of banks), such as Atos Origin's acquisition of Banksys and BCC in Belgium.
Whether banks will accept the IT services suppliers as 'family' as a result of these JVs and acquisitions is an open question. Much will depend on how these new units perform, and how they market themselves to the financial services community. Given that many banks are likely to be examining their payments-processing operations over the next few quarters, in part as a result of the EU's Sepa initiative, this conservatism towards outsourcing may find itself being challenged within banks. That could help swing CxOs towards greater use of outside providers.
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