NCR Acquires Digital Insight – What’s Next?

NCR Acquires Digital Insight – What’s Next?
NCR announced yesterday that it is acquiring Digital Insight for $1.65 billion. This is a rather quick “flip” for private equity firm Thoma Bravo, as they purchased Digital Insight from Intuit for $1.03 billion this past summer. The move makes a lot of sense for a firm like NCR. However, I am left scratching my head as to why they didn’t purchase Digital Insight from Intuit a few months ago. Was Intuit in a rush to sell of the Digital Insight assets? Was NCR not ready or not aware that Digital Insight was for sale? There are some unanswered questions here that don’t add up. They add up however for Thoma Bravo as a quick $620 million is nothing to sneeze at! The acquisition presents several opportunities and challenges. Opportunities:
  • NCR is aiming to become a fintech powerhouse. Yes, NCR is already a large player. However this acquisition allows them to expand further into digital banking . We have seen similar stories with ACI’s acquisition of S1 and Online Resources, D&H’s acquisition of Harland, Fiserv’s acquisition of Open Solutions, etc. This is the next wave of solution providers competing on digital and multichannel banking. In other words, there is plenty of opportunity for banks to look beyond the classic core banking providers for online and/or mobile banking. 
  • NCR will be able to focus on multichannel banking and cross-selling their solutions. Online, mobile, ATM, branch transformation – these are all areas that NCR can zone in on. Not to mention that the firm has a multichannel marketing solution. Both firms have solid client bases that can be tapped into.
  • NCR already has digital banking solutions. The firm will now add a host of new and modern solutions to their digital banking arsenal. The Digital Insight assets will allow NCR to become a more significant player in the online and mobile banking space.
Challenges:
  • Digital Insight can’t afford to be in limbo for so long. The firm has been caught up in the M&A doldrums for quite some time, starting from when Intuit decided to sell the firm. Other firms spent this time investing in their solutions and building out new capabilities.
  • NCR is going to have to move very quickly in order to compete. Newer firms like Q2 have been gobbling up market share from the classic providers. Other startups are emerging on the scene. NCR will have to forge ahead rather quickly in order to stay relevant in the online and mobile banking market.
  • NCR is going to have to manage the expectations and concerns of Digital Insight clients. Digital Insight clients have bounced around from Intuit to Thoma Bravo to NCR in a very short period of time. This can be a frustrating experience and NCR is going to have to work hard to make these clients happy.
  • NCR and Digital Insight both offer digital banking solutions. Some of this product overlap will need to be rationalized.
This acquisition is certainly big news for the fintech industry, and I’m curious to see where it will take NCR. Please feel free to weigh in with your thoughts and comments.  

Intuit sells off its financial services business unit

Intuit sells off its financial services business unit
Big news today from Intuit, as it sells off its financial services business unit (formerly known as Digital Insight) to Thoma Bravo. The press release points to most assets being sold, though interestingly Intuit will hold on to Mint.com and a connectivity piece:
The transaction includes an Internet banking platform, digital payments, mobile banking, Purchase Rewards, FinanceWorks, and digital banking add-on solutions as well as third-party solutions. Certain assets that are currently included in the IFS division, including OFX connectivity and Mint.com, will remain with Intuit.
There has been a flurry of transactions lately that involve online banking players:
  • ACI picked up S1 and Online Resources
  • GTCR acquired Fundtech
  • Bottomline Technologies purchased Intuit’s small business online banking assets
  • Fiserv acquired Open Solutions
This is clearly a volatile space, and the high level of activity isn’t necessarily indicative of opportunity or demise.  Each of these deals is quite different. In Celent’s opinion the ACI and Fiserv acquisitions are primarily about land grab and market share. Bottomline’s acquisition is more strategic and about building out their business. Fundtech and Intuit Financial Services were both sold to private equity firms. Intuit’s bank clients will certainly feel uneasy about what the future holds and will have plenty of questions. Questions will include, will there be continued investment in popular mobile and online banking solutions? Should I consider switching to another provider? When will the private equity firm decide to exit the business it just acquired? I have a few unanswered questions that I am going to speak to Intuit about:
  • What happens to the newly announced mint.com for banks? Intuit is hanging on to Mint but selling the online banking piece, so this is unclear.
  • What are the implications for present online and mobile banking customers?
  • Is Intuit going to be a friend or foe to banks? They used to play both sides, but with the sale of IFS it appears that they are going to be competing with or complementary to banks.
  • What is Thoma Bravo’s 12-24 month plan for IFS?
This is a newly announced deal, stay tuned for more info. Feel free to weigh in if you have thoughts or comments.

Fidelity acquires Metavante

Fidelity acquires Metavante
The boldness of this move is a shocker. FIS has a market cap of $3.32 billion. Metavante (NYSE:MV) has a market cap of $2.7 billion (as of today’s announcement). If someone were acquired, I would have imagined it to be Jack Henry or Open Solutions, which are much smaller companies with core systems that would be folded into a portfolio. Metavante has a large hosted system, which Fidelity doesn’t really have. Fidelity hosts Fiserv’s ITI Premier. Fidelity may resent writing checks to Fiserv and this would be a way out with their own hosted platform. Convincing their Premier customers to move is another matter…. I would expect that Metavante IBS (core) would be integrated into Fidelity Xpress middleware and therefore the Touchpoint Sales and Service, Internet Banking, etc. In order to truly benefit from scale, platform consolidation will be necessarly. Both Fidelity and Metavante have payments business. Fidelity has Certegy and eFunds among others. Metavante has NYCE and card processing. I am most interested to see how the organizations are merged.