An expanded partnership between financial technology vendors CSC and SAP could disrupt the U.S. core banking market at a point when many banks are looking to modernize their core banking systems, to support real-time transactions and new regulations.
SAP's Core Banking and Bank Analyzer software have sold well in EMEA and Asia, according to the company. But the services-based core banking product has been a tough sell in the U.S. North American banks are wary of being among the first to implement new core systems. Just one U.S. bank signed up for SAPs version in 2012.
This deal should make it easier for SAP to break into the U.S. core banking market, says Jost Hoppermann, vice president and principal analyst at Forrester Research. "They might leverage some of CSC's know-how on the legal side," he says.
CSC is also a core banking software vendor but it, too, is facing challenges in the U.S. The company offers Hogan, a product that is being sunset, and Celeriti, its more modern replacement. Fewer than ten U.S. banks have bought Celeriti, which was rolled out in 2010.
SAP has a U.S.-specific version of its core banking solution on its roadmap for 2014 delivery. It has delivered a couple of local add-ons faster than planned and could beat its own schedule.
Meanwhile, Oracle has aimed its own Oracle Banking Platform at Hogan customers whose systems are being phased out.
CSC, an outsourcing and IT services company based in Falls Church, Va., is ranked
Enterprise resource planning software company SAP, which is based in Walldorf, Germany, is eighteenth on the Fintech Enterprise 25 list and has 61,344 employees globally. Software products the company provides to banks (in addition to ERP) include SAP Core Banking, Bank Analyzer, and Hana, the company's in-memory data analytics solution. "SAP is strong in core banking, analytics, databases and mobility," says Ray August, vice president and general manager of financial services for CSC.
The two companies will co-sell one another's products, each taking the lead where they have existing relationships. CSC will resell SAP software globally; it was already reselling SAP solutions in Central Europe. On the services side, the companies will work together on systems integration projects, one acting as primary contractor and the other as subcontractor, based on existing customer relationships and the focus of the engagement.
"We're working with a core set of early adopters to ensure that what we put together will be low risk and low cost," Grosshans says. One large bank is already testing the two companies' technologies in tandem; he would not divulge the name of the bank.
