Temenos (SIX: TEMN), the market-leading provider of banking software and Wipro Technologies, the global Information Technology, Consulting and Outsourcing business of Wipro Limited (NYSE:WIT), have entered into a strategic agreement to deliver core banking on an
Application Service Provider (ASP) model to European banks. Under this agreement, Wipro will provide banks with a solution based on Temenos’ best-selling TEMENOS T24 (T24) core banking solution, accessed over the internet and charged based on a per use or monthly fee.
Wipro and Temenos decided to launch this new service to meet significant and growing demand for an ASP offering from small and medium sized banks and new market entrants. An ASP model allows banks to bundle the licence, maintenance, services and infrastructure costs of a banking application into a predictable monthly fee and achieve a much faster time to market than if installed on premise while at the same time allowing the provider to generate significant scale economies by standardising the offering and leveraging the application and infrastructure costs across multiple users. These benefits are critical to small and medium sized banks, in that they would otherwise struggle to extract the same economies of scale, but also for new entrants in that upfront IT costs (which are estimated to make up two thirds of start banks’ initial costs1) can be spread or made variable.
Daniel Mayo, Principal Analyst, Financial Services Technology, Ovum commented: “Following a recent survey conducted by Ovum into banking strategy, there is increased demand for ASP models in Europe at a country specific level, most notably in Spain, Benelux, France and Switzerland, as well as countries with established data processing models like Germany. This trend is being primarily driven by smaller institutions and new entrants, who are looking for a cost effective way to run their operations”.
Andreas Andreades, CEO, Temenos, commented, “There are more than 8,000 banks in the European Union, the vast majority of which are small and medium-sized entities holding on average assets of less than USD3bn and for which core system replacement is a very expensive and mostly out of reach activity. There are also many new banks wishing to enter the traditional European banking markets seeking to exploit a fast changing landscape in banking. Providing T24 on an ASP basis will allow us to offer an exciting product to a new market segment which is otherwise unaddressable. By working with Wipro we combine our leading product with Wipro’s significant ASP
experience to deliver the right service to the market.
Sriram Srinivasan, Global Head of Banking, Wipro Technologies said, “Banks are constantly looking for solutions that help them deliver superior customer experience while driving cost variability in line with their revenue growth.
1 Please see “Review of barriers to entry, expansion and exit in retail banking, Office of Fair Trading, November 2010 The core banking ASP offering from Wipro and Temenos provides an innovative solution to the European banking industry to enjoy non-linear success by leveraging our investments and capabilities.”
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