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Ivan Martin CEO Misys Banking Division. Misys Banking Division StrategyIvan Martin Business DriversSteve Gowers Product ManagementJerry Luckett Break.

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Presentation on theme: "Ivan Martin CEO Misys Banking Division. Misys Banking Division StrategyIvan Martin Business DriversSteve Gowers Product ManagementJerry Luckett Break."— Presentation transcript:

1 Ivan Martin CEO Misys Banking Division

2 Misys Banking Division StrategyIvan Martin Business DriversSteve Gowers Product ManagementJerry Luckett Break Three Great Stories SummitFTGeorges Bory MidasPlusAndrew White EquationPlusAndrew Derrer SummaryIvan Martin Questions and AnswersAll Agenda

3 Key messages 1. Banking is a large and growing software market 2. Misys is well positioned to benefit from this growth 4. Misys is growing its market share in key markets 3. Misys leads in functionality and technology 5. Retail is key growth sector going forward

4 Where were we? What did we do? Where are we now?

5 Where were we? What did we do? Where are we now?

6 What did we see in 2002? Products are old legacy back office systems We see no product roadmap for the future There is a risk the business will not benefit from a recovery in spending In 2002 you told me … Losing market share to competitors

7 What did we see in 2002? Revenue £m 50 100 150 1996199820022000 Banking Division ILF - ILF moving annual total - Smoothed ILF trend line

8 Where were we? What did we do? Where are we now?

9 Columbus Portfolio Management Talent Management ServicesR&D investment What did we do? Product Management

10 Banking software market Securities Treasury International Retail Asset Mgmt Corporate Significant opportunities in target markets Addressable market > $5bn US Retail

11 Banking Division Healthcare Systems Division Financial Services Division Misys Retail Banking Misys Risk Management Systems Summit Systems Misys Wholesale Banking Systems Misys Banking Division

12 Columbus Portfolio Management Talent Management ServicesR&D investment What did we do? Product Management

13 Over $100 bn Below $5 bn Private Banking Investment Banking Retail Banking Corporate Banking Universal Banking Misys and Banking Systems Market Asset size of Bank EQUATION BANK MASTER RISK MIDAS OPICS SUMMIT GMS LOAN IQ Boxes represent market coverage – not size of business

14 Columbus Portfolio Management Talent Management ServicesR&D investment What did we do? Product Management

15 Columbus Portfolio Management Talent Management ServicesR&D investment What did we do? Product Management

16 Product management Lifecycle mgmt Introduction Growth Maturity Decline Evaluation Qualification Definition Operation Business as usual Launch Design Build Alpha & Beta Development Build Decision General release Decision Market Understanding Market Engagement Competitor information Customer requirements Technology innovations Misys vision Market drivers Go external to beta Outline Delivering the solutions our customers want, when they want them

17 Columbus Portfolio Management Talent Management ServicesR&D investment What did we do? Product Management

18 Columbus Portfolio Management Talent Management ServicesR&D investment What did we do? Product Management

19 R&D Man Days Back-office Technology Front-office + 55% R&D 20 60 100 140 2003/42006/7 Increasing offshore capacity (,000) 0

20 Where were we? What did we do? Where are we now?

21 Banking software markets are generally improving Conditions vary significantly between sectors –Retail banking continues to show sustained growth –Wholesale banking and capital markets have stabilised –Marked regional differences; activity in emerging markets Underlying market drivers still apply –Cost containment –Regulation –Rising consumer expectations Long term trends continue –Move away from in-house software to third party packages Banking market conditions

22 Source: Annual Reports and Private Company estimates. Source: 2002 financial statements & Misys estimates Market structure - banking software revenues

23 AucklandBahrainBangalore BangkokBeijingBrusselsDubai DublinFrankfurt Hong Kong Jakarta JoburgKuala LumpurLisbon London LuxbourgMadridManilaMexicoMiamiMilan MoscowMunichNew YorkParisRiga Sao PaoloSeattle Singapore SloughSofiaSydney Tokyo Utrecht Warsaw White PlainsZurich Global power – local knowledge

24 Portfolio moved to new areas of growth Increased investment in R&D Increased Treasury & Capital Markets market share Strong evidence of traction in our installed base Achievements in 2004 Retail benefiting from market facing structure

25 Best increase in H2 order intake in 3 years Closing order book up strongly H2 professional services grew by 20% Professional Services backlog grew by greater than 70% Achievements in 2004 Maintenance revenues stable

26 Business Drivers Steve Gowers Business Development Director Misys Banking Division

27 Misys focus Misys is focused on providing business critical systems in specialist vertical markets Characteristics of vertical markets: –Depth of industry knowledge –Depth of software IPR –Specialist skills able to rapidly deliver solutions –Demand for mature and proven systems –Long lead times Different drivers from horizontal markets (e.g. ERP)

28 What drives growth in vertical markets? How do vendors compete in vertical markets?

29 What drives growth in vertical markets? How do vendors compete in vertical markets?

30 1. Breadth of product portfolio 2. Depth of IPR 4. Breadth and depth of geographic network 3. Size & quality of development capability 5. Ability to sell into installed base Competitive dynamics in vertical markets

31 Over $100 bn Below $5 bn Private Banking Investment Banking Retail Banking Corporate Banking Universal Banking Breadth of product portfolio Asset size of Bank EQUATION BANK MASTER RISK MIDAS OPICS SUMMIT GMS LOAN IQ Boxes represent market coverage – not size of business

32 Depth of IPR MidasPlus Midas represents 14 million lines of code in total, with 168 functional modules MidasPlus release was 3 years in the making, delivering 3 million lines of new software IAS Compliance was 50 man years of investment SummitFT Summit represents 6 million lines of code in total SummitFT release was 3 years in the making SummitFT and MUST alone represent an investment of over 75 man years

33 Size and quality of development Sales and Marketing Software Development Product Management Support Services F&A 2,600 specialist staff More than 1,000 software engineers

34 AucklandBahrainBangalore BangkokBeijingBrusselsDubai DublinFrankfurt Hong Kong Jakarta JoburgKuala LumpurLisbon London LuxbourgMadridManilaMexicoMiamiMilan MoscowMunichNew YorkParisRiga Sao PaoloSeattle Singapore SloughSofiaSydney Tokyo Utrecht Warsaw White PlainsZurich Breadth and depth of network

35 Ability to sell into installed base 3 Core systems Midas450 Wholesale and international banks Equation270 Retail banks BankMaster190 Retail and Universal banks 4 Departmental solutions Summit110 treasury & capital markets operations Opics130 treasury departments GMS 800 banks, funds and corporates Loan I/Q 30 banks Enterprise Risk Risk Vision 30 banks Count is number of discrete Banks Total = more than 1400 customers because many clients have multiple systems

36 Ability to sell into installed base Upgrades/Extensions Contracts signed in FY03/04 New product New customer Funded dev/Other 55% of Misys contracts were for new product and new customers 45% of Misys contracts were for extensions of existing business Additional volume Analysis based on numbers of contracts

37 What drives growth in vertical markets? How do vendors compete in vertical markets?

38 1. New technology cycles 2. Growth in underlying business volumes 4. A return to IT spending for competitive advantage 3. Increasing burden of regulation/reporting 5. Trend to use of third-party vendors Drivers of growth in vertical markets

39 Growth drivers – technology cycles IT Spending Cycles 74767880828486889092949698000204 Source: Bureau of Economic Affairs ISVs Mini- computers Client- Server Euro and Y2K Services Oriented Architecture

40 Growth drivers – underlying volume 1994 2.0 billion 1.8 billion 1.6 billion 1.4 billion 1.2 billion 1.0 billion 0.8 billion 0.6 billion 0.4 billion 19981996200020042002 2,007,551,750 messages Transaction Volumes Swift estimate that Misys systems generate 15% of all transactions in their network. Misys is at the heart of banking

41 Growth drivers – underlying volume 1994 $1.50 trillion $1.25 trillion $1.00 trillion $0.75 trillion $0.50 trillion $0.25 trillion 19981996200020042002 Global FX Volumes $1.4 trillion per day Misys GMS confirms approximately 7% of the worlds $1.4 trillion daily foreign exchange transactions This equates to $100 billion per day through Misys GMS ASP solution

42 Growth drivers – regulation/reporting Simple Lightly Regulated Old Boy Network Complex Highly Regulated Performance Culture 1984 2004

43 Growth drivers – competitive advantage Cost Reduction 88% of CIOs Customer Service Service Costs Service Quality 70% of Customers Cost Other

44 Growth drivers – quality imperative NatWest 3K 1 100K Fails/Million 50K

45 Fails/ Million Growth drivers – shift to third-parties Source: Celent – IT Spending Europe 2004 Bank IT budget allocation New Projects Maintenance Maintenance v New Projects Internal v External Software

46 The new era and Misys Delivering the solutions our customers want, when they want them Functionally rich Component based Engineered on Java &.NET With compliance built in

47 Product Management and Development Process Jerry Luckett Product and Strategy Director Misys Wholesale Banking Systems

48 Resource Allocation Internal Return Market Requirements Target Market Solutions to Meet Requirements Product management objectives

49 Evaluation Qualification Definition Build Decision Market Understanding Competitor information Customer requirements Technology innovations Misys vision Market drivers Outline Product management process Operation Business as usual Market- Launch General release Decision Lifecycle mgmt Introduction Growth Maturity Decline Design Build Alpha & Beta Development Go external to beta Market Engagement

50 Customer involvement Strategic Development Partnerships Customer Advisory Boards User Groups Funded Development Market Research

51 Requirements Definition System Specification DesignConstruct Integration Test Quality Assurance Controlled Deployment Ongoing Fix Quality Management Development Process – Development Standards – Quality Plan – Quality Audit – BMS / ISO Accreditation Configuration Management Doc Set Mgmt – Version Control – Collection – Packaging – Shipping – Dev Schedule – Dev Facility – Client Inventory Project Management Dev Plan – Test Plan – Deployment Plan – Dev Tracking Development process

52 The move to offshore and outsourcing Misys has been creating offshore capacity for more than a decade What we gain from offshoring: –Lower unit costs –Increased capacity –24 hour development capability –Access to wider skill pool –Significant local market presence In addition outsourcing also provides a variable cost model

53 Moving to offshore cost base Getting It Right! Have an ambition, know your target Plan offshore/onshore mix You are moving, your customers are not Inject product skills through secondment Recruit and train Protect domain knowledge – realignment strategy Excellent communications 2004 2007

54 Summary Know what you want to build Get the software factory working effectively and efficiently Result –Focus on growth products and new markets –Output that meets and exceeds industry quality standards Increase development capacity without increasing the R&D to revenue ratio

55

56 SummitFT Georges Bory Managing Director Summit Systems

57 Summit – a brief introduction Product Treasury & Capital markets solution 400+ staff in 8 countries world-wide 110 global customers Consistent management and technology strategy Loyal customer base Resources Core development in NY & Paris Outsourcing partner Support and local development New York, Paris, London, Frankfurt, Singapore, Seoul, Tokyo Sales – global resource Target Markets Primarily Tier 2 & 3 banks Some Tier 1 ASP solution for Tier 4 / corporates

58 Technological advantages -.NET and real time services Market leading tool for exotics & structured products Modular Technology that grows with clients needs Breadth & Depth of functionality – No. 1 One Solution front-to-back covering multiple asset classes ASP Summit solution Derivatives Treasury Commercial Lending Fixed Income Derivatives

59 Fixed Income Bonds MTNs MBS/ABS Repos Sec Lending GICs Emerging Mkt Treasury Loans & deposits Foreign Exchange Money Market securities Derivatives Interest Rate Credit Currency Equity Bonds Commodity Lending Syndicated Loans Bilateral Loans Exotics & Structured (MUST) Multi-asset class coverage

60 Client - Server C Unix Sybase 19902000199819962001200219932003 MARKETS RISK MANAGEMENT DERIVATIVES FRONT OFFICE MONEY MARKET and FIXED INCOME DERIVATIVES BACK OFFICE CREDIT DERIVATIVES TREASURY FRONT to BACK OFFICE REAL TIME FX COMMERCIAL LENDING REAL TIME STP DISTRIBUTED RISKS EQUITY DERIVATIVES WEB TRADING CASH MANAGEMENT Extendible Data Model Customizable GUI Pricing API C++ Native NT Oracle-Sybase Product Formula Excel Add-In 3 Tier Corba Orbix Gateway RT FX Position Server RT Event API eToolkit Excel / Java XML Credit Server Risk Server RT STP Framework Web Trading MS SQL Server FpML 2004 FT MS.NET Parallel Distributed architecture EXOTICS & STRUCTURED TRADES MUST Linux Grid Computing SOAP & Web Services 14 Years Track Record Product evolution

61 Investing ahead of the curve Increased R&D during downturn Ready with market leading technology for upturn Followed a consistent product strategy and vision Employed and retained product development and product marketing expertise 54,000 R&D man days over 5 years

62 Client examples Global Investment Banks International Wholesale Banks Regional & Large Local Banks Hedge Funds/Corporates

63 Our customers speak for us The processing and managing of trades will be massively improved with Summit and I expect to see a quick return on our investment. Our decision to pool all applications into one with Summit as the BLB core solution for investment banking, will help us achieve this goal. Replacing such a large number of systems will reduce costs in many areas by reducing system complexity and improving STP. I was impressed by Summits product knowledge and the capability of its solution. It will provide us with flexible pricing, integrated risk management and back- office tools that will enable us to establish and grow our business in this competitive and profitable market.

64 Market trends Banks are looking to consolidate vendors Treasury technology spend is now starting to see strong signs of recovery and positive growth rates, and Datamonitor predicts CAGRs of 3.2% and 2.9% from 2002 to 2006 in Europe and the US respectively. the deadline for IAS39 compliance, together with overall pressures to centralize treasury technology in order to improve operational efficiency, is going to drive significant increases in year-on-year growth of investment until 2006 and beyond ISDA has estimated that the credit derivatives market has doubled for each of the last six years - $3.58 trillion by the end of 2003 with 51% growth expected in 2004

65 The Summit advantage Breadth and depth Regulatory compliance Corporate strength Business specialists Technological advantage 14 years experience 33 banks of the top 100 Banks use Summit Worldwide customer base Summit MUST

66 MidasPlus Andrew White CEO Misys Wholesale Banking Systems

67 This is Midas! Loyal customer base – TRUST Global product, local features, local support Unmatched corporate banking capabilities International branches and regional banks Most successful banking software package ever

68 25 years of change IT Spending Cycles 74767880828486889092949698000204 Source: Bureau of Economic Affairs ISVs Mini- computers Client- Server Euro and Y2K

69 Manual operations Change again. Banks are under pressure. Rocketing customer expectations Regulation Risk Competition: markets, products, price

70 Next phase IT Spending Cycles 74767880828486889092949698000204 Source: Bureau of Economic Affairs ISVs Mini- computers Client- Server Euro and Y2K Services Oriented Architecture

71 This is MidasPlus! Multi-channel eServices platform Head office solution Straight Through Processing (STP) Global processing Open architecture

72 MidasPlus – A whole new world

73 Deep functionality Tightly integrated yet flexible Improved functionality Strong support New solution - with pedigree Customer self service

74 Modern technology platform Deployment options Open Efficient Faster time to market Development tools

75 Delivering global processing solutions Improved customer service Cost and credit control Reduced risk Cross-selling opportunities Agility The Power of One

76 Roadmap – more to come! Client Server GUI 19962002200019992003200419972005 Syndicated Lending Private Banking Euro Support Y2K IBAN Support Repo Processing Collaterals Register CLS Credit Risk management ISO15022 Profit Centre Accounting Overnight Index Swaps IAS 39 Cash Mgmt IAS 18, 32 Local Features Collateral Lending Management Limits KYC eServices Local Features Global Reporting Syndication Manager Messaging APIs iSeries Integration Toolkit MUI MQ Series J2EE 10 Digit Account Websphere Thin Client Web Services i5/OS 2006 Enhanced Front Office Private Banking Enhanced Retail Local Features Revenue Analysis Full API support User Defined Forms SOAP Advanced Processing Component based solutions Business Routing 25 Years Track Record

77 Single biggest investment in Midas, ever First two customers in production before Dec 15 deliveries the day MidasPlus was launched The MidasPlus effect Delivered on schedule Three years in the making

78 Banks will each select a single vendor solution Misys is market leader and has first mover advantage Local features and local reporting are musts The global processing effect All Midas customers will upgrade over time All back offices in a bank will converge

79 Why Misys and Why MidasPlus? Trust and expertise Global processing Best functionality Corporate strength Best local support Integrated Best technology 25 years experience

80 EquationPlus Andrew Derrer CEO Misys Retail Banking

81 Brand new technology Market leading foundation Wider opportunity Equation Plus Elevates the entire market More than just a product

82 The largest market with the largest growth: –Retail Banking to Bank Retailing –Packages will be the norm –Compliance deadlines –Islamic Banking Market dynamics

83 Installed sites market share Source: IBS Market Report – International Retail Core Banking Software Market. Excludes North America Installed base

84 Addressing the market need Process Data Product Channel TellerElectronicB2B2C TransactionalComplexExperience Deposit/LoansInvestmentWealth management TransactionalCustomer-centricReal-time analytical Merchandising Differentiation Efficiency Knowledge

85 Delivering packaged software and related services to help financial institutions: –Improve customer service –Comply with regulatory requirements –Reduce IT costs The challenge

86 EquationPlus Data Product Process Channels Branch Channels Internet Banking Call Centre IVR Customer Sales & Service B2B2CATMPOS Mobile & Kiosk Offline Reporting Consumer Banking Commercial Banking TreasuryAnalytics Customer Services Other Banking Services Business Process Workflow Rules Data Propagation Management Misys Retail Banking Database Interfaces Product/ Transaction General Ledger Consolidated Information 3 rd Party Information Channel platform Open technology Existing New 3 rd Party

87 The roadmap Merchandising +DifferentiationEfficiency +Knowledge + Business Process Engine Q1 06 Complete retail system Today Platform Independent Front-Office Multi-channel Sales & marketing Q1 05 Platform Independent Back-Office 24 X 7 Q4 05 Based on calendar year

88 What convinces us that we can execute on the milestones? –Experience - MidasPlus –Partnerships –Unique tools and utilities –Talent The execution

89 Bring every customer with us –An attractive future for every Misys Retail Banking customer –Easy, worthwhile upgrades –Support commitment Technologies that meet the aspiration of banks, both large and small The right architecture –Inclusive, not silo-based –Right platforms Founding principles for customers

90 What the market thinks If Misys can deliver on this plan, it will mark a real renaissance for the Equation brand Equation Plus, a complete new-generation, richly functional, highly-advanced retail banking system, will in our assessment, transform the fragmented retail banking market and competitive landscape. In migrating to Equation Plus, Misys has unveiled an expansive vision to combine the best elements of proven retail banking functionality, with the capabilities of leading edge architectures.

91 Why we will be best in the market? First truly open system Process automation leader Single customer view Functional leader Company strength Single point of accountability CRM leader 20 years of experience

92 Summary Ivan Martin CEO Misys Banking Division

93 Growth opportunities 1.SummitFT Market leading Treasury & Capital Markets solution World class functionality and technology Consistent growth up to and including last 3 years 2.MidasPlus Most successful banking application ever Unmatched depth of corporate banking functionality Significant 3 year investment in new technology platform 3.EquationPlus World class Retail functionality Clear leader in international markets First truly open front-to-back Retail solution

94 Customer satisfaction … today our customers tell us … Very impressed by the improvement in Equation Support over the last six months. If the Customer Satisfaction Survey were to be repeated now, Misys would see a dramatic improvement in feedback from its customers. A most impressive display of solid technical expertise and great support. Best wishes from a satisfied customer.

95 Market feedback Our survey indicates that Misys customers are planning fewer system replacements than users of other systems The solutions rated more favourably than other vendors on flexibility and instrument coverage Misys product position versus the market remains strong... with products perceived as offering above-average support for banks future needs Morgan Stanley/IBS Survey on behalf of Association of Foreign Banks April 2004

96 1. Banking is a large and growing software market 2. Misys is well positioned to benefit from this growth 4. Misys is growing its market share in key markets 3. Misys leads in functionality and technology Key messages 5. Retail is key growth sector going forward

97 Making things that really matter, work better

98


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