M&A Deals in Banking IT and Services: 2006
AbstractSan Francisco, CA, USA March 16, 2007
Banking and services chalked up a healthy number of mergers and acquisitions in 2006 totaling nearly US$20 billion. Celent expects 2007 will be an even bigger year for deals.
The banking and IT and services M&A deal market has been heating up over the past few years. Already, the 2007 M&A season kicked off with a headliner: CheckFree will acquire Carreker (estimated deal value of US$206 million) and Corillian. Celent expects that 2007 deals will outpace 2006, according to a new report, . The report outlines the reasons this market is heating up and analyzes the major deal trends in 2006.
The payment processing market was abuzz with a large number of small deals in 2006. The segment led deal activity in 2006, with 90 deals accounting for slightly under two-thirds of the deal flow, signaling market consolidation and opportunity. Payment processing will continue to experience an M&A boost for market consolidation, and opportunistic plays remain. Celent predicts further consolidation in global money transfer, prepaid cards, EFTPOS (including smart cards), and merchant acquiring. Mobile commerce will continue its ascension, opening up payment processing and merchant acquiring opportunities.
Business services saw a third the number of deals but included proportionately more valuable deals, signaling scale and expansion plays. Banking and lending saw the fewest deals but some of the most notable ones: Intuit's acquisition of Digital Insight; M&F Worldwide's acquisition of John H. Harland Company; TSA's purchase of P&H; and The Carlyle Group's and Providence Equity's acquisition of Open Solutions.
Deal activity in 2007 is likely to beat 2006 for several reasons. The banking industry continues to enjoy strong performance, so there is no lack of money to invest in IT improvements. Due to heightened competition, banks are increasingly seeking a technology-based competitive edge from back end systems (e.g., modern core system that are flexible and can handle bundled products and relationship-based pricing) to front end systems (e.g., next-generation small business online banking that incorporates personal, business, and investment/trust services on the same site).
"This will be another exciting year in banking IT and services M&A deals," says Alenka Grealish, author of the report and managing director of the Banking group at Celent. "Banks should end up being the winners as providers build scale, scope, and pass-through efficiency gains and technological enhancements to them."
This report provides an overview of the 2006 IT and services M&A deal landscape across financial services, analysis of the banking deals, highlights of notable deals, and summaries of the past and projects of the future.
This report is 24 pages and contains 10 figures and 2 tables.
A table of contents is available online.
Members of Celent's Wholesale Banking and Retail Banking research services can download the report electronically by clicking on the icon to the left. Non-members should contact firstname.lastname@example.org for more information.
Celent is a research and advisory firm dedicated to helping financial institutions formulate comprehensive business and technology strategies. Celent publishes reports identifying trends and best practices in financial services technology and conducts consulting engagements for financial institutions looking to use technology to enhance existing business processes or launch new business strategies. With a team of internationally based analysts, Celent is uniquely positioned to offer strategic advice and market insights on a global basis. Celent is a member of the Oliver Wyman Group, which is a wholly-owned operating unit of Marsh & McLennan Companies [NYSE: MMC].
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Table of ContentsSan Francisco, CA, USA March 16, 2007
|Deal Flow in Financial Services||5|
|Banking Deal Landscape||10|
|Business Services: Expansion and Opportunism||17|
|Banking and Lending: Core in the Quest||18|
|New Model: Intuit||19|
|Private Equity Chips||20|
|Past and Future Deals Summary||22|
|Objectivity and Methodology||23|