Finance software devs claim success despite dip

Local companies seeing positive signs

Auckland-based Finzsoft, a provider of software and services to the finance and banking industries, and mobile banking company M-Com have both managed to keep their heads above the water through the crisis in the finance sector.

While M-Com is expanding into the Asian market, Finzsoft is seeing positive signs from its clients.

NZX-listed Finzsoft is back on track for a return to profit after confirming a loss last August of NZ$300,000 for the year 2007/08.

In a press release, company chairman Don Hattaway predicted a small profit for 2009, despite the difficulties Finzsoft’s customers in the finance sector are facing.

The company’s software, called Sovereign, is a browser-based, interactive investment and lending system with transactional banking and business intelligence functionality. It has been developed over the past 20 years, says Finzsoft’s managing director Keith McLaughlin.

So how has the company managed to avoid difficulty in the harsh climate in the finance sector?

“We saw what was happening during the course of last year,” says McLaughlin, who was previously the managing director of Baycorp.

The decision-making process within organisations has been deferred. As well, there was a slow-down in new sales and in requests for new enhancements to the software, he says.

“The market went into holding pattern. Decisions just weren’t being made,” he says.

The company had redundancies last October, when a project for RACV in Australia – the equivalent of AA here – was completed. Some contractors and staff had been employed specifically for that project, he says.

Today, the company has more than 20 clients with over 50% of the revenue coming from overseas. Four or five clients are currently in moratorium, which means they are trying to trade out of the difficulties and have suspended repaying debentures and deposits to investors. One is in receivership, he says.

The main benefit of the software is that it is focused on finance companies, banks, building societies and credit unions and provides a “one-stop-shop” for them, says McLaughlin. Clients can run the whole solution or select modules of it.

The Windows and Java-based application has recently been under some extensive modernisation, with the company currently in the process of releasing a new version. Some of the new features are about giving the control back to the users, as well as the ability to customise requirements, he says.

The past year has been tough, but now there are some indications that the worst might be over for the finance sector, says McLaughlin.

“We are starting to see more positive signs coming out of our client base,” he says. “The money that has been pumped into the banking system is starting to give more confidence to our clients, and they are starting to make decisions looking forward.”

Companies in the financial sector that are still trading today, are going to be stronger as a result of what has happened, he says.

“There will be better decision-making and more focus on the fundamentals of running a business,” he says. “And I think risk management will feature more strongly in their vocabulary than it probably has in the past.”

A shake-up in the sector was inevitable, he says. But it went further, deeper and for longer than most people expected.

Some companies probably deserved to be affected, but some good ones got affected too, he says.

During the downturn in sales in the past 12 months the company has focused on research and development, particularly for the export market. He says the company is disappointed the government has decided to remove the R&D incentives.

“Funding R&D is difficult, and any encouragement or contribution helps,” he says.

Finzsoft has 50 staff, of which half are developers, says McLaughlin. The rest are involved in system architecture, support and sales.

In 1971 McLaughlin joined the company that would later become Baycorp, which was founded by his father. McLaughlin and his brother came onboard in the early 70s and started Baycorp itself in 1985.

He went to Sydney in 2001 for the merger between Baycorp and Data Advantage. He oversaw the merging of the Australian and New Zealand operations for a couple of years on contract.

He joined Finzsoft in 2007. The role gave him the opportunity to come back to financial services and technology – “my two passions”, he says.

Finzsoft has an office in Sydney with two staff.

Besides RACV, which went live with the system at the end of last year, Australian bank St George is another client across the Tasman.

In the longer term, McLaughlin sees Asia and the Middle East as potential markets.

Auckland-based M-Com, a provider of mobile banking and payment systems, is not slowing down its international growth, either.

M-Com won a deal with US company Fiserv — one of the world’s largest providers of electronic banking and payment systems and services — in September last year. M-Com’s mobile banking platform BankAnywhere powers Fiserv’s Mobile Money mobile banking and payments service, which supports consumers on SMS, wireless application protocol and downloaded mobile applications, says M-Com spokesman Serge van Dam.

It also offers online and offline enrolment capabilities, and integrates with core banking, online banking and electronic payments systems, he says.

Now, M-Com has had its first big win in the Asian market, says van Dam. A top-10 Asian bank has launched a secure browser-based mobile internet banking application, based on the Mobile Money service.

M-Com, founded in 2000, has a research and development centre with 25 developers on “modest premises” in Auckland, says Graeme Ransley, the company’s director and founder. While the whole operations team is based in Auckland, four key staff, van Dam included, are now located at one of Fiserv’s campuses in Atlanta, US.

Doing business with large US banks may be considered somewhat “hair-raising” in the current economic climate, but so far, M-Com has not suffered any adverse effects, says Ransley.

And while Ransley can sense a slowing down of decisions made in projects in New Zealand and Australia, in Asia there appears to be a strong desire to continue innovative projects in the mobile area, he says.

“It appears to us that Asia has not caught the cold as badly as in other parts of the world,” he says.

Other M-Com customers include Washington Mutual, ANZ Banking Group, Westpac Banking, Electronic Transaction Services (Paymark) and GE Money.

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