Swift’s planned acquisition of SunGard’s Ambit Messaging Hub is all part of the financial network operator’s new and recently approved 2015 strategy, which aims to strengthen Swift’s overall commercial approach to the market. The new strategy will see Swift making further “targeted acquisitions” over the course of the next five years, according to Mike Fish, its chief technology officer.
The Swift board approved the 2015 strategy last month and Fish reckons the acquisition of SunGard’s solution for high volume financial messaging fits in nicely with the overall five year plan. “One key element of the strategy is that we work with our high end customers to reduce the total cost of ownership of using Swift and this acquisition is a good fit to help in this regard,” he explains.
Swift and SunGard have been talking about working more closely together for some time, adds Ken Dummitt, president of SunGard’s AvantGard business unit. “We’ve been talking with Swift for several years to increase the partnership that we have and the best way to extend any partnership is for each to focus on what they do best. One of the manifestations of those discussions was the decision that Swift was much better positioned to handle our financial messaging product line represented by the Ambit Messaging Hub, which will now be marketed as the Advanced Messaging Hub (AMH). It made sense to transfer the assets to Swift from that perspective,” he elaborates.
The transaction, the terms of which have not been disclosed, is subject to a number of closing conditions but it is expected that the acquisition will go through by the end of this quarter. Once the deal has closed, the related management and staff of SunGard’s Ambit Messaging Hub product line, which includes around 20 employees, will transfer to a newly set-up Swift subsidiary and will be based in Mechelen (Belgium), Frankfurt (Germany) and Zurich (Switzerland). The subsidiary will be led by Hans Cobben, who has been heading the group within SunGard.
“The new team that is joining, which we will leave in a separate subsidiary, will have a more flexible approach in working with the top 50 customers of Swift,” claims Fish. “There is not a one size fits all that will work with every firm, so this team will be freer to craft integration solutions that will fit with these customers.”
Fish indicates the AMH fits a part of Swift’s portfolio where it didn’t really have a product before: as a message hub for its high end customers. He contends that the acquisition will allow customers to interface many of their back office applications with many different communication channels and he feels this is a good complement to its own Swift communication interface.
“We think this will make us a stronger competitor versus other vendors who sell to our high end customers. Swift has dominated the mid and lower tier markets and we have a respectable share of the Swift interface market, but this provides us with a route to getting into the general messaging hub and value added services,” he explains.
The network operator is already in the first stages of consulting its clients about the potential further development of the AMH solution. “We are most likely in the future going to offer more flexible applications to plug into AMH, but we will work with the customers to determine this,” says Fish.
The new strategy is all about getting close to these customers and to the compatible vendors out there in the market, after all, and this could involve getting very close indeed. “We have often tried to do things ourselves and the 2015 strategy really opens it up in terms of acquisitions and strategic partnerships to make Swift stronger and reduce risk and cost for our customers. We are looking for targeted acquisitions where they make sense in order to be able to pursue this strategy,” says Fish.
Dummitt adds: “In terms of Swift’s 2015 strategy, what is interesting to us is their willingness to expand their partnerships and explore new types of cooperation, which is great for the marketplace.”
In the meantime, for SunGard, the focus of this deal has been on continuing to ensure there is support for the customers on its Mint messaging solution, the predecessor solution to the Ambit Messaging Hub. “It was critically important to SunGard that our Mint customer base were taken care of and had a defined migration path,” explains Dummitt. “Two years ago we announced to these customers that Mint had a five year time horizon left on its life and we defined migration paths for them to the Ambit Messaging Hub, and this timeline will be honoured in this transaction. Moving forward, Swift is best placed to define a suite of product alternatives for our customer base in this space.”
Dummitt indicates that customers using SunGard’s Mint solution for messaging will therefore be able to work with SunGard and Swift to migrate to AMH.
As well as bringing in some extra cash (although there is no indication of how much is to change hands), the deal will also bring a stronger route to market for its AvantGard EcoSystem Communication Hub (Echos) solution. “From a depth of partnership approach, it will strengthen our portfolio in the corporate to bank and corporate to corporate space as SunGard will focus on Echos for delivery of these solutions. Echos shares the core messaging engine that exists within AMH. The benefit for us will be the joint market presence of Swift and SunGard in this marketplace,” explains Dummitt.