4239 Misys Bank Fusion Presentation

Wednesday 3rd March 2010Deutsche Bank

Winchester House1 Great Winchester Street

London, EC2N 2DB

Misys BankFusionAnalyst & Investor Event

experience, solutions, results 1

experience, solutions, results 2experience, solutions, results 2

Forward looking statements

This communication contains forward looking statements. Those forward looking statements include all statements other than those made, solely with respect to historical facts. Forward looking statements may be identified by words such as believes, expects, anticipates, estimates, projects, intends, should, seeks, future, continue, or the negative of such terms, or other comparable terminology.

In addition, statements made in this communication about anticipated financial results, future operational improvement, and the results of the regulatory approvals, are also forward looking statements. Such forward looking statements are subject to numerous risks, uncertainties, assumptions and other factors that are difficult to predict, and could cause actual results to vary, materially, from those expressed in or indicated by them. Factors that could cause actual results to differ materially include but are not limited to legislative, regulatory, political and economic developments, changes in competitive and market forces, further exchange and interest rates, changes in tax rates, and future business combinations, or disposals.

Some of the central risks faced by Misys are set out in the company’s most recent annual report. Misys undertakes no obligation to revise or update any forward looking statement or to make any other forward looking statement, whether as a result of new information, future events or otherwise. Misys is not responsible for updating the information contained in this communication beyond the published date, or changes made to this communication by wire services or internet service providers today.


Agenda

Refreshment Break

BankFusionTM Customer UpdateGuy Warren, EVP, Misys Solutions for Banking

Partnering with MisysRashik Parmar, IBM and Stuart Drew, HCL

Why Actinver chose MisysAlejandro Ramos, Actinver CTO

Summary and Question & Answer SessionMike Lawrie, Misys CEO

How BankFusionTM will Change Misys’ Financial and Business ModelStephen Wilson, Misys VP Group Finance

BankFusionTM Go to Market strategy Peter Scott, Misys BankFusion Solutions Management

BankFusionTM: A Radically New Way to Solve Operational ChallengesPeter Scott, Misys BankFusion Solutions Management

Banking Market Assessment: The challenges of legacy banking systems and routes to modernisationDon Free, Gartner

Exploiting our Unique Position in the Financial Services MarketMike Lawrie, Misys CEO

Drinks and Canapés

1

2

3

4

5

6

7

8

Including:


Key messages

We have a strong installed base - our business challenge is to leverage this base

The first new core banking solution for Misys in over 7 years. BankFusion allows Misys to compete in the Unix space opening up 70% of the new business market

Allows us to upgrade our installed base over time whilst minimising risk to our customers

Building an eco-system of partners to help take our proposition and capability to market

Over time, BankFusion will fundamentally change the financial characteristics of Misys’ Banking business


Leveraging the installed base

Significant cross-sellopportunity

150Other

1,230ALL(300)Multiple products

380Transaction Confirmation Matching

370Treasury and Capital Markets120Trade Services

510Core Banking

CustomersApplication

BankFusion creates new initial licence, professional services and maintenance events

Tier 4 banks right up to tier 1

Installed base of 1,200 customers

1,200 customers

120 countries

https://www.unionbank.com/

http://www.boc.cn/index.html

http://www.bnymellon.com/util/tononsecure.cfm?Dest=/index.html


Dependable Affordable Scalable

New World

Co-ordinated online, mobile, call centre, branch

Capital preservation & cost reduction

Increased regulation

Ability to change Business Processes quickly

Fast automation of new Banking products lowering risk

Quickly respond to changing market conditions and

opportunities

Increase flexibility, adding new functions and components while

lowering operating costs

Remove the risk of moving to new systems through our renovation

approach

BankFusion enables banks to:

Rapidly reconfigure business processes

Responding to changing customer needs


• Leveraging and deepening our relationships with customers to increase the value we deliver

• Catapulting Misys into a technology leadership position

• Dramatically expanding our reach in new markets through our partnership network

BankFusion - Transforming the Misys Banking business

Over time, BankFusion will transform Misys Banking into an organic growth business


The challenges of legacy banking systems and routes

to modernisation

Don Free, Research Director

2 The Industry Analyst View

© 2008 Gartner, Inc. and/or its affiliates. All rights reserved. Gartner is a registered trademark of Gartner, Inc. or its affiliates.<docname>_<date>_<author>

99© 2008 Gartner, Inc. and/or its affiliates. All rights reserved. Gartner is a registered trademark of Gartner, Inc. or its affiliates.

1. Business: Through 2010, only 30% of financial 1. Business: Through 2010, only 30% of financial institutions and business models will be institutions and business models will be restructured sufficiently to take advantage of a restructured sufficiently to take advantage of a return to growth. return to growth.

2. Technology: Through 2010, legacy technology 2. Technology: Through 2010, legacy technology landmines and landmines and ““run the bankrun the bank”” responses will keep responses will keep cost/income efficiency ratios above 50%cost/income efficiency ratios above 50%


1010

Social Fabric Fractures

• Fracturing social fabric - aging, urban, exclusion/inclusion & personal identity. Traditional processes broken down

• Who is the customer - Demographic shifts & behaviors remain poorly understood and mass customization persists

• Personalization is cost of doing business, but product centricity still dominates bank mindset

• Micro lending moves from developing- to-developed world


1111

Innovation Should Not be an Afterthought

•Risk aversion strategies dominate market

• Innovation attempts remain fragmented - strategy elusive

•Many banks go into hibernation and don’t build resources/capabilities to meet future recovery requirements

•What innovation occurs remains focused on products not experiences

•Emerging markets lead innovation initiatives


1212

The Neighborhood Is Changing

Long-Term Threats Most-Immediate Threat

Threat to Digital Native Ownership

Type of Banking Competitor

Scal

e of

Com

petit

or

Non-Traditional Traditional

Lower Scale

Higher Scale Global Mega-Banks

Telcos

Utilities

Retail


13

Product Innovation

Operational Efficiency

CustomerInformation

CustomerService

Core Banking Renewal Drivers

FunctionalGaps

Rigid Architecture

System Uncertainty

RegulatoryChange

ProcessChange

Long Development

Cycles

System Scalability

Slow Timeto Market

Business IT


1414

Unleashing the Power of the CoreCore Applications:

SpecialtySpecialtyLoansLoans

PNCPNCInsuranceInsurance

SavingsSavingsCurrent Current

AccountsAccounts

CreditCard

MortgageConsumer Lending

Commercial Lending

CreditCards

Equity Lending

Fixed TermFixed TermLife andPensions

CorporateBanking

CorporateBanking

The End of Core Applications: 2015

Micro Lending

Deposit Services

Lending Services

Neg. Amort.

Lending

Customer Services

2010


15

The Back Office in Transition: Reform or Transform?

Reformative Transformative

Benefits

Drawbacks

• slower pace of renewal reduces risk of program failure

• reduced impact on near-term business initiatives

• condensed timeframe results in faster time to market

• less retrofit due to fewer parallel short-term business initiatives

• resource intensive with higher risk of burnout

• limits near-term market opportunity

• less competitive in medium term

• higher risk of long-term market loss

Reformative StrategyLonger-term, incremental program to revise back-office technologies

Transformative StrategyShort-term, all-encompassing program to revise back-office

technologies


BankFusion brings speed, simplicity and flexibility to

banking processes

Peter ScottBankFusion Solutions Management

3 BankFusion: a new way to run a bank


What makes BankFusion unique?

• Fully process-driven core banking solution gives high flexibility

• BankFusion Workbench graphical design time accelerates development at a lower cost

• Use of Components makes adapting business process to desired workflow simple

• BankFusion Server automated code generation saves time and expensive IT resources

Applications Universal Banking

Shared Modules

Components Such as:

• Interest Accruals• Charges• Amortisation Rules

BankFusion Workbench

BankFusionServer

BankFusion Platform

RunTime

DesignTime


• Over 30 years of banking domain knowledge

• Product Composer assembles banking products from a library of building components

• Takes process models and creates business applications from them

Using building block components accelerates development

BankFusion builds banking business processes


• Financial components and activity steps assembled into business workflow

• Can be used by Business Analysts as well as developers

• Freedom to focus on business content

New business requirements rapidly deployed

Visual design environment - Product Composer

Cash Deposit Transaction

Capture


Process Driven Application

Product Composer

Automated Code Generator

BankFusion has unique attributes to address these issues

CEO

Increase sales and grow profitably

Differentiated services based on

single customer view

Fast response to market opportunities

CIO

Raise flexibility

Easier localisation

Future proof the system

COO

Optimise customer relationships

Reduce expenses, streamline processes

Manage riskCha

lleng

esBankFusion solves banks’ challenges


Industry Analysts rate BankFusion technology

“Business process-enabled core systems unlock banks’ potential to drive more aggressive and sustainable growth.”

“BankFusion provides updates that are error free… a true cost of ownership advantage.”

“Institutions are no longer constrained by arcane, restrictive, time-consuming and horribly complex practices… far greater degree of business control and ownership.”

“… has significant potential as a truly modern banking system… more effective than existing monolithic banking systems.”

“… highest score on depth of integration.”


Scenario demonstration

Using the Product Composer, we show how BankFusion can be used to rapidly respond to

changing business requirements

How BankFusion solves operational problems


4 strategic segments of BankFusion strategy

InternalRenovation

ExternalRenovationIndustry

Platform

BankFusionPlatform

UniversalBanking


Publish

BankFusion Universal Banking

BankFusionDevelopmentWorkbench

Branch Operations

Deposits

Lending

Multi-Currency

Compliance

Current AccountsManagement

Reporting

Limits

Treasury

Pricing

Payments

Security

BankFusionRuntime

Environment


4 strategic markets for BankFusion


Platform

BankFusionPlatform

UniversalBanking

InternalRenovation


Internal Renovation and Shared Module approach

Midas

Equation

Bankmaster

The Present The Future

Dedicated Developments Shared Modules

Charges

LoanOrigination

BranchSolution

CollateralManagement

Universal Banking

BankFusionEquation

BankFusionMidas




Platform

BankFusionPlatform

UniversalBanking

InternalRenovation


Legacy Core Banking SystemsIn-house developedMoribund 3rd party solutionsProducts acquired but not evolving

BankFusion PlatformDesign-time and Run-time

BankFusion as External Renovation technology

Shared Modules such asLoan Origination, Customer Acquisition, Branch Solution

Common Components such asInterest Accrual, FX calculation rules, working days calculator




Platform

BankFusionPlatform

UniversalBanking

InternalRenovation


BankFusion - Disruptive industry platform

• BankFusion adoption as an industry standard for financial industry developers

• Leveraging Misys’ leading market share in the banking applications market

• Misys opens up its community to 3rd

party developers and showcases their solutions

• Option to ‘white-label’ core banking for regional developers to add and support compelling local features


BankFusion customer update

BankFusioncustomer update

Guy WarrenEVP, Misys Solutions for Banking

4


Customer proof points

New system

TIME Bank

Upgrades Renovation

UniversalBanking

InternalRenovation


Platform

BankFusionPlatform

http://www.investec.com/


Bankmaster customers upgrading to BankFusion Universal Banking

• User Acceptance Testing completed with positive performance

• Go-live scheduled March

Status

• Fastest-growing Bank in Tanzania• 700,000+ accounts

Profile

• Bankmaster replacement• Ease of migration• Latest technology to underpin business• Improve customer service

Requirements

UniversalBanking

InternalRenovation


Platform

BankFusionPlatform


Equation customers selecting BankFusion Equation

InternalRenovation

UniversalBanking


Platform

BankFusionPlatform

• Long-standing Equation customer• Almost 900 branches

Profile

• Expansion across domestic and international network• Best technology to support growth ambitions• Agility and innovation to maintain competitive edge

Requirements

• Currently implementing in Head Office• Scheduled roll-out to international branch network

throughout 2010

Status


Why Actinver Chose BankFusion

Alejandro Ramos, CTO

BankFusion customer update4


• One of the fastest growing financial services groups in Mexico

• Expanding from Brokerage and Fund Management to Banking

• 1,500 employees

• 72 Branches

• 200,000 Customers

• Daily transactions: 25,000

• Total assets: MXN $150 billion

Who is Actinver?


What were we looking for?

• Deposits, Loans, Channels - Branch through to Back Office

• A customer-centric solution to improve the customer experience

• Customisation, not just changing parameter settings

• Most technically advanced Universal Banking solution on the market

• A platform on which to base our future growth

• A long-term partnership with the vendor


Why Actinver chose Misys

• Revolutionary process-oriented approach

• Capability to meet complex regulatory reporting requirements

• Flexibility of the Workbench

• Integration approach

• Delivery capability, professional services and a proven track record


We will bring to market a range of BankFusion

applications & tools to modernise banking systems

Peter ScottBankFusion Solutions Management

5 BankFusion: a new way to run a bank



InternalRenovationUniversal

Banking


Platform

BankFusionPlatform


BankFusion Universal Banking

EXISTING CUSTOMERS NEW CUSTOMERS

Why will we win?• Low risk ‘upgrade’ for existing Bankmaster customers• Next Generation build and design• Lower Total Cost of Ownership• Excellent business agility

Who will we sell it to?

• Bankmaster customers • With growing business

aspirations• With functional and account

volume limitations.

• Domestic & Regional retail banks replacing core systems

• Tiers 3 & 4• Legacy systems, stretched by

competitive pressure and regulatory burdens

• New ‘start up’ banks

UniversalBanking

InternalRenovation


Platform

BankFusionPlatform

2009 onwards


Internal and External Renovation

EXISTING CUSTOMERS NEW CUSTOMERS

Why will we win?

Who will we sell it to?

• Equation and Midas users• Want to introduce more

flexible business processes• Receptive to Misys new

module Roadmap

• Low risk alternative to ‘Rip and Replace’• Raises the return on existing investments• Unique technology and business proposition• Business Roadmap from Shared Modules

• Monolithic legacy • Tiers 2 & 3• Require functional evolution• Need better process efficiency• ‘Rip and Replace’ too risky

InternalRenovation

ExternalRenovation

UniversalBanking

IndustryPlatform

BankFusionPlatform

2010 onwards

2011 onwards


BankFusion will have a disruptive market impact when used by 3rd parties

Extending the BankFusion platform

NEW CUSTOMERS

• Application partners build software using BankFusion technology

• Misys vets and showcases 3rd party applications

• Local features from 3rd parties in ‘white labelled’ core banking offer

• Based on success in other segments and unique proposition

IndustryPlatform

InternalRenovationUniversal

Banking

ExternalRenovation

BankFusionPlatform

2013 onwards


BankFusion Services - enhancing value to our customers

Business Process design Consultative

engagementDeeper

customer relationships

• Focus on business workflow

• Best Practice in Banking processes

• Misys Global Centre of Excellence

• Misys / Partner led

• Greater role in business transformation

• Design as well as implementation

• Early stage contribution to solution definition

• Continuing business partnership

• Increased cross-sell and up-sell over time

• Greater share of wallet


Agent

DeliveryPartner

SolutionPartner

TechnologyPartner

Influencer/ Consultant

System Integrators

Complementary Solutions

Reach

Scale

Depth

BankFusion leveraging and expanding our partner network


Partnering with Misys

6 Partnering with Misys

Stuart DrewSVP Financial Services

Europe

Rashik ParmarCTO, IBM Distinguished Engineer

Member, IBM Academy of Technology


What is the value of this opportunity to Misys?

Stephen Wilson,VP Group Finance

7 Strategic and financial impact


Value-based pricing model

• Pricing based on components and functions selected by customer

• Prices scaled according to volumes, e.g. accounts, user seats

• Multiple ILF events per customer over time

– Platform workbench– Modules – Applications

• Incremental Recurring Licence Fee (RLF)

Platform

Applications Universal Banking

Modules


Revenue Model assumptions: 5-year horizon

1 ILF reflects typical ranges for 10-year term licenses sold to banks in the target tiers shown. In practice, pricing will vary more widely towards the extremes of our target markets and also according to volume-based price grids

2 Reflects the RLF generated over the life of a typical 10-year licence contract arising from an ILF deal, under a range of RLF rates, from basic service up to premium service

ILF event

1.8-2.4

1.8-2.4

1.8-2.4

RLF: ILF ratio 2

2

2,3

3,4

Market Tier

20-25

120-130

100-110

Total Deals

1.3-1.7£500K-£1mApplication modules & Developer Licences for 3rd

party applications

ExternalRenovation

1.0-1.2£200-500KWorkbench Licences & Application Modules for Equation & Midas customers

Internal Renovation

1.0-1.5£200-600KBankmaster replacements & Open Market

Universal Banking

Services : ILF ratio

ILF1Segment

Illustrative assumptions


Progressive adoption of BankFusion

Internal RenovationMigration of Equation customers from 2010/11 and Midas customers from 2011/12

Universal BankingEarly impetus from migrating Bankmaster customers and selective competitive wins

External RenovationPlatform sales to 3rd party application customers materially from 2012/13

Cumulative BankFusion adoption

250 adopters over the next 5 years

0

20

40

60

80

100

120

140

160

2009/10 2010/11 2011/12 2012/13 2013/14 2014/15

Customers

Universal Banking

Internal Renovation

External Renovation


Potential incremental revenue from the BankFusion strategy

• Initial Licence Fee (ILF) growth as adoption progresses

• Growing Professional Services multiplier as more complex projects are tackled over time

• Recurring Licence Fees (RLF) add progressively to existing base

• Normal margin framework but re-use of software components offers upside potential over time

Incremental BankFusion revenue over 5 yearsBased on illustrative assumptions

109

113

29

£183m

£250m

Initial Licences

58

Professional Services

44

Recurring Licences

81

0

50

100

150

200

250

Banking Division2008/9

BankFusion2010/11 - 2014/15

£m

Potential to add 6-8% per year compound to the revenue

base over 5 years


BankFusion brings operational benefits to Misys

1

MISYSBENEFIT

2

3

45

6

7

8

Removal of product silos

Re-use of business & technical resources

Technology refresh: business agility & new

functionality

Higher returnson investment

Fosters creativity in product development

Simpler cross-sell

Accelerating functional roadmap

Process-based client consultation


How will BankFusion change Misys?

Mike Lawrie, CEO

7 Strategic and financial impact


Key messages

We have a strong installed base - our business challenge is to leverage this base

The first new core banking solution for Misys in over 7 years. BankFusion allows Misys to compete in the Unix space opening up 70% of the new business market

Allows us to upgrade our installed base over time whilst minimising risk to our customers

Building an eco-system of partners to help take our proposition and capability to market

Over time, BankFusion will fundamentally change the financial characteristics of Misys’ Banking business


Get Fit Win More Lead

1 - 2 yearsComplete

2 - 3 Years 3 - 5 Years

BankFusion takes Misys into the Leadership phase

Technology LeadershipSales LeadershipServices Leadership

TIME Bank

BankFusion

http://www.investec.com/


experience, solutions, results

Documents

4239 Misys Bank Fusion Presentation