NEC Corporation (TSE: 6701) today announced the acquisition of Avaloq Group AG (Avaloq), a leading Swiss financial software company. The acquisition of Avaloq will provide NEC with digital finance software and domain knowledge as it enters into the field globally and strengthens its business in the digital government field. The acquisition is expected to be worth 2.05 billion Swiss francs, and to be completed by April 2021, following the confirmation of necessary procedures and approvals for each organization.
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NEC focuses on Solutions for Society businesses that utilize the strengths of ICT to enhance social infrastructure. NEC’s biometric and AI technologies are driving the expansion of business globally, mainly in the digital government field, and help to promote safe, secure, fair, and efficient communities. NEC is now shifting more attention towards SaaS business models that utilize software capable of being horizontally deployed.
Avaloq is a global leader in digital banking solutions and is at the forefront of financial DX as a software developer for financial institutions largely centered in Switzerland, but reaching across more than 150 customers in 30 countries worldwide. Avaloq’s business growth is partially driven by recurring business from the provision of software as a service (SaaS) and business process as a service (BPaaS) for wealth management and other applications, as it holds the top market share in wealth management software within Europe and Asia Pacific. Furthermore, in recent years Avaloq has worked with FinTech startups and other partners to aggressively promote digitization through AI, blockchain and other technologies as part of capitalizing on new service needs brought on by open banking, particularly in Europe.
In response to slowing growth in conventional services and advances in regulatory reforms such as the shift to open banking, the financial industry is working to acquire new sources of revenue by creating services that leverage digital technologies, and the utilization of software is expanding in preparation for rapid introduction of these services. In addition, there is a growing momentum toward achieving more equitable and efficient civil services through cooperation between government and finance, which is based on digital IDs and digital tokens.
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“NEC will be placing great importance on building long-term relationships with Avaloq and its customers, and aims to create new solutions that combine Avaloq’s software with NEC’s cutting-edge technologies, such as its brand of biometric authentication solutions, “Bio-Idiom,” the company’s AI technology brand, “NEC the WISE,” and its innovative blockchain technologies,” said Takashi Niino, President and CEO, NEC Corporation. “NEC will also promote global sales expansion of Avaloq’s software by taking advantage of NEC Group sales channels, including KMD, a leading European software and IT services provider that NEC acquired in February 2019.”
“The Avaloq team is delighted to be joining the NEC Group, a highly trusted and well-respected company with a long heritage, which will help further enlarge our geographical footprint across the globe,” said Juerg Hunziker, CEO of Avaloq. “Due to very similar values of professionalism, reliability, quality and excellent service for clients with a focus on precision, we firmly believe that this union will be a successful one for all involved and we are looking forward to an exciting and fruitful cooperation. The whole Group Executive Board at Avaloq is committed to driving forward our growth strategy and we are very glad to have a strong partner on our side who supports our long-term vision and offers us continuity, stability and an exciting future of accelerated growth in new markets. With NEC, Avaloq found a perfect new home to continue our success story of serving our clients with solutions that make their lives simpler in an ever more complex world.”
The digitization of the financial industry is expected to have a broad impact on the sustainable development of the digital economy and society. NEC will acquire software and domain knowledge in the digital finance field through the acquisition of Avaloq, and enter this field globally, while strengthening its business in the digital government field.
Furthermore, NEC aims to expand its business and improve profitability, mainly in the digital government and digital finance areas, by globally developing SaaS business models that utilize software and technologies from throughout the NEC Group.
