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  5. NCR Acquires Digital Insight - What's Next?

NCR Acquires Digital Insight - What's Next?

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3 December 2013
Jacob Jegher
NCR announced yesterday that it is acquiring Digital Insight for $1.65 billion. This is a rather quick "flip" for private equity firm Thoma Bravo, as they purchased Digital Insight from Intuit for $1.03 billion this past summer. The move makes a lot of sense for a firm like NCR. However, I am left scratching my head as to why they didn't purchase Digital Insight from Intuit a few months ago. Was Intuit in a rush to sell of the Digital Insight assets? Was NCR not ready or not aware that Digital Insight was for sale? There are some unanswered questions here that don't add up. They add up however for Thoma Bravo as a quick $620 million is nothing to sneeze at! The acquisition presents several opportunities and challenges. Opportunities:
  • NCR is aiming to become a fintech powerhouse. Yes, NCR is already a large player. However this acquisition allows them to expand further into digital banking . We have seen similar stories with ACI's acquisition of S1 and Online Resources, D&H's acquisition of Harland, Fiserv's acquisition of Open Solutions, etc. This is the next wave of solution providers competing on digital and multichannel banking. In other words, there is plenty of opportunity for banks to look beyond the classic core banking providers for online and/or mobile banking.
  • NCR will be able to focus on multichannel banking and cross-selling their solutions. Online, mobile, ATM, branch transformation - these are all areas that NCR can zone in on. Not to mention that the firm has a multichannel marketing solution. Both firms have solid client bases that can be tapped into.
  • NCR already has digital banking solutions. The firm will now add a host of new and modern solutions to their digital banking arsenal. The Digital Insight assets will allow NCR to become a more significant player in the online and mobile banking space.
Challenges:
  • Digital Insight can't afford to be in limbo for so long. The firm has been caught up in the M&A doldrums for quite some time, starting from when Intuit decided to sell the firm. Other firms spent this time investing in their solutions and building out new capabilities.
  • NCR is going to have to move very quickly in order to compete. Newer firms like Q2 have been gobbling up market share from the classic providers. Other startups are emerging on the scene. NCR will have to forge ahead rather quickly in order to stay relevant in the online and mobile banking market.
  • NCR is going to have to manage the expectations and concerns of Digital Insight clients. Digital Insight clients have bounced around from Intuit to Thoma Bravo to NCR in a very short period of time. This can be a frustrating experience and NCR is going to have to work hard to make these clients happy.
  • NCR and Digital Insight both offer digital banking solutions. Some of this product overlap will need to be rationalized.
This acquisition is certainly big news for the fintech industry, and I'm curious to see where it will take NCR. Please feel free to weigh in with your thoughts and comments.

Comments

  • Agree with most of your insights Jacob. Further - NCR will not only differentiate itself from Diebold, Wincorp, and Nautilus Hyosung and gain share down market in newly acquired DI accounts, but it will also take the DI solutions to a new level and cross pollinate already developed technology with new offerings for an addressable market that was previously unattainable by a smaller provider the size of DI. This includes an international market. There is plenty of history here and a well-laid foundation by a group of expert online banking pioneers who once thrived within NCR, but were never able to secure the investment required to truly flourish. Just ask any former NCR "eCommerce" customer, employee, or sales manager in the financial space.

  • […] last year, NCR announced the acquisition of Digital Insight (DI). It’s been quite the ride for DI as they are on their third owner in a very short […]