July 30, 2013

Harland acquisition makes Canada's D+H a U.S. payments player

TORONTO–Davis + Henderson Corporation has entered into an agreement to acquire Harland Financial Solutions , a leading U.S-based provider of strategic technology, including lending and compliance, core banking, and channel management technology solutions to U.S. banks, credit unions, and mortgage companies. The purchase price for the Lake Mary, Florida-based HFS is approximately US$1.2 billion in cash.

The acquisition enhances D+H's competitive position as a leading North American financial technology provider to larger financial institutions, community banks and credit unions. In addition to D+H's existing strong relationships with Canadian and U.S. financial institutions, the acquisition provides D+H with:

  • A leading U.S. provider of lending compliance solutions for banks and credit unions of all sizes.

  • Top four core banking technology provider in the U.S. coupled with several additional solutions that support online and mobile banking, online account opening, branch automation and commercial lending, all designed to help banks comply with an increasingly complex regulatory environment.

  • 5,400 U.S. bank and credit union clients, bringing D+H's total client base to over 6,200 financial institutions after accounting for shared relationships.

"Acquiring HFS fully aligns with D+H's FinTech vision and our objective of growing our technology capabilities and value proposition in the service of banks and credit unions," said Gerrard Schmid, CEO of D+H. "With proven technology solutions that are mission critical for clients and complementary to our D+H offerings, solid financial performance, including strong cash flows provided under long-term contracts, and an experienced team of approximately 1,350 employees across some 17 locations, HFS adds the scope and scale necessary for D+H to be a trusted market leader in the U.S. We also believe that this union will allow us to create even more differentiated product offerings by combining our market-leading lending solutions with HFS' strong suite of lending products."

Two Strong Platforms for Cross-Selling Opportunities

HFS provides two equally important platforms: lending solutions and core banking technology.

HFS' lending solutions platform includes  LaserPro®, the leading automated loan compliance solution in the U.S. D+H's lending solution platform includes market-leading Mortgagebot Point of Sale (POS) and Loan Origination Systems (LOS). By combining these suites, D+H will have a substantial portfolio of best-of-breed solutions to cross-sell to banks and credit unions in the large and growing U.S. lending market.

HFS also commands the number four U.S. market position in core technology, a segment that D+H does not address with its current solutions. Through its  PhoenixEFE® technology – the 2012 recipient of the  Xcelent Technology Award for Core Banking Solutions – HFS supports mission-critical activities including customer account openings, payment processing, deposit account balancing and interest-rate calculations, and the management of commercial, consumer and mortgage loans.

"Experience shows that the installation of a core banking system drives additional sales of ancillary FinTech solutions. HFS has several competitive solutions such as online and mobile banking, branch automation, business intelligence solutions and lending solutions to complement the sale of a core platform," said Mr. Schmid. "In combination with our D+H products we can address the broader needs of our combined customer base and use our improved value proposition as a springboard to grow in the U.S. market that includes over 13,000 credit unions and community banks."

According to a 2012 survey by the Independent Community Bankers of America, more than half of community bank respondents are using core banking technology systems that are more than 10 years old. These older systems limit a bank's ability to launch new products in a timely manner and to offer an integrated customer experience across channels, are costly to maintain and make it more challenging to remain compliant in an increasingly complex regulatory environment. With the U.S. economy and banking sector continuing to stabilize, market forecasts suggest spending on core banking technology will increase over the next few years.

"HFS' services, including cloud solutions delivered on an account-based fee basis or in house depending on customer preferences, are the perfect complement to D+H's portfolio business solutions, with limited overlap of clients or products," said William W. Neville, President of D+H's U.S. Operations. "The combination of our two firms will create a larger product and service portfolio for U.S. banks and credit unions who will now be able to access integrated, market-leading technology solutions through a single vendor. We are delighted to welcome HFS' leadership and employees to D+H and look forward to working together in providing reliable, effective solutions that are relevant to our customers."

Raju Shivdasani, CEO of HFS, said: "The combination of D+H and HFS will create a powerful combination with both parties bringing significant capabilities to the North American FinTech market."

"We are excited by the prospect of becoming part of D+H and believe that this transaction is right for both our customers and our employees. We are joining a growing, trusted, customer focused organization that is committed to helping clients grow, compete, and offer their desired consumer experience. By combining organizations, we'll be well positioned to do even more for customers in future," said Bill Zayas, Chief Operating Officer of HFS.








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