By
Mayowa Adebajo
March 27th, 2024
The acquisition of Avaloq will help NEC to offer cloud-based digital financial services to government agencies along with its existing data analytics and biometrics products.
On Monday, October 5, Japan’s multinational giant NEC Corporation (OTCMKTS: NIPNF) announced the acquisition of Swiss financial software company Avaloq Group. As per industry reports, the acquisition happened for a deal worth $2.23 billion and will be completed by April 2021.
This deal is also part of NEC’s plan to expand its footprint in the global financial services software market. Avaloq is currently the top provider of software for financial services management. It specializes in providing powerful cloud solutions to banks and financial institutions via the business process as a service (BPaaS).
Last year, nearly 70% of Avaloq’s $664 million sales came from Europe alone. The Swiss giant has been serving some of the big clients like HSBC and Deutsche Bank over the last few years. This deal will allow NEC to offer cloud services to its global clients while simultaneously offering its own data analytics and biometrics products to financial institutions. During the announcement, Takashi Niino, President and CEO of NEC Corporation, said:
“NEC strongly believes in the importance of safety and security around financial institutions, which is absolutely crucial for sustainable prosperity and digital inclusion. Avaloq is a recognized global leader in their field, and their compelling offering is expected to complement our current solutions. NEC aims to further expand its business in the digital government and digital finance areas, by globally developing SaaS and BPaaS business models that utilize software and technologies from throughout the NEC Group, including Avaloq’s.”
NEC Consolidating Its Business Position with Acquisition of Avaloq
Over the last decade, NEC has worked on restructuring businesses facing cut-throat from other Asian counterparts. NEC said that through the acquisition of Avaloq, it will expand its domain knowledge in the digital finance field. It will initially focus on the Japanese market where financial institutions have taken a long time to adopt digital transformation.
Besides, NEC also has support from Japan’s newly appointed Prime Minister Yoshihide who has pledged to modernize outdated government systems. Digital Finance and the digital government will be the two areas where NEC aims to expand its business. Recently, NEC has also received huge investments from Japanese telecom companies Telephone (NTT) and Nippon Telegraph. NEC will be working with these telecom giants on the next-generation 5G technology services. The official press release notes:
“Robust financial institutions build a crucial part in NEC’s vision for smart cities. Banks and financial institutions worldwide are embracing rapid digitization as a way of offering secure and seamless financial services and addressing a rapidly growing customer appetite and global market for digital-first banking. With its 30-year heritage and focus on innovation in digital banking solutions, core banking software and wealth management technology, Avaloq is uniquely qualified to complement NEC”.
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