NEC acquires Avaloq for CHF2 billion

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.

NEC will acquire software and domain knowledge in the digital finance field through the acquisition of Avaloq. 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.

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. Avaloq Ventures has invested in companies such Assetmax or Metaco.

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.

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.

(Press release / SK)