Payments technology firm ACI Worldwide, which provides retail and wholesale banking products as well as retailer-focused software and hardware solutions, announced Q2 2016 results that were in-line with expectations during its earnings call last week.
But the firm’s software-as-a-service (SaaS) and other high growth offerings were highlights in the call, which indicates success in the firm’s ongoing plan to transform its business to embrace and stay ahead of the digital disruption of the payments industry.
Gains in high-growth segments points to ACI’s clients’ shifting demand for digital solutions. SaaS-specific bookings, which now comprise 50% of the firm’s backlog, grew by 16%in Q2 and 23% year-to-date. For context, on-premise software bookings decreased by 26% in the quarter.
The strong market demand for SaaS offerings, especially compared to on-premise bookings, indicates that ACI’s customers are seeking the efficiency, convenience, and security of digital offerings. That’s in line with larger industry trends, where major payments firms are becoming increasingly focused on software and services in order to diversify revenue moving forward.
The firm’s ongoing emphasis on high-growth areas rather than legacy business seems to be paying off. In January, ACI sold off its community banking division to Fiserv as part of a move to increase its focus on its most strategic initiatives, like e-commerce and real-time payments. The performance of newer digital-focused segments relative to the firm’s traditional business points to the ways this shift is already helping ACI’s performance.
It’s likely that as the firm allocates more resources to these areas through new initiatives, like a comprehensive European data center nearly ready to launch and new digital acquisitions, it will begin to see these services overtaking legacy offerings and driving business.
ACI Worldwide is one player in a much larger payments ecosystem, which includes acquirers and processors, issuers, card networks, gateways, and more.
Evan Bakker and John Heggestuen, analysts at BI Intelligence, have compiled a detailed report on the payments ecosystem that drills into the industry to explain how a broad range of transactions are processed, including prepaid and store cards, as well as revealing which types of companies are in the best and worst position to capitalize on the latest industry trends.
Here are some key takeaways from the report:
- 2016 will be a watershed year for the payments industry. Payments companies are improving security, expanding their mobile offerings, and building commerce capabilities that will give consumers a more compelling reason to make purchases using digital devices.
- Payments is an extremely complex industry. To understand the next big digital opportunity lies, it’s critical to understand how the traditional credit- and debit-processing chain works and what roles acquirers, processors, issuing banks, card networks, independent sales organizations, gateways, and software and hardware providers play.
- Alternative technologies could disrupt the processing ecosystem. Devices ranging from refrigerators to smartwatches now feature payment capabilities, which will spur changes in consumer payment behaviors. Likewise, blockchain technology, the protocol that underlies Bitcoin, could one day change how consumer card payments are verified.
In full, the report:
- Uncovers the key themes and trends affecting the payments industry in 2016 and beyond.
- Gives a detailed description of the stakeholders involved in a payment transaction, along with hardware and software providers.
- Offers diagrams and infographics explaining how card transactions are processed and which players are involved in each step.
- Provides charts on our latest forecasts, key company growth, survey results, and more.
- Analyzes the alternative technologies, including blockchain, which could further disrupt the ecosystem.
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The choice is yours. But however you decide to acquire this report, you’ve given yourself a powerful advantage in your understanding of the payments ecosystem.
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