Avaloq is a Swiss company that develops and provides software for

core banking Core banking is a banking service provided by a group of networked bank branches where customers may access their bank account and perform basic transactions from any of the member branch offices. Core banking is often associated with retail ba ...

. The software system, Avaloq Banking Suite, is used by more than 140 banks worldwide.

Background

Core banking includes information about customers, transactions and account balances. Banks have traditionally bought in software for these purposes rather than developing it internally. More functions had to be added over the years as requirements changed, such as for online banking. The result has been very complex computer programs that can be difficult to manage. Coding changes for compliance to new regulations and for accommodating new products can be problematic. As a result, banks have tended to buy in modern comprehensive software from large, specialist firms. This may be run by the bank itself or by an agency running the computing service on behalf of the bank.

Company history

Avaloq was founded in Zurich in 1985, under the name "BZ Informatik Aktiengesellschaft", functioning as the

information technology Information technology (IT) is the use of computers to create, process, store, retrieve, and exchange all kinds of data . and information. IT forms part of information and communications technology (ICT). An information technology system (I ...

subsidiary of . In 1991, 30% of the share capital was taken by the employees as a result of a partial

management buyout A management buyout (MBO) is a form of acquisition in which a company's existing managers acquire a large part, or all, of the company, whether from a parent company or individual. Management-, and/or leveraged buyout became noted phenomena of 1 ...

. At that time, there were five staff and the cost of the buyout was $200,000. The first customer was

Swiss National Bank The Swiss National Bank (SNB; german: Schweizerische Nationalbank; french: Banque nationale suisse; it, Banca nazionale svizzera; rm, Banca naziunala svizra) is the central bank of Switzerland, responsible for the nation's monetary policy an ...

, followed by five other commercial banks in Switzerland. The system then spread worldwide although it has had little impact in America. Initially, the firm was called BZ Informatik, and its product “AdvAntAge”. In 1996, the current name was adopted. In 2001, the company split from BZ Bank, as the employees acquired 100% of the share capital. In November 2019, Reuters reported that

Warburg Pincus Warburg Pincus LLC is a global private equity firm, headquartered in New York, with offices in the United States, Europe, Brazil, China, Southeast Asia and India. Warburg has been a private equity investor since 1966. The firm currently has over ...

was working with

Goldman Sachs Goldman Sachs () is an American multinational investment bank and financial services company. Founded in 1869, Goldman Sachs is headquartered at 200 West Street in Lower Manhattan, with regional headquarters in London, Warsaw, Bangalore, H ...

and

Barclays Barclays () is a British multinational universal bank, headquartered in London, England. Barclays operates as two divisions, Barclays UK and Barclays International, supported by a service company, Barclays Execution Services. Barclays traces ...

on a planned IPO or sale of Avaloq. In October 2020, Avaloq was acquired by

NEC Corporation is a Japanese multinational information technology and electronics corporation, headquartered in Minato, Tokyo. The company was known as the Nippon Electric Company, Limited, before rebranding in 1983 as NEC. It provides IT and network soluti ...

for $2.2bn.

Current activities

Avaloq Banking Group AG employs 2,500 staff, 500 of which are programmers. It has annual revenues of over $500 million and its software accounts for bank deposits to the sum of $4 trillion. The founder is Francisco Fernandez. The Avaloq Banking Suite software is used by over 450 customers including

HSBC HSBC Holdings plc is a British multinational universal bank and financial services holding company. It is the largest bank in Europe by total assets ahead of BNP Paribas, with US$2.953 trillion as of December 2021. In 2021, HSBC had $10.8 tri ...

Royal Bank of Scotland The Royal Bank of Scotland plc (RBS; gd, Banca Rìoghail na h-Alba) is a major retail and commercial bank in Scotland. It is one of the retail banking subsidiaries of NatWest Group, together with NatWest (in England and Wales) and Ulster Bank ...

UBS UBS Group AG is a multinational Investment banking, investment bank and financial services company founded and based in Switzerland. Co-headquartered in the cities of Zürich and Basel, it maintains a presence in all major financial centres ...

Deutsche Bank Deutsche Bank AG (), sometimes referred to simply as Deutsche, is a German multinational investment bank and financial services company headquartered in Frankfurt, Germany, and dual-listed on the Frankfurt Stock Exchange and the New York Sto ...

, Nomura and Societe Generale. Some of the customers have performed

business process outsourcing Outsourcing is an agreement in which one company hires another company to be responsible for a planned or existing activity which otherwise is or could be carried out internally, i.e. in-house, and sometimes involves transferring employees and ...

to Avaloq itself for the actual running of the core computing service which uses

cloud computing Cloud computing is the on-demand availability of computer system resources, especially data storage ( cloud storage) and computing power, without direct active management by the user. Large clouds often have functions distributed over mul ...

. Apart from a 10% holding by a Swiss bank, Avaloq is owned by its employees and it has major offices in Zurich,

Edinburgh Edinburgh ( ; gd, Dùn Èideann ) is the capital city of Scotland and one of its 32 Council areas of Scotland, council areas. Historically part of the county of Midlothian (interchangeably Edinburghshire before 1921), it is located in Lothian ...

and

Manila Manila ( , ; fil, Maynila, ), officially the City of Manila ( fil, Lungsod ng Maynila, ), is the capital of the Philippines, and its second-most populous city. It is highly urbanized and, as of 2019, was the world's most densely populate ...

. In 2016 the firm was rumoured to be seeking investment from

private equity In the field of finance, the term private equity (PE) refers to investment funds, usually limited partnerships (LP), which buy and restructure financially weak companies that produce goods and provide services. A private-equity fund is both a ty ...

investors. The security of the data stored by the system is of the utmost importance. To guard against

cyber attack A cyberattack is any offensive maneuver that targets computer information systems, computer networks, infrastructures, or personal computer devices. An attacker is a person or process that attempts to access data, functions, or other restricted ...

, the firm engages a number of companies based in Israel to attempt to break through the security systems and then help plug the weaknesses uncovered.

References

{{Authority control Software companies of Switzerland Banking software companies Financial services companies established in 1985 Software companies established in 1985 Swiss companies established in 1985 Business software companies Companies based in Zürich Financial services companies of Switzerland Financial technology companies Swiss brands 2020 mergers and acquisitions NEC subsidiaries NEC acquisitions