Fundtech Reports 4Q Growth, Hires Industry Vet
Fundtech, a bank transaction software company, reported a strong fourth quarter yesterday and the hiring of 30-year banking technology veteran Ed Gainer today.
Last quarter, the company's revenue was $32.8 million, a 10% increase over 2009. It closed 153 new deals, including 12 new system sales at banks, and added 9 new bank customers. George Ravich, Fundtech's CMO, says this is because transaction banking is experiencing a renaissance. "The most amazing part of this business is so few people pay attention to it, meanwhile it represents a third to half of a bank's revenue," he says. "It's an enormous part of the business that has been sleepy because people were more interested in consumer or investment banking, but all the while, this part of the business has been chugging along, it's been growing, it's been profitable. Now, a lot of banks are deciding to invest more in it. At the same time, there's a lot of new technology, a lot of new things happening that warrant more investment."
One thing bank clients are doing is adding value to transactions by adding data, he says. For instance, adding invoice data to a wire transfer allows that information to go straight into a business customer's accounting system. This can help the business customer's cash manager be more efficient and become better at cash planning, with a real-time view of payables and receivables and the ability to predict future needs. "In this economy, it's very important to be able to predict the best you can," notes Ed Gainer, Fundtech's new head of U.S. cash management. Such a service can help a bank sell its services and improve customer relationships.
Positive pay and other services that help a business customer detect fraud have also been popular, says Gainer. Although many banks are reporting increases in fraud, Fundtech's service has safeguards that stop people from making a fraudulent payment, including the use of electronic signatures and a handheld token to authorize payments. One thing banks are trying to do is bring small businesses from the retail platform, where they use a consumer type of account at the kitchen table and pay low fees, to cash management services that have the protections built in and for which a bank can charge higher fees, Gainer and Ravich say.
Gainer began his career as a software engineer, working on a funds transfer project for Bankers Trust in the late 1970s. He co-founded Generated Systems Technologies, a developer of small business banking software and provider of professional consulting services. He has also held senior management positions at Brokat Technologies, Transaction Software Technologies, and National Data Corporation. Gainer will be responsible for product development and growth strategies for Fundtech's North American cash management business.
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