Temenos Buys Kony to Boost its Digital Front Office Technology for Banks

Less than a month after securing a $37 million debt financing from BMO’s Technology and Innovation Banking Group, mobile application development platform Kony is back in the fintech headlines with even bigger news: the company has agreed to be acquired by digital banking technology giant and fellow Finovate alum Temenos for $559 million and an earn-out of $21 million.

The acquisition will bolster Temenos’ ability to compete in the digital front office solutions market, specifically strengthening the company’s Infinity offering – which currently has more than 500 banking customers and is widely recognized as a leading technology by industry analysts from Forrester and Gartner. Kony Chairman and CEO Thomas Hogan will serve as President of Temenos North America, post-acquisition, and will join the company’s Executive Committee.

“The power of the Temenos portfolio, combined with Kony’s digital banking applications and multi-experience development platform, will bring the industry’s most robust suite of applications for delivering service, value, and efficiencies from the digital edge to the modern core,” Hogan said. “The strength, scale, and commitment of Temenos will also help protect and extend our market-leading innovation.”

The acquisition is expected to be completed by Q4 2019, and is subject to standard regulatory approvals.

Calling Kony the #1 SaaS digital banking company in the U.S., Temenos CEO Max Chuard highlighted the synergies between Kony and his company. “We are acquiring a digital front office product that has already been successful in the U.S. market and is connected to most third party cores,” Chuard said. “We are also adding a significant amount of exciting functionality and ease of generating customer journeys and experiences that will accelerate Temenos Infinity, providing banks in both North America and internationally with an unrivaled customer experience and omnichannel banking product.”

A long-time Finovate alum, Kony first demonstrated its technology at FinovateFall 2010, and returned to the Finovate stage two years ago for FinovateFall 2017 to present its retail banking solution. Founded in 2007 and based in Austin, Texas, Kony launched its Conversational AI DevKit earlier this month to enable businesses to deploy new technologies to improve customer engagement. In May, Kony announced that its Quantum digital experience development platform would power the new CareLogic mobile app from Qualifacts, and unveiled a new partnership with multiple Finovate Best of Show winner and fellow alum, MX.

Headquartered in Geneva, Switzerland, Temenos demonstrated its Connect Mobile Banking solution at FinovateEurope 2015. The company is also an alum of our developers conference, having presented its B2B Financial Marketplace at FinDEVr Silicon Valley – also in 2015. More than 3,000 banks in 150+ countries – including 41 of the top 50 banks – rely on Temenos’ banking technology to process the daily transactions and interactions of more than 500 million banking customers.

Kony is the second major acquisition by Temenos this year. In July, the company announced its purchase of explainable AI innovator Logical Glue and plans to integrate the company’s machine-learning-as-a-service technology into its cloud-native banking solution. Aside from acquisitions, Temenos has been on an energetic partner-making pace, working with IIG Bank, who agreed to use the company’s Infinity digital front office platform earlier this month; as well as teaming up with FIs like Israeli bank Mizrahi-Tefahot, New Zealand’s TSB Bank, and Pakistan’s Bank of Khyber.

Temenos Acquires Explainable AI Platform Logical Glue

Explainable AI – which enables human analysts who aren’t data scientists to understand how artificial intelligence-based solutions reach their conclusions – is at the center of the prize that is Temenos’ acquisition of explainable AI innovator Logical Glue. Temenos announced today that it will integrate the Logical Glue XAI platform into its cloud-native, cloud-agnostic banking solution, and will be available with all Temenos products.

Many view Explainable AI as a critical component in making artificial intelligence work in heavily-regulated industries like banking and finance. Temenos CEO Max Chuard called the technology “a game changer” for customers, adding: “It will give them greater transparency and explainability of AI automated decisions and recommendations helping them harness AI technology to create seamless customer journeys and automate manual processes while meeting the growing regulatory demands.”

Logical Glue provides a purpose-built, Machine Learning as a Service platform that does the work of data scientists at speed and scale. The company’s technology, demonstrated live at FinovateEurope 2016, enables users to leverage raw data to build highly accurate predictive models, see how those models can be applied to real-world business challenges, and then apply those models to the new data in real-time.

“With our patented, cutting-edge XAI platform and our highly experienced machine learning experts, we are helping financial institutions harness the explosive power of XAI and helping them master AI decision-making,” said Logical Glue co-founder and Chief Science Officer Hani Hagras.

Founded in 2012, Logical Glue is headquartered in London, U.K. In May, Logical Glue announced a partnership with managing digital agent Azur to help the company improve its risk analysis. Two years ago, Logical Glue secured an investment from U.K. entrepreneur Tom Singh, founder of fashion retailer New Look. “Logical Glue provides a straightforward and accessible machine learning platform for lenders and insurance providers,” Singh said in a statement when the investment was announced. “(The technology delivers) faster and more accurate decisions that will underpin increased productivity and profitability.”

Temenos demonstrated its Connect Mobile Banking solution at FinovateEurope 2015. The company is also an alum of our developers conference, presenting its B2B Financial Apps Marketplace at FinDEVr Silicon Valley 2015. Based in Geneva, Switzerland and founded in 1993, Temenos notes that more than 3,000 firms around the world – including 41 of the top 50 banks – are daily users of its banking, payments, fund, and wealth management solutions.

Logical Glue Locks in Investment from New Look Founder, Tom Singh

Terms of the investment were not disclosed, but London-based predictive analysis specialist Logical Glue has secured funding from Tom Singh, founder of U.K.-based fashion retailer, New Look. The investment will support the continued development of Logical Glue’s machine learning and statistical modeling platform, including its white box, decision-making engine and data visualization technology.

Singh highlighted the platform’s effectiveness in a range of verticals. “Fast, accurate and automated decisions based on data have a place within many industries, from retail through to finance,” he said, crediting Logical Glue for “(bridging) the gap between data science and the boardroom.” Logical Glue co-founder Daniel McPherson called the company’s technology “the machine learning platform of the future,” and added that FSOs would be among the big beneficiaries of a solution that was “delivering better, faster decisions and providing the consumer with the best customer experience.”

Pictured (left to right): Robert De Caux (Chief Product Officer) and Jon Rimmer (UX Architect) demonstrating Logical Glue Ensemble at FinovateEurope 2016.

Logical Glue has developed a cloud-based platform that enables companies to use data to solve “prediction problems.” As the company’s Chief Product Officer Robert De Caux explained during his FinovateEurope demo last year, questions like:  “Will a customer repay their loan? Will they buy my product?” “Is this transaction fraudulent?” are answerable by applying the right predictive analytic tools to data that lenders and banks already have. More importantly, Logical Glue enables lenders and banks to use these tools without having to hire data scientists and coders to build and run them. During the company’s demonstration of its platform, Ensemble, De Caux and UX Architect Jon Rimmer showed the automatic categorization feature during the data input process, and the feature selection tool which helps ensure that only the most historically valuable and predictive features in the data are included during the model building process.

“You’ll find if you have hundreds or thousands of predictive variables that you want to assess, it’s often that if you remove some of them, you can improve your model performance,” De Caux explained. “At a time when companies are drowning in a sea of data from multiple sources they don’t properly understand,” he said, “it’s a great way to reduce costs and improve insight.” In addition to the data input and model building stages, the team from Logical Glue demonstrated how the models can be customized to the company’s specific business preferences, and then easily deployed in the cloud.

Logical Glue gives users three different predictive models to choose from: one geared toward the best statistical technique, one based on the best machine learning technique, and another De Caux called “the best for insight, which allows you to see why a decision has been made.” The company says its technology helps improve acceptance rates for lenders by 40% and grow profits by between 5-20%. Logical Glue adds that the platform also decreases default rates by 15%, boosts recovery collection rates for debt collectors by 18% and reduces manual interventions for underwriters “20-fold.”

Founded in 2012, Logical Glue demonstrated its technology at FinovateEurope 2016.  The company’s partners include fellow Finovate alums ExperianmiiCard and Equifax.

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