July 24, 2013

Canadian-based Davis + Henderson Corporation is acquiring Harland Financial Services, one of the top four core banking providers in the U.S., expanding D+H’s reach in the industry to the 5,400 institutions that currently use Harland’s solutions, according to a statement released yesterday by D+H. The acquisition will cost D+H $1.2 billion, the statement said.

D+H said that the acquisition will help them compete in the financial services technology market as the acquisition will bring their total client base to 6,200 institutions, according to D+H. Harland is one of the four major core systems providers in the U.S. (along with Fiserv, FIS and Jack Henry) and also offers solutions for online banking and account opening, branch automation, mobile banking and commercial lending.

Davis + Henderson provides lending and payments solutions to 1,700 banks and credit unions in North America, but has not previously offered a core banking solution. HFS’ core banking clients will also provide a client base for ancillary products and services from D+H and HFS.

[See Related: Core Banking Systems Winners And Losers]

D+H cited a 2012 survey by the Independent Community Bankers of America that said more than half of community banks in the survey were using core systems that were more than 10 years old. This will create an increased demand among smaller institutions over the next few years for new core systems as the existing systems continue to age, D+H noted. Celent just released its global core banking forecast yesterday, which predicted slow but steady growth in the global core banking market from $8.6 billion this year to $10.1 billion in 2017. In the U.S., Celent anticipated slow growth in demand from smaller banks, with some larger institutions finally taking the plunge and converting to a new core.

The Harland acquisition will also give D+H a stronger foothold in the U.S.; only 8% of the company’s revenue comes from the U.S., but that will increase to 36% with the HFS acquisition.

The combination of HFS’ LaserPro automated loan compliance solution with D+H’s Mortgagebot Point of Sale and Loan Origination Systems will create a cross selling opportunity for the company in the lending market, the statement added.

Jonathan Camhi is a graduate of the City University of New York's Graduate School of Journalism, where he focused on international reporting and interned at the Hindustan Times in Delhi, ...