Davis + Henderson Corp.'s acquisition of
Terence Roche, principal and co-founder of Cornerstone Advisors, told Credit Union Journal D+H's purchase is a continuation of consolidation credit unions have seen in the vendor community, adding, "But the biggest question is, what happens next?"
"This move means D+H acquired a U.S. company that has a lot of credit union clients," Roche said. "D+H now has a much bigger presence than it had before. Nothing is better than good choices, so we will see down the road if there will be fewer choices going forward."
On July 23, Toronto-based D+H said it acquired Lake Mary, Fla.-based Harland, which provides technologies supporting lending and compliance, core banking and channel management to financial institutions, for $1.2 billion in cash.
Roche noted D+H's previous purchase of Mortgagebot already had the Canadian company's foot in the door.
"Lots of credit unions use Mortgagebot for their online mortgage origination solution," he noted, adding D+H also acquired Avista, a decisioning and fulfillment piece, in 2011. "Between those two products D+H had a pretty big presence in the mortgage origination portion of the credit union market. However, it did not have a core system presence. Harland had a lot of loan origination solutions and two core systems."
Roche said the immediate impact on CUs is that vendor due diligence will be affected, starting with current Harland customers.
"Every credit union that was an UltraData client needs to know the company's commitment to the product. Any time there is an acquisition credit unions have an obligation to do due diligence, but D+H will have to articulate the difference in its products, and what will be the go-forward product line given all these new products it now owns. Mortgagebot clearly is a go-forward product, but the company will have to communicate, for example, on the core side and show a continuation path for UltraData or Phoenix."
D+H also will have to demonstrate "market momentum," said Roche, whose company provides guidance on technology and core system solutions, among other offerings.
When telling a story about products, he said it is important for vendors to articulate integration of systems.
Many Cornerstone clients inquire about improving integration between various products, according to Roche.
"How is D+H going to integrate all these products it now has will be a big question."
As for now, "Hosted systems will keep running. The intermediate and long-term impacts are still to be determined and will depend on articulation and integration, as well as execution. There are overlapping products and decisions will have to be made, but I cannot imagine D+H investing in two U.S. core systems and not investing in them."
