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• Speaker #0

  Welcome to What Leaders Want, the podcast series that features leaders in the finance industry. And today you're listening to Eric Pierre.

• Speaker #1

  Morning Caroline.

• Speaker #0

  Hi Eric. It's great to have you for another podcast. A lot has changed. You're not only CEO of SBS, you're also Puget's CEO of 74 Software. So let's recap quickly what happened. About a year ago in September 2024, 74 Software was... created. So why does this change? Why is it important? That's what we are going to discuss today together.

• Speaker #1

  So well, you're right, it was the 2nd of September last year, so one year ago. We wanted to create a strong software company or portfolio of software company. And we can look at it like a reorganization or strategic reorganization under the same shareholder. Our biggest shareholder is still Sopra GMT, so the Pasquier family. But of course, leaving a services group now to merge with a pure software company such like Axway is putting us, I would say, very visible as a software player. And that new group is delivering 700 million revenue. So meaning that when we are doing only software and being public, this is starting to be a very strong position into the market.

• Speaker #0

  So what's the vision behind this new entity?

• Speaker #1

  You know, the first vision was to simplify the fact that a software company has to operate like a software company. And being in a services group was generating complexity. because of course it's not the same KPI, it's not the same way to operate the business. So that was the initial objective to simplify and to act as a software company. The second, I would say, key reason to build the vision is to consider that in SBS we are processing data. So from a processing platform to an engagement platform, being in SFP or in SBP, but we are processing data. Axway is the leader, and the Gartner is saying that, by the way, in transferring, securing, orchestrating data. So if I'm looking at my clients inside SBS, so the financial services industry, they are expecting to rely on very strong players to process their data, but also to increase, or I would say to augment, the usage of this data. And of course, everyone is talking about AI. And the only way to do AI generating business outcome for our clients is to be able to leverage all of this data with the quality of data, with the data real time. And the combination of the Axway product and the SBS product, at least for this financial services industry, I think is the unique combination into the market. And you can compare with many other players. I think only us today, we are able to provide that business added value. to the market.

• Speaker #0

  And what's the overall plan behind this merger? What do we aim for together?

• Speaker #1

  Of course, this is only one year. So when we are merging, even if we are saying that we are coming from the same DNA, Axway was a spin off in 2011 from Sopra. At that point in time, we are still learning together because we know that we cannot merge completely the organization. We are not addressing at the same level our clients, even if we do have some clients in common. And of course, we need to find the best way to leverage what Axway is able to provide with their experience, what SBS is able to provide with our experience. And from that point of view, we have started to have synergies. These synergies are mainly linked to the business where Axway is super strong in some countries, including North America. SBS is really strong in the UK, for example, and in Africa. So the idea is first to see how we are able to augment the value prop from each company to address their clients. And of course, these synergies, we see them mainly on the financial services because SBS is only doing financial services. We are looking also to gain efficiency in the way we are operating the company. So we are public, meaning that we have a lot of obligations. And we are trying to have a single way to look at the figures and the consolidated figures. We are trying also to leverage a single view from a legal perspective. But it's the... Very early beginning. I should say that it's going to take two, three years. And we don't want to generate any disruption for our clients, but also for our people. So that's where we are today.

• Speaker #0

  So this is a huge change for SBS, this murderer, and also this new entity, 74 Software. How did you experience that change?

• Speaker #1

  Personally, I would say there were three phases. The first one was when it was a secret. And, you know, I did have to lie to my people. And it's very difficult for me because I did build the leadership team in the last three, four years. They are still with me today. And the trust between us is really important. And, of course, as it was a transaction with two listed companies, it was a very difficult secret to keep, I should say. And there were many days where my team did not know where I was, which never happened in the past. Because, of course, we were preparing and it was very difficult. So there was a mix of excitement and many mornings when I was waking up, I was not very comfortable to continue to, I would say not to lie, but just to keep the secret even with my super close team. The second phase was when I was able to bring them under NDA, so let's say one month before announcement, and of course then the excitement to make it happen. So from one month before the announcement, so we are in January, up to I would say transaction itself. And of course it was different because the idea was to make it happen, the idea was to explain, to communicate a lot, and of course to secure the deal itself. By the way, it was including our clients because we were receiving a lot of questions from our clients. The third phase is not an easy one because the day you start, it's like a new beginning. Because I was personally so involved in preparing this that the day it's done, you wake up and you say, what am I going to do today? It was really, really uncomfortable. Let's call it like this also. and of course then you You start to learn, you start to engage with your clients, with your people, with your shareholder also, because then, of course, four months later, we were publishing for the first time the consolidated figures for this new group. So I did have doubts, to be honest, because it was easy to design something like this. But when you have to run it, of course, there are many things not happening as per plan. That's our life. And then sometimes you're asking yourself, was it a good idea? Was it a good choice? And I think the way to, month after month, continue to deliver the initial plan of SBS, I think it was the first priority and it was reinsuring a lot for the team and for our clients. And then progressively see the benefits of being in this new group. You are reducing the doubt. You keep some doubt because... We will need, I think, one to two years more to see the entire benefit. So it was like climbing and leaving mountains during this last one year and a half. By chance, I have a strong team and we were able to stay strong together to manage the situation. And I hope that including our clients and our people, disruption has not been so important.

• Speaker #0

  So now that this merger has been completed, I'm wondering where does SBS fit into all this? Has our model changed? And what place does SBS occupy in this new landscape?

• Speaker #1

  It's a difficult question because if I'm looking at the total revenue of 74 Software and looking at Europe and Africa, 80% of the total revenue, so 8-0, It's for financial services. So, of course, we can look at it like we are a company like SBS standalone was in the past, delivering value to financial services industry. When I do include North America, of course, the revenue of SBS is lower and Axway is delivering around $150 million. And the impact or the presence in the financial services industry of Axway is... is lower, of course, in comparison, because they do address more transversal, including logistics, supply chain, pharmaceutical, public sector. So it's not only financial services. And it's a very difficult question because we have the opportunity tomorrow. to continue to acquire and we said from the beginning that we would like to become a 1 billion software company and of course the organic growth in the next five years will never be supporting to move from 700 to 1 billion and we have then two options one is to bring more value within the financial services that's one option there are many many domains where we do not operate from a business process point of view on our client side, but also from a geographical point of view. And we have the second option to say, oh, we are really a portfolio software company. And then we could be acquiring in a domain which is not at all covered by Axway and SBS today. We have not taken any decision by the way we said it is not going to happen before 26. So we need to work and we need to see what's the best benefits having that portfolio strategy or... continuing to augment the portfolio and the value prop for a specific domain such like financial services. So the place of SBS is important because more than 55% of this new group, but it's too early stage at the moment to consider that this will become the strongest driver for the future because of the financial services.

• Speaker #0

  And you mentioned earlier that you wanted to include our clients in this.

• Speaker #1

  merger and in these changes should our customers expect any changes you know when you do announce such kind of transaction all your clients are telling you please don't change anything i want the same person taking care of me i want the same contract i want i want everything as it was before so that's the first reaction and it's a human behavior i would say One year later, and especially because I think we have been able to maintain that continuity and business continuity with them, now they are asking us, okay, what can I have more? Can I have more off 74 software and not from SBS itself? And that's what I was calling earlier, that augmented portfolio. So if you're coming with integration capabilities or API capabilities, in addition to what you're selling and implementing, they should see a benefit. And if they start to see the benefit and with a very strong relationship, this will be opening new doors and new potential business for the future. So I think that's what they do expect. But you know, a client, it's usually super simple. Priority one, business continuity. They expect from you to secure that. business will continue as per plan. The second is then, I would say, trying to be in their eyes for us. So meaning we need to understand the way they want to operate their business and we need to follow to allow them to continue to, let's say, bring more value to their clients. And the third, without forgetting the past investments. So some of them are our clients for more than 20 years. They consider that the investments they have done, so the money they gave us, to simplify, they expect that you don't forget this. So meaning that if they start with one core with you, they expect you to continue with this core and to bring innovation on top. So these are their three priorities. And if the combination Axo and SBS is contributing to these priorities, they will be following.

• Speaker #0

  You said that the clients were expecting more of 74 software now. Can you share an example of what they are expecting?

• Speaker #1

  I have many. When we were coming in front of clients with open banking capabilities, we were letting them manage the API orchestration. Axway was obviously a partner. But we were not so engaged in delivering value and especially operating that value for them. Today, none of them is expecting us to come only with a business domain approach. They are expecting us to say, oh, you did innovate on open banking functionally. You did innovate on the API orchestration. And by the way, there is a new product. called Amplify Fusion from Axway, which is exactly driving that API orchestration. Now they consider that there is a single product with that combination to the market. That's what we did in North America with the Residence Bank. That's what we are proposing to all our clients at the moment in Europe and in Africa. So this is an immediate benefit, yes.

• Speaker #0

  And in terms of strategy, where are we headed in the next five years?

• Speaker #1

  From an SBS perspective? Yeah, sure. AI is there, so difficult not to start with AI. So we are working first on... enabling all our products to propose what we have called a data platform to our clients. So meaning that there will be a single data platform, whatever the product from SBS will be processed behind. First, because we need to continue to open our product and our calls. Second, because our clients, they do not leverage so many data they are having in the product from us they're using. And of course, if we want to leverage that data and if we want to bring that innovation to our clients, we need to build with them, and I think with them is very critical, what are the new use cases and what should be the new added value they will be providing to their clients leveraging AI on top of our data platform. So I think the next five years we will be pursuing this, so meaning protecting our cores. Adversion, industrialized, secured, cybersecurity is very critical. The data platform on top and bringing innovation and especially including AI capabilities. But I'm convinced that many of the AI use cases will not be coming only from us. And I think that the more we're going to go in the next five years, the more the ecosystem is going to make a difference for our clients. And we need to be part of that ecosystem. And I think if the data are processed by us, we are the best place in that ecosystem. But we need to provide these AI capabilities and it's the very, very beginning at the moment.

• Speaker #0

  So following this merger and these changes, we have created five new connects this year.

• Speaker #1

  Yeah.

• Speaker #0

  So we've been to... Morocco, Belgium, France, UK, and the last one being completed in the US. What was the objective of this event?

• Speaker #1

  Super simple. The name is Connect. It's connecting with our clients. I personally do consider that they know better their business than us. That's a fact. It's their business. The best way for us to capture the trajectory of their business is to spend time with them. So we need to have the opportunity to first listen to them. Second, bringing them together to exchange on our product, on our roadmap, on our willingness, where we do want to invest. And it's a fantastic opportunity to check that we are moving into the right direction. And this event has been a great success because first, we were happy to see the participation at a very good level, I should say. The quality of the exchanges were super strong. And I think it has accelerated what we need to do in our understanding, in our way to prioritize, in our way to engage with them. It's like you do six months in one day at the end of the day. And it was the first time we're hesitating to do that. And I think it's a very good experience. The survey from them is very positive, by the way. So it's very important. And if the next question is, do I plan to do it again next year? The answer is yes. But it was very important to stay focused where we are very strong today. So UK is the second country for SBS. It's close to 100 million pounds of revenue. So it's becoming a... very important. So UK, Belgium, Morocco to cover the African countries, France of course, and also America for the first time also. So it was very important on that side.

• Speaker #0

  You said the survey is very good. What was the customer feedback? Do you have examples?

• Speaker #1

  First, they were happy with the quality of the work, the quality of the presentation. but also our willingness to involve them, not only for presenting, but for debating on several topics around our products regarding their business. So I think it was really the first remark, comment we did have. The second, and it's sometimes surprising me, they are really happy to connect with their peers. And they don't have so many opportunities, finally, to... connect with their peers, their peers being their competitor, by the way. But they know that there are many, many topics and especially where we do operate SBS, where it's not really competition. When you do a loan servicing, the ability to differentiate yourself with another one on the way to drive the servicing of a loan is really limited. When you deliver payment capability, the ability to differentiate is also quite relative. So they are happy to share where they can have first benefit on cost and efficiency, and they consider that if they do apply the standardization we propose, this should be helping to reduce the TCO. And the second, they are happy to benchmark where they are in terms of innovation. So they are all having the same question, but do you have really AI use case on the market for your clients? So I don't know if they are all saying the truth when they do answer, but it's for them really a benchmark opportunity. And being the player slash the partner, organizing that ability for them to connect between them, I think we can be proud of that. Yes.

• Speaker #0

  Eric? Thank you for sharing your insight on what this year of transformation has meant for SBS. But before I let you go, I want to know what is your personal feedback on the SBS Connect events. So that's where we will pause for today, because the next part of our discussion deserves an episode of its own. So in the second part of this special episode, we will talk about the U.S. market, specialized finance. open banking and a very special anniversary coming up the 2025 summit so you don't want to miss the next episode