A number of you listening to our results call yesterday. We're very pleased, delivering excellent set of results yesterday evening. We've got a great agenda and lineup of speakers for you today. We're going to be running through a number of different sessions covering strategy. We're going to do a deep dive across a number of our products. You're going to see some great demonstrations of the client user cases of the product as well. We'll also be covering our U.S. opportunity. Takis, our CFO, will be digging into how we plan to drive growth going forward and deliver value for our shareholders. We'll also be talking about how we operate responsibly as a company. With no further ado, I'd like to hand over to Max Chuard, our CEO.
Thank you, Adam. Good morning, and thank you for taking the time to be with us today. It's going to be quite a full day. Even though we met not too long ago, in fact, we had our last capital market day was in May of last year, I'm pleased to say that a lot has happened during that period of time. A lot has happened on the product side, on the innovation side. A lot has happened from our geographies, the development we've been able to make in the U.S. and in other countries. A lot has happened on our deployment of our SaaS offering, and we are going to discuss that in more detail soon.
As you know, last night, we reported our Q4 and full-year results. It was my first year as the CEO of Temenos, I'm pleased that we had an excellent 2019 across all our KPIs. You can see that the total software licensing grew again at 23%. The last five years, we've been able to consistently and sustainably grow at 25% over that period of time. We continue to grow on a profitable basis, extending our margins and EPS that grew at 19% over that period of time. You can see a very exciting new development, which is our SaaS and cloud business, which is really taking off in a massive way. An extraordinary performance on our SaaS and cloud business, which grew over 50% on a compound basis over the last five years. In Q4, grew at around 1.5x faster than last year.
Extremely pleased with those results. However, today we are here to talk about the medium-term and the long-term as well, because we operate in a market which is so large, it's a $60 billion market. The driver for growth and the driver for change are so required for banks to transform. I think most of you who works in banks, you understand the fact that banks are still by far using legacy technology which is not fit for the digital age, and that it needs to change. Hence, not only it is a very large market, but it is also a growing market, a market which is growing at 8%. Clearly, we've been growing faster than that because we've been gaining market share. We are already the established leader in that market.
Today, we are the world number one banking software provider, with more than 3,000 banking customers. Any type of size, large banks, the more sophisticated banks, the digital banks, but as well, smaller banks, regional banks. That leadership give us so much credibility. We've got so many references. In 2019, every day a bank was going live on our software. That's huge. This is why we've got the confidence to be able to foresee that we will continue to sustainably grow by at least 15% in the long term. We've been delivering above that, obviously, the last five years on an organic basis, you know I'm talking organic.
Here you can see that the last five years we grew at 25%, so we've been able to very nicely complement our organic growth with very strategic acquisitions that have been fully integrated within our offering and that have been able to accelerate our growth. That's clearly the goal is to continue to bring additional growth through M&As as well. Finally, and which personally give me even more confidence on our sustainability of our total software licensing for the future, is the acceleration that we are seeing on our SaaS and cloud business, which clearly was not there a few years ago. We are going to see how this is transforming our business. Excessively exciting. We all know that banking is under massive challenges, is undergoing a fundamental change. We see new competitor, which are becoming more prominent.
Already we see new entrants that are trying to capture the customer relationship. That they want to be able to gain access to the customer and to distribute banking services. At the same time, the customers are more sophisticated. The millennials are tech savvy. What they want is a hyper-personalized experience, the same as they enjoy with Amazon or with Uber. Also, you've got the regulators. Regulator that is encouraging innovation competition, just if we talk about open banking and how we see the banking value chain breaking up between the manufacturing part of the banking and the distribution part of the banking. You've got new technology like AI, Explainable AI, cloud, API, that is driving change. This is accelerating change, which new entrants are able to capitalize on it. The incumbent vendors are clearly at a disadvantage compared to them.
To win in the new era of banking, banks need to transform, banks need to change, and banks need to embrace technology to create new business models. We never had so much technology, and this is great. Technology enables that transformation. Look at what we can achieve with SaaS and cloud, the agility it brings, the scalability it brings. You can scale up and down automatically at a very more affordable cost than when you were doing traditionally on your own application. APIs opened up a whole market. You connect with the ecosystem. You can become, as a bank, a marketplace provider of both financial and non-financial services. Microservices allows for a continuous innovation. You can renovate the bank step at a time. You choose when you want to start and when you want to finish. All of that was not possible the last few years.
Technology enabled that change. AI, Explainable AI on efficiencies, on being able to offer hyper-personalized experiences. Obviously, underlying all of that, you need security, and the more data analytics you get, the better your models. As I said, the banking model are changing. We see more and more the traditional banks that choose to offer and to manufacture products, that those products were then going to be distributed to their customers to break up. We see more and more a concentration on the manufacturing side, where we see consolidation, and we see lots of new entrants on the distribution side that do want to be able to distribute new products, that do want to be able to offer a personalized customer experiences. That ultimately becomes marketplaces that will distribute both financials and non-financial products to the customers.
Temenos has the technology and the product tool for that requirement. We've got the de facto offering for both the manufacturing and the distribution. All our product are cloud native, cloud agnostic, multi-cloud. With Temenos Infinity, we address the distribution side. It is the most advanced solution that exists in the market. I have to say, I'm very pleased and very excited of what we've been able to achieve in 2019 with the acquisition of Avoka, with the acquisition of Kony, and we'll discuss that in a moment. Obviously, on the manufacturing side, we've got Transact. Both can be sold on a standalone basis or tightly integrated through APIs. We believe banks have everything they need to succeed. They've got the capital. They are regulated. They've got extremely good insights on the customer data, and they still enjoy the trust of the customer.
There is no question they will need to transform. It is our belief that it is through an end-to-end transformation that banks would get the most of the benefits. Back to front to back. We've got the technology, we've got the ability to do that. This is why, remember, a year ago, we decided to launch Infinity and Transact to give the freedom to the banks to innovate the way they want it. What is great is we've been able to prove the benefit of that. We run what we call Value Benchmark with customers, and Kanika will discuss this in more details later on, which is detailed financial analysis of our customers and prospects as well. We've been able to prove that our customers are much more profitable than the rest of the industry.
We've been able to prove that they can enjoy half of the cost-to-income ratio, which is amazing. Our top-performing quarters enjoy 27% cost-to-income ratio. That's a dream for most of the banks. You see that on average, banks have a cost-to-income ratio of more than 50%. This you can achieve with modern technology, with modern technology from Temenos through an end-to-end transformation. They obviously enjoy higher return equity, most importantly, they can invest so much more in innovation, where today, traditional banks do spend a lot on IT. We know that they spend a lot, the spending goes on the support, on the maintenance of the legacy systems. We have what we call the winning combination, we are very proud of that. Very proud because for the last 25 years, we've been extremely focused on.
How we differentiate ourself and how we lead the market today is because we lead both with detailed, deep banking functionality, full understanding of the banking market. The deep knowledge that we have is amazing. In addition to the knowledge of the banking market, we get that to the country level, to the regulation in each of the country that we package. This is one of the strengths. We couple that with advanced technology. Technology which is native, which is open, which is agnostic, which is APIs first. That combination, nobody has it. We do see some vendors that have one of them, but not the other, and let's discuss that in a moment. Today, we outsell the competition by a factor of five. On average, we sell five more deals than our competitors.
In fact, that leadership is accelerating. We see what we call the old legacy. Those are the traditional vendor that we've been competing for the last 15 years. We know them extremely well. We've been beating them for the last 15 years, and we will continue to do that. Those are vendors that have an old technology, which is not fit for the digital age. They are not focused as well in one specific industry, so they usually cover all type of industry, so you can question the dedication to banking as Temenos does. Clearly, their technology is not fit for the cloud, it's not fit for AI, not fit for the innovation of DevOps. That's one set of competitors. As I said, we know them quite well. We've seen some new competitors that entered the last few years.
We call them the new legacy, and I'll tell you why in a second. Those are digital-only, so they are cloud vendors that have a very limited scope of functionality. It's mainly a technology toolkit, if you want, which has not been productized, that cannot offer an end-to-end renovation, that don't have AI or analytics capabilities. Most importantly, as I said, they are not able to productize. They are not able to continuously innovate the product, and hence, they will become the new legacy. We have a unique value proposition. As you know, for the last 25 years, we've been extremely consistent with that. First, we believe that we do one thing well, and this is banking. We've been focused 100% in that. When you go to a bank and you say, "Listen, your success is my success, there is no way out for me.
We are your true partners. This is extremely powerful. Today, focused only on banks, we've got more than 3,000 banks, as I said, to the largest one, to the most sophisticated banks, to the digital-only banks, and to the smaller banks as well. Any banks, anywhere, of any size. I already discussed our winning proposition of functionality and advanced technology. We are open, independent. As I said, you can implement our core system on the back of any front system, or you can implement our Infinity, our front office, with any back office system. Totally independent, open through our DevOps platform. Relentless focus on innovation. We are passionate about innovation, and you'll hear my leadership team later on talk about product innovation and how we are proud to be able to come to be the first to innovate.
We were the first to go to the cloud 10 years ago. Ten years ago, we were the first to put a core system on the cloud. We continuously do that because we invest massively in the product. Finally, we've got a very large community of more than 6,000 people, 6,500 people of consultant that we can leverage to be able to ensure we deliver success to our customers. As I said, in 2019 alone, every working day, a bank was going live on our software. We have a very large market. We said that it's a 60 billion market. Now, 80% of that spending though is still done in-house. Still, the majority, and this is probably the last industry that has not fully embraced packaged software.
Still, the majority, 80% is spent in-house on legacy systems, a patchwork of different systems that has accumulated over the last 40-50 years, well before the internet age. Clearly, those are not fit for business anymore. They are struggling to automate. They are struggling to get efficiencies out. They are struggling to bring customer experiences, and there is a need to change. We've got four main products to address that market. Digital front office, which is our Temenos Infinity product, Temenos Transact, which is our core banking product, Temenos Payments, and Multifonds. All of those segments of the market are growing. On average, this is a market growing at 8%, and we believe we can be growing faster than that because of our value prop. This very large market, how do we go about capturing that opportunity? Last year, we discussed which were our strategic initiatives.
As you know, Temenos is all about growth, is all about capturing that opportunity. Hence, our strategy has been put together to ensure we can maximize on that opportunity. It starts with the product, obviously. It starts with ensuring that we continue to have the best solution out there. As you know, we spend twice as much as any of our competitor on R&D. We spend 20% of our sales in R&D. To put that in perspective, over the medium term, over the next three to five years, this will be around $1 billion that will go back into the product, more than anyone else, more than even the largest bank. Clearly, we want to continue our geographic expansion. We've made some very strong inroads into the U.S., there are still markets that we want to continue to capture the growth.
Investing in sales and marketing, as we've been doing for the last few years, to ensure that we've got more specialized salespeople to capture that opportunity. Cloud as well. We'll discuss cloud in quite some details in a moment, the opportunity on how to capture it. Partners, both technology side and as the technology is evolving so fast, we work more and more with our technology partners. Is it Microsoft? Is it AWS? Is it Google? As you know that we've announced an extension of our strategic partnership with them. It is NuoDB, a very interesting company where we invested into it. Let's say a modern database, which is a distributed database technology. Finally, using M&A to strategically accelerate our growth. We only look at transactions that are able to complement, which are synergistic, hence that will accelerate the growth of the group.
I'm pleased to say that in 2019, we made major progress in each one of those areas. We start with the product, in 2019, at the start of the year, we started with the separation of Temenos Infinity and Temenos Transact to give choice to our customers. Earlier this year, we announced our cloud-based microservices to be able to offer hyper-personalization with Explainable AI to the distribution side and to allow continuous innovation for the largest banks on the Temenos Transact side. We've made significant progress in the U.S., obviously following the acquisition of Kony and Avoka. We've got now a very large structure in the U.S. We've got distribution in place. We've got products, amazing products to sell in the U.S. SaaS, our ACV grew 68% in 2019, and in Q4, it accelerated to around 30%, extremely strong growth on our SaaS business.
We continue to expand on our partner ecosystem with more than 6,500 consultants, 12,000 developers community that can, through our APIs, extend the product leadership. Finally, three very strategic acquisition, Kony on the digital front-end, Logical Glue on the Explainable AI, and hTrunk on the data and analytics. To capture that market, we benefit from five engine of growth. Transact is where we started. This is where we enjoy the largest market share today, this is still a clear driver of growth for us. In 2019, we grew Transact at double digit, we continue to be able to penetrate the banks. With our microservices architecture now, we are offering even for the largest banks, a way to transform at their own pace. Infinity is the largest part of the market, Infinity is extremely exciting.
Infinity grew in 2019, a multiple of the growth we had with Temenos Transact. This is all about offering a personalized customer experiences. We see banks that need to differentiate themselves, and that's how you can do that. We are very confident that with our Temenos Infinity offering, which is best in class in the market, we will be able to continue to accelerate and gain market share and gain leadership in the digital front office. Temenos Payments, also very exciting. It grew very nicely as well in 2019, and we see lots of opportunities, some of them driving by regulation. Finally, fund administration, also growing at 8%, a slightly smaller market at $1.6 billion addressable for us. Let's look at cloud and SaaS for a moment, and look at some of the achievement. As I said, we had our first customer on the cloud in 2019.
That was really an industry first. I think what is exciting is how banks are using cloud as an enabler for change. Clearly, the last few years, we've seen a massive acceleration. What is also very exciting about this is, obviously I'm in constant discussion with CEOs of banks. All the time, I ask myself, this cloud deal or this SaaS deal, would it be possible to have positioned a traditional on-premise deal to that customer? Most of the time, if it's not all the time, the clear answer is no. SaaS allows for different opportunity there, allows for new models to be created, allows for banks to go to the board and get the deal approved, which would not have been the case on the traditional on-premise infrastructure.
It brings agility, it brings scalability, and the fact that with the cloud environment, you are able to scale it up and down. The cost infrastructure is much more affordable for a new vendor. Very exciting development on our SaaS business. You can see that we got today more than 1,000 customers using our SaaS offering. 50 of them are core banking customers. Today, 42% of our new deals are SaaS. Obviously, the growth on our ACV for the full year was at 2019. To put that in perspective of what it means, if you look for the one, some of you here I know have been looking at Temenos for quite a while. It took us 19 years to build a business of 100 million license bookings. 19 years. When we started in 1993 up to 2012.
We expect by the end of 2020 to achieve an equivalent of $100 million in license with our SaaS business, which means that it will have taken us slightly less than four years to get there. This gives you the magnitude of the acceleration. Within the Temenos history, we've never had such a growth driver. That's super exciting, and this is why at the beginning, I said, I'm even more confident on the ability to sustain our long-term license growth of more than 15%. The U.S., as you know, is one of our strategic market. Later on, you are going to hear it live from our headquarter in the U.S. from Alexa, who is our new President from the Americas, to discuss the opportunity in more details. I'm very pleased with the inroads we've been able to make in 2019.
The last few years, in fact, we've made a lot of progress in that market. Last year, significant growth in our revenues, we grew at 38%. Massive growth on the head count, 50% growth. What is very important, this was one of the things that we were missing, is clearly the distribution. We've got a very strong sales organization right now to be able to capture that opportunity, which increased by 57% in 2019. We see Temenos Infinity as a clear driver for growth in the U.S. As you know, banks in the U.S. do enjoy a higher return on equity. For them, the ability to gain new customers, the ability to differentiate, is extremely important. That's why with Temenos Infinity, we give them the ability to do that.
We give them the ability to gain new customer, we give the ability to grow faster. There's clearly also a market for core. In fact, we launched a very exciting proposal, which is a SaaS proposal for digital banks to allow them to go live in just 90 days. That's quite exciting. As I said, pipeline is building very nicely, and we'll hear more from Alexa in a moment. It's more than Temenos today. Temenos clearly is at the middle of all of that, but it's a community. It's an extremely powerful community, and that community brings a lot of success. It's a community that get together on a yearly basis at our TCF, that exchange between themselves, that challenge themselves, that learn from each other. It's a very powerful community.
This is the point I've said that as soon as you get scale, as soon as you get credibility, your growth should accelerate. That is the effect of that community. It's 8,000 Temenos people, we call ourselves Temenians. 8,000 of us spread across the globe. It's 6,500 trained partners on our software. It's more than 3,000 customers. It's more than 100 fintechs, which are on our marketplace. It's more than 12,000 developers that are part of our community. It is half a billion customers that rely on a daily basis on our software. That's extremely powerful. We talk a lot about why Temenos has been so successful. What was key to that success? There are many elements of that, and I think I mentioned quite some of them.
There is one thing that we are extremely proud internally, and I thought I should also share that with the market, which is our culture. We call our culture Temenosity. That's the way we do things. We do things with Temenosity. Every one of us has a different view of what it is, but ultimately, it is about tenacity, it is about velocity, it is about responsibility, it is about community, about authenticity. Each of us have a different view. For me, it has always been about putting Temenos first. You put Temenos first, you know that this is the right decision. It's always about the velocity. I've been with Temenos for 18 years. The ability to change, the ability to take decisions, it's amazing.
We proud ourself about our culture, and we believe it is one of the key element of our success. We value people, and as you know, this is the Temenos key, and we are all proud to wear our Temenos key, which remind us that people are the key. When you're in a business where you sell something which is intangible, they're valuing the people. People create the software. People sell that software. People take care of the customers. We are extremely proud of our culture. We are also proud on the progress we've made in our ESG initiatives. We do believe that ESG leadership creates value.
It's now more than three years that we've structured our initiatives, and we've been able to make a lot of contribution, and we are all so proud to be able to contribute. Kalliopi, who is running our sustainability program, will go into much more details, but this is something that we are all extremely proud to be able to contribute on. Temenos has always operated at the highest standard of sustainability and responsibility. Very proud of that. To conclude, I've shown that slide already, we've got the credibility, we've got the leadership, we've got the product, we've got the customers. We've reached a major milestone of a billion of revenues. We are the category killer of banking software. What we've seen in other industries is once you reach that stage, to reach that stage takes quite a bit of time.
It took us 25 years. For other companies, it took longer or less. However, once you get there, what is clear is things accelerate. This slide is not about saying that we'll be a $5 billion revenue in five years, even though clearly I try to get there. It's about saying that the accelerations once you get to that critical size, to that credibility, to that reference point, once you get that community, when this community accepts everything that you do. We are very excited. We've got big ambitions. We've got a big market. We've got a huge opportunity, and we want to capture it. Thank you very much. Thank you. Let me introduce you to Mark, who, as you know, has been running our product division for quite a period of time. Now he will also have the great pleasure of running our technology group.
Thank you, Mark.
Thanks, Max. Good morning, everyone. As Max said, I'm Mark Winterburn, I run the product and the technology group. After me, we've got two sessions before coffee. We're going to show you Temenos Infinity, and then we're going to talk about Temenos Transact. There'll be a coffee break, then we're going to do technology, we're going to do cloud, we're going to do a bit about AI, and then some demos. Okay, that's the layout until we get to the coffee break. Max, in that session there, talked about product leadership, so I want to just talk a bit about that before I get Brian up to talk about Temenos Infinity. I'm going to start here, which is where I normally start on these sessions.
We're very proud of this. When people say, "Well, why is Temenos at the forefront? Why have you got this product leadership?" It's not by accident.
It's because we've been investing for over 25 years, and that investment has increased. Frankly, the more deals we win, the more M&A we do, the more skills we add to an existing world-class team, round and round the wheel goes. I'll show a bit later how our velocity is increasing now. I've seen a gap between us and the competition. Max talked about how we outsell them. That gap is growing for me as the velocity of this thing increases. In the past, I'd have put up a bit more detail about this slide. Client server back in the day would've been a proprietary database, would've been Unix and stuff. We went through multi-tier, and we started to utilize Microsoft Stack, SQL Server, Oracle Database. You go through cloud-ready, and we start to talk about platforms for user experience, RESTful APIs, et cetera.
I think it genuinely has, over this period, been revolutionary and also agnostic. We do not, and have never, told clients what technology to use. We leverage the best in the marketplace. You'll see when we talk about cloud, that continues. Max talked about the fact that we've got a lead in technology, and we've got a lead in the package functionality. That package functionality lead continues to grow. Again, looking right back at the start, we'd have been adding trade finance, we'd have been adding various, I think corporate wealth. Then as we've rolled forward again into API frameworks that allow us to offer enormous range and depth of APIs, but also things like robo-advisors and faster payments and stuff like that. It is both streams. What does that look like now? Well, it's resulted in a very clean architecture. Omni-channel.
It was only a year ago that we split Infinity from Transact to allow us to offer banks transformation in whatever order they wanted to do it, to allow us to offer best in class, both in the front as Max was talking about distribution, but also in the back in manufacturing. Payments has always been built to that architecture from the start as we built it ground up a number of years ago. Very clean, omni-channel, leveraging the data lake and AI, and we talked a bit about M&A earlier. That hTrunk and really helped us on the data lake. We leveraged that and embedded that quite quickly. Logical Glue on the Explainable AI.
These things, we get them, we embed them quickly, and again, nice and clean stack. Then risk and compliance, either through AML, FCM, but also the huge investments we make in the country model and understanding the regulatory requirements in the different countries in which we operate. All good, all nice and clean. Then, of course, Max talked about a huge growth in SaaS and cloud. Of course, because we're agnostic, we offer that on all the major cloud providers and some that, Alibaba, for instance, is a recent addition. If we run it, fine, we'll run it SaaS for you, the Temenos software. Client runs it, they get the choice. Then as we see new technologies emerging around, whether Kubernetes or OpenShift and now Anthos, we'll be agnostic in those as well.
If they're the right thing, if they're leading technologies that clients want to leverage, guess what? We'll have tested it and optimized to run it on those platforms. Of course, those that still want to run on-premise, we run on-premise. Same stack, ultra-high performance, reliability, et cetera. I wanted to dig into this slide a little bit. You've got a nice clean stack. What's going on in there since we made the announcement about Infinity and Transact? Well, this slide shows the enormous amount of work. If you look at the distribution services in Infinity and in the microservices piece in Transact, this is giving banks choice about how to take value, in what order to take value, and to take value more quickly, right? There is an enormous amount of work going on in the product group to get this stuff done.
I showed the innovation since the '90s and how proud we are of that. What you're seeing here in one slide in one year, if you will, would have taken years in the past. We've got some real velocity now. I think there's some reasons for that. One, the architecture's clean, and we've worked for years for that to be the case, and we'll continue to do so. Two, we attract world-class talent, either organically or through M&A. Product group now is over 3,000 people. You've got a real army of talent there to be consistently changing and improving the product on a daily basis. Secondly, the split between Infinity and Transact has allowed us to really concentrate on what underpins the value there and to move more quickly than if it was treated as just one stack.
What you're seeing there in a year would have taken years before now, and that velocity is increasing. We're seeing us be able to deliver more concurrently with better quality than we ever could. I only see that increasing as we move forward. A very key slide, and you'll hear more about this, as the guys get up and talk about Transact and Infinity in more detail. All good. Okay, product leadership in good hands there. How does the client take that and implement that? I've spoken a little bit of one of these in the past about UTP, which is how we change the way we build and deploy software to be ready for the cloud. We started to make the packages of code that we build smaller to be far more focused and small bits of code.
Those are checked in every day, the full regression run overnight. We are coding on a daily basis and putting that into the system, and it's automatically tested. We take that a step further and allow our clients to consume it at that rate, should they be ready, should they want to. Right? UTP, over a period of time, has become the continuous deployment, TCD. Are banks yet ready to take software upgrades on a daily basis? Frankly, no. They will be. As cloud becomes far more pervasive, that ability to take a change and implement it really quickly will define, I think, the nimbleness of the bank, right? We can do it daily now. We can build in the morning and consume it in the afternoon, as it says in the strap line. We've already got banks taking software every month.
Roll that up, monthly deployment, they take that software monthly, others quarterly. As the cloud becomes, as I say, more pervasive, you're going to see more of that. That timeline's going to speed up. The speed of innovation for us is speeding up. The speed of innovation for our clients will speed up, too, as they become more nimble. This is all underpinned by use of the cloud, right? I remember when I started, this took ages. Get a test system, you had to get the code imported, debug it. Now you can spin up an environment then, so you can have a Transact or Infinity deployment there and then ready to test. It's the sandbox environment we use with our marketplace. This is a much easier way to build and test code and then deploy it. As you'll see, we ship the code.
The bank's doing its own work, potentially with the extend phase. They then assemble and release. What we're saying is that whole process automated using cloud technology is a game changer for the banks. We're seeing a lot of interest in that approach to break down the difficulties involved in employing transformation in core or payment software. I'll just let this thing work its magic. What I want to say on this is we do a lot of change. If you've got over 3,000 people in the product group, you're deploying a lot of change. What is the process we use to manage that change? Well, clearly, we're listening to customers, we're talking to prospects, we talk to the industry. We keep our eye on competition, obviously.
We look at what other industries are doing to see if there are things that would be of use for us. All of that is a set of possible changes, a backlog, if you will, and we pump that through a system, it's online. We have a regular product board C-level meeting where we get into those things, where people come along with propositions, which we agree or disagree. They could end up in core, the software that we ship to all of our clients. It could be a regional upgrade, a change which allows us to prosecute a region, or there's change in a region. We do occasionally do code just for single customers rather than for the whole product. It could end up there. Of course, we could reject it.
The way we work at pace now is we have a standing meeting every month, but where we see opportunities to do change more quickly, we take those opportunities, run the meeting, make the decision, and go. We've had to invest in the product group, particularly because the development machine is running at such a pace. We do not want to get in the way of that. This is just to show how we manage all that change. We also do a rolling governance review, which takes each month, what have we delivered, what have we yet to deliver, and just adds on. That's a rolling 12-month review of everything we commit to on a monthly basis. We had a great Temenos Kick-Off, in January. Got a thick end of 1,000 people in a room.
We spent a couple of days with the pre-sales guys going through what we'd done. We had a day in the main plenary. We couldn't get through everything that we wanted to talk about, broadly our product data, some of the bits and pieces. What I just tried to capture here is in the main blocks of Temenos, Infinity, and Transact, kind of things that we've been working on to bring to market. Underneath, across all of our product lines, we've continued to invest in that organic, that drive into the feature function. Everything, we've got teams that work on each one. It's not as if we just do Infinity or Transact. We do it across the piece, technology and the various business units for feature function. I've had a couple of sessions with some of the guys in the room.
If you want more time for us on this, now isn't the time, but we could do sessions to go into a bit more detail. The key that we want to concentrate on now is around the Infinity and Transact piece. What I'm going to do is get Brian Abele up, and he's going to talk about the Infinity piece first. Thank you. Brian.
Thank you, Mark. Afternoon, everybody. The five drivers of growth that obviously Max has talked about, we're going to start talking about individually a few of those, and we're going to start off with Infinity. Infinity really represents the biggest market opportunity that we've seen. You saw at the very beginning that in Max's presentation, what the size of that total opportunity was. What we're really seeing as far as what the banks are asking about, what they're really going through right now is, they're not asking the question whether they need to go through a digital transformation. What they're doing is they're trying to figure out how to go through that digital transformation.
What are the steps that they can take given the fact that they have legacy technology, given the fact that they have regulatory burdens that they have upon them, given the fact that they can't do massive projects just on a whim like that? What we've been able to do is figure out exactly how we can go help our customers go through that digital transformation in the digital front office with our Temenos Infinity solution. The overall market opportunity, which I'm going to talk through with you guys, and then I'll talk a little bit about what Temenos Infinity is and how we're actually taking it out into the marketplace.
The digital front office solution for us is one that can do the three primary objectives that they need to be able to do in the digital front office: market to your customers, acquire new customers, and service those customers. That's the bottom line. You have to be able to do that in that digital front office piece. $5.9 billion is that overall opportunity growing at 8%, so very significant growth. The solution that we have for this particular market, as we said, is Temenos Infinity. Infinity is really driven off of three key tenets. When we think about Infinity and how we're talking about it, how our customers are responding to it and listening to it, is the fact that it's driven off of these three principles. Number one, it's an omnichannel full service platform. Mark just talked about the AI-driven, API-based, microservices-driven.
Everything is being used leveraging these open technologies. The platform is the key component, the starting point for how we're able to go deliver in that digital front office piece. The second piece is that hyper-personalized digital experiences. Those that are native, regardless of whatever type of resource or channel or glass that a customer is coming in from. Whether they're coming in from a browser, from an app, from a wearable device, any of those types of interactions that they are bringing forward. They're coming forward, but it's in a personalized way. It's in a way that's very meaningful and unique in a market-of-one type of technology approach and experience approach.
Finally, it's all built on the one thing that really makes us stand out, those banking-specific distribution services that allow for the open banking needs that are arising as part of this whole digital transformation that's taking place. The thing that does make us unique is the fact that we do have those distribution services, we have the technology, we have absolutely the entire breadth and depth of solutions available to us. When we look at the competitive landscape, whether it's actually having the full set of technology, the full set of capabilities, the way in which it can get delivered, the partnerships that exist, there's really nobody out there who can do all of those things the way that Temenos can.
That gives us an advantage, and it gives us great opportunity to go continue to open ourselves up and get ourselves into more opportunities and expand the overall footprint that we have for our digital front office. This is a very exciting place for us to be in, especially given the fact that our competitors really can't stack up to us based on all of the different things that we have available to us. How are we coming to market? What are we bringing forward when it comes to our digital banking solutions? It's really a holistic approach, and it's really any of the type of person or entity that a financial institution is going to be able to serve.
We serve the entire gamut, running from the retail customers for their basic needs, the onboarding and origination that they need to be able to open up any type of account and be able to be serviced on those types of accounts. Gig and small business, one of the fastest-growing labor markets is the freelancer worker force, right? The gig people, the people who are driving for Amazon delivery or who are doing Fiverr on the side in order to make either multiple jobs or on top of an existing job. There's a set of services that we have to be able to offer to those people, and we're providing those services as part of our overall Infinity solution stack. Wealth, business, corporate, the entire range, everything from the most complex trade finance type of transaction to the very basic retail needs.
That entire set of capabilities is something that we have within the Temenos Infinity stack, again, making us unique and helping us be able to solve the specific problems that we're hearing from our banks on a regular basis. How are they using the Infinity technology, and what are they doing in order to provide services to their various constituencies? It's really important to think about this because digital transformation really is not just about the front-end experience. It's not just about the consumers. It's also how the bank interacts with that technology and what tools are available for them to be able to better serve the customers and be more efficient and be more profitable and market the right way to those customers. We have four different personas that we really target when we talk about our solutions for Infinity. Number one is our customers.
Whether they're coming in from a mobile device, like Max here, actually going through his own application and his personalized view so you can see how hyper-personalized our solution can be. To be able to offer services to those customers, again, regardless of the touch point that they're coming in from, whether they're coming in from an app or coming in from a browser or any other type of device. On the branch side and in the support elements, you've got to be able to support those customers. You have to be able to service them. You have to provide the right types of interactions when they contact or when they reach out to be able to answer questions about a marketing catalog or to be able to better understand what their needs are to provide the right types of services to them.
We offer those solutions as well. We have a product called Spotlight, where all of that is available to that back office user, so they can see a more comprehensive view of what is available to them. It's all driven from our analytics and all of the data that comes through our applications that we can go and drive those more meaningful conversations to take place. Product owners, being able to create products and understand the profitability of the products and what products need to be targeted and marketed for specific people, how to get those products developed and rolled out and available to specific customer bases or specific pools of people that you are going out to target. Those are a very key constituent that we have solutions for to drive that. Then, of course, the technology.
All of the elements that underpin this, everything is API-driven, so being able to not just have solutions that come out of the box, but to be able to integrate and to incorporate other third parties or other components that are just part of their natural ecosystem. We have the tools and the technology that's not something very difficult to use, but is very simple, and in many cases, are just drag-and-drop type technology that allows for the integration of our solutions to other platforms. It's a very powerful set of tools. Infinity, as you think about the entire banking value chain, is really that channel view, how people are interacting, how people are coming into and experiencing the bank and the financial institution in some way, shape, or form.
It's leveraging experience APIs that go into our distribution services, I'll talk about those here in just a second, that really stand out. That's where we're actually taking some of the real true banking capabilities and making them standalone deployable solutions so that as banks go through that digital transformation, they can deploy those services to really meet very specific needs and have a much more robust roadmap to get to a complete digital transformation over time. Of course, the manufacturing on the back end to actually handle all of the transactions and the payments and the other different pieces that are the core elements of how a financial institution runs. Really, Temenos Infinity is that driving force. How we see this in our customers and in the environments that they serve is really interesting. We recently were talking with a financial institution.
This is about as close as a topography as we could potentially draw for them. We were going through an exercise with them. From the very beginning, you can see all of the touch points that they have to be able to support. They have to support all of those touch points because they're constantly getting asked by their customers, they're constantly getting the competition from fintechs who are coming after them saying, "You've got to be able to have augmented reality when it comes to a banking interaction," because there's a fintech who provides that. If you don't offer it, then your customer is going to pick up, take their accounts, and they're going to go move over to that other fintech, right? All of these new technologies are coming available to our customers. Now we have to be able to respond.
What's happening is that as they individually get deployed into specific areas, they have to make direct connections into the various back-end systems that the financial institution already has. As we talked about before, making the big change, changing something on the back end becomes a lot more challenging. How are we going to go deliver services? How are we going to go through and provide the right types of product capabilities and digital front office services when we have this kind of environment? This kind of environment creates problems. The problems that it creates for those customers are things like application drop-offs. North of 50% of applications that are coming through from an onboarding standpoint from one of those channels will just disappear.
That's a person who was going through the exercise of actually trying to originate an account at that financial institution, and they're just walking away. That kind of drop-off is just not acceptable. You can't have those levels of drop-offs and be able to continue to succeed because that's the bread and butter. That's your new customers that are coming through the door. Lost marketing leads. Wherever people are coming in from, it's not being captured. You're not seeing what's actually happening when it comes to the delivery of those leads and making sure that you're following up. The third major problem that we see in this kind of an ecosystem is just the high legacy platform costs.
Millions of dollars are being spent on this in order to preserve this ecosystem that is not able to provide the velocity and the pace and the speed with which the banks are expected to be able to behave. We have addressed that with our Temenos Infinity solution. When you have Temenos Infinity at the financial institution, you can actually take those front-end pieces, and whether they are from actual Temenos Infinity applications that we actually have, or it's things that the financial institutions themselves will actually build out and deploy themselves. Leveraging those distribution services in the middle to create the logic, if you will, or the functionality, the capabilities that will allow them to maintain some of their existing applications but have a more consistent experience. This provides that seamless onboarding experience.
It provides the ability for the banks to see in one place what is happening when it comes to servicing their front office and servicing their customers in that kind of a way. This is a much better approach. It's driven off of APIs. Everything is open. We're not trying to lock everything down here because there's just a lot of different systems that we have to be able to plug into, and that's really critical to us as being able to have that openness, that ability to be able to integrate. The distribution services that we have within Temenos Infinity specifically, these are just a sampling of some of the distribution services that we have rolled out. Origination obviously is critical for us, onboarding, funds authorization.
These are all the types of microservices that we have started to build out and are rolling out to some of our customers currently. This is the area where we will continue to see that focus for us because the distribution services really provide a set of very important value propositions. Number one, it provides the ability to personalize and create a level of explainability for all of the underlying artificial intelligence that's taking place in some of those microservices. Number one, for the personalization, we can actually be a very focused understanding with the data that we have to be able to really provide a tailored experience and provide the right type of product at the right time for that particular customer. Super important to be able to do that.
Not only can we do that, we can actually with our Explainable AI, and we'll talk about it later in the afternoon, is really provide detailed information about why that particular recommendation was made for that particular customer. It's a very, very powerful tool all being delivered through our distribution microservices. The deployment and the cost of operating this, because these are run in the cloud, they are standalone entities. Now we have the ability to deploy these as a standalone entity, and they are cloud-based, so they can scale up and scale down as needed based on the usage tied to that. Again, we'll talk about the cloud pieces later on too. The time to market gets accelerated as a result of this.
We can plug and play these microservices so that we can go deliver specific targeted types of solutions, then we can offer those to allow the banks to be able to push their products out the door a lot faster. Scalability and availability obviously comes from running in the cloud. Obviously the adoption of new business models as things change, as fintechs come about and there's new challenges and new ways in which we have to be able to serve them, we have better tools available to us in order to be able to do that. That's the Infinity standalone solution. As we have talked about, Infinity is something that we can offer separate. That was one of the big strategic decisions that we made over a year ago.
We've made significant investment to make this solution the market leading solution when it comes to digital front offices. Now what I want to do is bring up Alex over here who's going to talk about the market leading core solution, Transact.
Thanks, Brian. Here we go. Transact, I guess flagship core banking system, and happens to be still the core of our business. It's a growing area. It keeps growing. We mentioned the 7% average growth that's still taking place in the market, and we want to be a part of that growth. Our value proposition is still the same. We want to be able to deliver faster and cheaper transformation to our clients. You'll notice that we're not talking about T24 anymore, but rather just Temenos Transact, and I will explain a little bit what it means for the market. In terms of our positioning versus the competition. We're quite happy to have a lot of people to contend with, such as the Infosys, Oracle, Sopra, and the newcomers like Mambu that you've seen from last year.
We've seen a number of newcomers coming to the market with a different offering, and this is how we compare against these players. In terms of the scale and the scope of our business, there's a number of equivalent, what Max used to call the old legacy players, which we compete on a daily basis across the world. They have also a global offering. They cover all segments. Nobody ticks all the boxes. Nobody is able to offer an integrated end-to-end capability. Infinity plus Transact plus AI plus Data Lake, nobody offers that. As a bank, when you want to transform, you need to go, if you're not talking to Temenos, you need to go and talk to a multiplicity of vendors and find a way to integrate all of this together. We de-risk these projects because we come with pre-integrated software end to end.
A number of new vendors are cloud agnostic. They were born with the cloud. They were born with new technologies. That's what we call new legacy, because most of the time, or actually none of them are really cloud agnostic. You will have seen from Mark's slides, we're operating on AWS, on Azure, on Google, on OpenShift, et cetera. You take a player like Mambu, for instance, they're completely tied to AWS. That's their SaaS business running on AWS. That's the only thing they can do. It's not sufficient because in terms of regulation, in terms of compliance, you need to be able to operate on multiple clouds. Typically in Europe, there's strong guidance by the European Central Bank that banks need to be able to operate on multiple clouds. At some point, it will create an issue for these vendors.
On the other hand, we are completely cloud agnostic. Very few vendors provide a real upgrade path. We're a product company, so that's what we do. A number of our competition is they are services companies. Their interest is in actually selling the software, but actually selling the services on top of that. That's not what we do. We sell the product. We want to make sure that it works, and the bank is happy to run with it. Then they take regular upgrades, and we'll be talking about microservices and how we can enhance that. Then you're sure that you can upgrade. You're not stuck with new legacy as we now call it. In addition to that, I think we're probably the only vendor in the market having this concept of country model banks.
We provide not only the software that applies to all banks in the world, but we also come with different countries where we operate. As a bank, you have the confidence that you'll be able not only to upgrade your core platform, but you'll also be able to comply country. That's quite a differentiator, and we see a lot of interest from prospects and, of course, multiple benefits for our clients. Now, one of the slides that Max presented was very interesting. We want to change that. And how we want to bring into a full microservice architecture. The target today have probably a lot of very good reasons to change, to renovate, but actually complex old legacy software, we call spaghetti software, it's very difficult to change, and they find it just too risky to change. Runs as a clock.
It's cheap to operate, so why would I change? Very often they don't realize the cost of change. It's not factored in the maintenance. They say, "Well, compare your maintenance I have today, it's very cheap. I have a very few small team running it. It's very fine." What they forget to add usually is the cost of change. Every time there's a new regulation, every time they want to launch a new product that has an impact on the core banking, that's usually on a separate line, and that is very expensive. Another reason for change is it's old legacy. They may have teams that are aging. A lot of people start retiring. COBOL, after 30 years, you get less and less people and less and less expertise.
In countries such as the U.K. here, you even hear about horror stories of banks not being able to serve their clients and crashes and bugs, et cetera. Some of these banks even have a real operational issue right now. They're still scared to change because it's so complex, because it's so risky. We're tackling that with a microservice approach. Rather than coming with a full core banking replacement, even if it's progressive, we're going to be able to offer them piecemeal replacement of very specific functions one by one. You don't have to replace all of your systems together. You can go really one by one. The ones we're launching this year are the key ones, let's say, for any retail bank. It's accounts and deposits. It's retail lending.
It's the ability to manage their products centrally in a product hub, and it's the ability to price at a much more granular level and much closer to their customers. There's a number of other services, smaller technical services I will not talk about, and this is really a roadmap. We're starting in 2020 to leverage the functional richness of this software and make it available to the larger banks. If a bank has an operational issue or wants to change something with their account processing system, which is really usually the core of the core, now they can do that. They don't need to migrate their customer database. They don't need to change their GL. They don't need to change the reporting. They can just focus on that. We're mitigating the risk by making it a much smaller upgrade project, okay? Same goes for retail lending.
Why did we pick these two to begin with? We're very strong. We have a very strong product in those areas, so we're quite convinced that it will address most of the bank's requirements, and probably a lot more. Next, to the product hub and the pricing hub are even more interesting because this is something that you can see as an add-on on top of an existing legacy platform. You don't even have to change your core platform, your spaghetti. You can add these blocks on top of it. Many banks have multiplicity of systems and no real clear view of everything that they offer as a product.
With the product hub, we want to offer them the capability to have a single point of reference for all of their products in a hierarchical form, and this is a place where you can even create new products that will be feeding into the underlying systems. We see a lot of interest. Just mentioning this a little bit has raised a lot of attention on the market, and in particular, in conjunction with Temenos Infinity. We have banks saying, "I just want to replace my digital platform at the front, but the back is such a mess, it's impossible just to upgrade. I want to replace the front, but the back is so complex. Can you give us a way by which we have a clear view of all of our products?" Yes, this is what we can do with a product hub.
Same goes with the pricing. If you're pricing your operations in multiple segregated systems, you're not able to aggregate all of that at a customer level. You're not able to price based on the relationship you have with a particular customer, which is what all the new banks are doing. This is what they're very good at. They know the customer, they have a single view of the customer, and they're able to price according to the conditions and the particular context of that particular customer. If you're dealing with a legacy system, with many different systems, it's impossible. Again, we are proposing this additional box on top of the legacy, a pricing hub, which is something we use today in our core banking. It's proven, it works.
It's got a lot of great features, and we want to make that available to any bank, even if they're not using any other Temenos software. The benefits, and this is also why we decided to make that transition from T24 to Temenos Transact, it's to really make it clear to the market that there's a change. There's a before and an after in terms of the architecture of the product and the benefits that it provides. For our existing clients, it's also very beneficial. It means they will be able to upgrade module by module rather than upgrading the entire core system. Nowadays, when a bank wants to upgrade a core system in our galaxy of customers, they tend to do it every two or three years. We are now giving them the ability to upgrade much more frequently and to take the innovation as they come.
This is something, actually, almost 100% of our clients have been waiting for, so it's now available. For the larger banks, as I mentioned, it's an enabler. The message to all these bigger banks, it's not impossible to change anymore. We're making it possible. We're enabling this progressive and safe renovation. With the pricing hub and the product hub and new features that we're going to launch this year or next year, we're also delivering enterprise capabilities on top of the existing systems. There's a lot of value in this. Again, if you think of the spend on third-party software versus what banks actually really spend on their in-house legacy, we want to capture a much bigger fraction of that. It also enables us to have a much clearer view and segmentation of the market of our clients and our targets.
For the small banks, microservices, you could say it's irrelevant. We're running their business, so whether it's running as microservices or not, it's not really an issue for them. Actually, the benefits are for us as a SaaS operator. It makes things easier for us to roll out internally. For a small bank, we want to sell them the full Temenos Transact, all the integrated capabilities, regular upgrades, and we manage it for you, Mr. Client. For the middle tier, on the other hand, the ones that are just slightly too big to be operating on a SaaS model, then the real benefit is what I've just mentioned, these partial upgrades. You can take innovation much quicker. You don't have to wait for two or three years. You don't have to build your own legacy, your own customization because you can't wait.
You get the new announcements from Temenos much quicker. Of course, again, the tier 1 and tier 2 banks, largely an untapped market for the third-party vendors such as us. We want to be able to offer them those individual microservices and enable them to start this transformation. Again, we want a bigger piece of the pie. Besides microservices, Mark mentioned there's 77, I think, enhancements across the product range. I just wanted to highlight a number of other things because it's not just about microservices. Today, the market conditions are very tough for banks with their retail clientele. It's very difficult to make any money with retail clients. We see a lot of attention back on SME and corporate banking. We've been investing heavily, end of last year and beginning of this year, into corporate banking, which admittedly we hadn't been doing for a while.
We're now back in business. We have a very strong competitive offering. We have very positive feedback from prospects even compared to best-of-breed solutions. We are winning some deals against the old established players in this market with this new offering that we're building around corporate lending and corporate banking in general. This is very exciting because, again, retail banking is tough conditions, we see a lot of traction in this market. On retail banking, well, we already have a very strong offering. We basically, year after year, we keep building upon that. In the background, we are replacing the entire architecture, changing the architecture. From a functional perspective, we just keep adding and incrementing the capabilities of the software, in particular around pricing. Last but not least, we're leveraging the acquisition of Kony even for the core banking.
We are using the great Kony technology to enhance the way we present the software to the users of the system, to the back office people, because nowadays the trend is very clear. Back office people need to do more with less. They need to process more transaction. They need to exhibit a lot more productivity, but how can they do that? We're investigating a number of things, such as robotic process automation, such as artificial intelligence. Right now we're also thinking about what the users do in their daily jobs, the manual tasks, and we want to help them with that with new user agents. Again, the feedback we get from the few prospects that have seen the very first prototypes are very promising. That's it from me. I think I was the only person between you and the break. Adam?
Great. We're going to stop for a quick coffee break, caffeine injection for 20 minutes. If everyone can be back in the room at 11:00 A.M. sharp, and we'll move on with the next session. Thanks very much.
[Break]
Welcome back, everyone. I hope you managed to grab some coffee. I'd like to introduce to the stage Colin Jarrett, our Chief Cloud and Delivery Officer. It was announced yesterday evening that Colin has joined our executive committee. Colin's background, he came from Accenture, joined Temenos when he was running development, then running our cloud operations, and made a major impact on that, and now very proud that he's stepped up and joined the executive committee. I'll hand over to Colin to run through our SaaS and cloud section. Thank you.
Cool. Thanks, Adam. Hello. It's Colin Jarrett. Promoted yesterday to be the Chief Cloud and Delivery Officer, and I'm incredibly excited about the opportunity, but let me explain why. I think this year we'll see a real transformation in both our company and in Temenos. Sorry, in Temenos and in the market. That's something you hear quite a lot. We do a lot of transformation. We say this is going to be the year. I think this is the year when we will see more cloud deals than on-prem deals. Cloud will be the predominant part of our business in terms of the number of deals that we're doing. That's transformational. I think this will be the year when in the U.S., we will have a bank go live from signing in 90 days. A new bank, new digital bank launching 90 days from signing.
I think that's transformational for the banking industry. It's a huge privilege for me to be running our cloud operation during this year. You've seen lots of slides today. You've had a lot of information to take on board. I think there's really two messages I want you to take away from the slides we're going to go through. First one, unprecedented level of growth. When you saw Max's slide earlier, and we said in four years, the cloud business has delivered the value that it took Temenos to deliver in 19 years, I think that's unprecedented. I think then when you look forward, and you start saying, what about demand? I think the demand for SaaS is unstoppable.
When we look at it's not a vision, it's not an idea, it's a proven concept that banks are now spending money on and are hungry for. Yeah. Transformational year, unprecedented growth, huge opportunity. They're the messages from the slides that I'll go through now. Okay. A quick recap. What are we talking about with SaaS? We're talking about bringing the power of cloud, combining that with the power of the Temenos products, and putting that into a package which is hosted and operated by Temenos. We're talking about cost efficiencies. We're talking about operational efficiencies being delivered to our clients through cloud, through our products, through our Temenos operations. Okay. You've seen pictures like this before in some of the earlier presentations. I think, the idea of the winning combination that Max talked about earlier, it's the extensive product.
It's the 25 years building out feature and function that really can't be rivaled. It's about the clean architecture, the future-proofed architecture, that is cloud native, API driven through continuous deployment that can't be rivaled. On top of that, it's now building in the operational expertise within Temenos and the partner ecosystem. Makes this an absolute category killer, kind of the reason why we're seeing the level of growth that we're seeing at the moment. I think from a SaaS offering, no one can touch that. We compare favorably. I probably would've said it a little bit stronger. This is the unprecedented growth. You saw something quite similar from this, earlier from Max. That'd be kind of the one image I'd want impressioned on everybody as they leave the room.
In four years, we achieved what it took Temenos 19 years to achieve with the on-prem model. Yeah. 42% of new deals are now on cloud. I expect this to be the year that becomes above 50%. Transformational in the way we think about our deal structures. 68% ACV growth. Yeah. It's the real driver behind the business. I would also echo something Max said earlier about this being additive. Yeah. When we look at it as a combined business, we see this as growing the overall footprint, growing the overall customer base is an additive service. The other part on this is, whilst we're growing at this rate, it's become very important that we're investing in building our internal capability. There's always growing pains when you're growing at this sort of speed.
Investing in our operating capabilities, increasing our headcount in our operations by over 100% last year, building out our central command center in India, with specialist dedicated resources in OT24 inside and out, and understand how to operate it, using that capability. Investing in improved tooling, improved automation, so that when you run a COB, the pre-COB, the COB, the post-COB, are all automated functions that don't require manual intervention. Investing in the operational excellence whilst we're growing at this rate is something that we've been doing proactively, we continue to do, and is, again, something we'll continue to invest in during 2019. We bought Avoka and Kony. That has brought with it many good cloud skills. They are cloud-native companies, and that has expanded our overall capability. We now have five different regional centers based on the acquisitions that we've taken on from Kony.
We're in Australia, within Latin America, within North America, we're in Europe, and with our central command center in India. Five centers in total. That's kind of the growth story. The other thing I said was, the demand for SaaS is unstoppable. We see $21.5 billion of SaaS spend already, projected growth rate 22%, 15% of bank applications already on the cloud. This isn't an idea. This is proven. Banks are adopting this now. We see that with the greenfield banks, when the banks are getting difficulty implementing because of their spaghetti, because of the legacy, a drive towards greenfield, and in greenfield, a drive towards SaaS. If we take a bit of a deep dive and say, okay, we understand globally that there's the demand. From a strategic point of view, we see specific opportunity within the U.S. market.
When you look at the U.S. market, we see interest rates are low. We have a low interest rate environment, which is driving cost pressures. From a manufacturing perspective, reducing the cost of manufacturing of products, critical in the U.S. We see new entrants and new digital banks and the acceptance of digital only. We see the rise of the fintechs adding additional competitive forces in the market. On top of that, you've got the specifics around the U.S. regulation. We see a global market that's driving towards SaaS, and in the U.S., we see a perfect storm of cost pressure, competitive pressure, regulatory pressure. To resolve this, we see that the industry needs a fast, flexible, future-proofed, low-cost offering to help new digital banks launch quickly.
We're incredibly pleased to announce on the 21st of January our new U.S. SaaS model offering, which will allow customers to go live in 90 days from signing. How do we achieve that? First of all, it's pre-configured for the banking landscape in the U.S. We come with a pre-configured model ready with U.S. It's a front-to-back model, so it's rich in functionality. It's out of the box, so it's coming back to that point around being pre-configured. It's fast. Time to market is critical here. Yeah. We're able to continuously update it, so the future-proofing and rollout of new functionality as we continue through our Temenos Continuous Deployment processes allows us to constantly update our clients on this model bank. It has rich functionality from day one. We have the checking accounts, savings accounts, so the things you'd expect to find.
In addition, we have onboarding functionality, allows us to onboard new customers in three minutes. Not only do we have that functionality, we will then expand it with new functionality that then be delivered through our continuous deployment so that we constantly keep refreshing and updating the U.S. offering. What we're offering is the best technology with the best service provider for a U.S. opportunity where we can roll out in 90 days from day one for greenfield banks. We think that's going to be a major competitive advantage and an industry changer in the U.S. That's all I wanted to cover in this session. I'm going to hand over to Tony, who's going to talk about technology. Thank you.
Morning, everyone. My name's Tony Coleman, I'm going to talk about technology for a few minutes. The technology that we're talking about today underpins everything that we do in our software landscape. It permeates every single piece of the software stack. It's not just Transact, it's not just Infinity, it's across everything. Just to drill in a little bit on some of the words. We're cloud agnostic, meaning that we give our customers the choice of which clouds to run on. We're cloud native, meaning that we leverage the managed services and the architecture's designed to run in the cloud. We're distributed multi-cloud, meaning that you can not only choose which clouds to run on, but if you choose to do so, run active-active across clouds at the same time. All of that is on a loosely coupled, event-driven microservices architecture.
Why do you need all that? You need all of that, and you'll see in the demos in a minute, banks need technology to deliver an exceptional customer experience. What does that look like? Not only do you need a best-in-class core product engine with its loosely coupled event-driven architecture, you need that supplemented and indeed designed and embedded with AI, be that Explainable AI or RPA. All of that rich functionality, every single thing you need to be able to expose those APIs. Not only do you need that, you need a distribution platform that's going to take all of that rich functionality, enhance it with distribution services, again, exposable through APIs, and leverage AI again to create intelligent services. Pulling all of that together. All of that AI needs to be powered by data. Training those models needs data.
That's where the data lake comes in. Not only that, you need to pull all this together to the channels using a multi-device omnichannel platform. You can pick up on one device and carry on on another. This is banking. It's a highly regulated industry. You need to be able to do this in a proven, performant, secure way. Not only security, not only operations, but continuous, so that we keep the platform evergreen, the health is guaranteed, we're constantly patched as and when it's needed. All of this to give platform choice and to drive through the analytics and the reporting and the risk that you need in this industry. That is all available from Temenos. Because it's all API-driven, every single piece is fungible, but out of the box, as Colin was talking about, front to back, that's there.
It's all wired together through our API first methodology. Running that software together gives you the choice, as I say, the cloud agnostic piece gives you the choice to run on different platforms. We've added in Ali for the R20 release, also looking on the cloud-like on-premise solution, where you can take the same containers, the same service architecture, and deploy it on premise in a cloud-like environment. We've added in support for OpenShift on the OpenShift Container Platform, and that runs on IBM Z as well as commodity hardware. Multi-cloud is great. It gives you the ability to run with the highest levels of SLAs. It means you can meet a lot of regulatory compliance issues that you can't do when running on a single cloud. There is an issue of manageability.
This is where we're looking to solutions like Google Anthos or VMware Tanzu, where you can run exactly the same software, single code base, updated, patched, push, managed from a central pane of glass, and again, giving our customers the choice of which platform and which solution to go with. In summary, our technology permeates absolutely everything that we do, and it's available on a variety of platforms which the customers choose. It's available cloud native, using the managed services that you would expect from any well-architected cloud solution. It's cloud agnostic, giving you the choice, our customers that choice, but also back to the platform choice for on-prem, we continue to support the traditional application server deployments, but with a look to distributed multi-cloud to be able to run simultaneously distributed across multi-cloud active-active.
No DR testing, no downtime because you fail over, the data is there in multiple clouds. All of that backed by within the solutions themselves, a loosely coupled event-driven architecture, which means you can deploy and swap out, upgrade independently any of the components that we've been talking about today. With that, I'd like to bring Prema on the stage to talk about data and AI.
Hello, everyone. This is the last 10-minute session from product leadership team with the slide deck, particularly. After that, I'll hand over for a demo. I think it's apt that we wrap up this session, the product session, with data and AI. We talked so much about the feature function, the capability, deepening and broadening with Temenos Infinity, Temenos Transact, Funds, and everything that we do. No digital transformation is complete in a bank until the bank leverages the insights that they can derive from data analytics and AI particularly. You have heard a lot from us before about data and analytics, what we do there. I'll drill down a little bit in detail on AI, where we are after the Logical Glue acquisition, and why explainability of AI model is something we have focused on so deeply. In a regulated industry like ours, explainability is the key.
I'll explain a little more on why it is so important and what we are doing about it. The opportunity statements here, banks are struggling to come up with new use cases that can increase their revenue stream. Right? They have a great opportunity right now to consolidate information about customers, thanks to open banking. There is an opportunity to collect data from other banks about a customer, and to understand the financial health of the customer more holistically. Right? This gives the opportunity for banks to then tailor the products and services that are required by the customers, understanding their needs, understanding their life events, and then to be able to cross-sell and upsell. Customer retention, that's absolute key. Doing that in a highly personalized manner, you need AI. You need an Explainable AI platform.
That's what we try to achieve through our capabilities collectively with data analytics and AI. How do we do that? It's through three of our products. You know Temenos Analytics already, Temenos Data Lake. With the Logical Glue acquisition, we also have the Explainable AI integrated fully with the complete product set. Our value proposition is quite simple and straightforward. It is to enable digital transformation in a smarter way, in a faster manner, and also in a cheaper fashion. Smarter why? Because the customer's behavior is changing. The demands are changing. There is so much pressure for the banks from the industry, from the rest of the challenger banks, and the way that the marketplace is opening up. Solutions have to be smarter. They have to be adaptable. They have to be adaptable to the changing needs of the customers.
That's why the solutions have to be smarter, and the smartness comes only when you apply artificial intelligence. It has to be faster, which is what we focus on in training and building these analytical capabilities, understanding the structure of data that comes in, both structured information, unstructured information that comes in from so many channels now. To be able to derive those insights, understanding the problem that a bank is facing, trying to understand if a customer is about to leave, what should be the next best product to sell to that customer, or a profitability analysis or a risk analysis. Right? All this is pre-built with the banking information, banking knowledge, and that is readily available for banks to implement. They don't have to actually do this job, right? We put this together for the banks.
To be able to deploy that at low cost. Tony talked about the technology choices, the platform choices. It's all about simplifying implementation and cutting down the cost of running the software. Cost of change is high, cost of operations are high. Banks have to do this in a cost-efficient manner. That's an absolute mandatory requirement these days whenever we build our software. We make sure any new capability we bring in, any new software that we add to our product set, it's actually built on those principles. This is pretty much how the landscape looks like for us. We suck in all the data from various product sets. We talked about Infinity, Transact, financial crime, and funds management. We don't restrict the data sources to Temenos data sources. This is a key point because we operate in a very complex landscape.
We do understand we have so many other systems within the enterprise that we need to work with, that has got more valuable information as well. We need to suck all that in. The data lake solution is an agnostic solution in that sense, that it's not specific and integrated only with Temenos data sources. It also sucks in data from other data sources within a bank. It takes care of all of the data requirements. For any bank to run proper analytics, to derive the insights, the data has to be clean, the data has to be purposeful, the data has to become useful before it can be used.
I think when you have a spaghetti-like architecture, when the systems have been grown in-house and aggregated over a period of time by taking off-the-shelf products from so many vendors, it can get really complex to get the right value out of the data, to even get the right data out. This is what data lake solves. Data collection, aggregation of data, cleaning of that data, preparing the data in such a way that the analytical models and the AI models can run effectively and to generate insights out. That's pretty much the whole stack. We take care of the pre-built models ourselves so the banks don't have to build these pipelines themselves. Right? Everything from the data models to the adapters to connect to different data sources, to the analytical models, to the AI models which have been trained is prepared by us.
It's built by us. It's deployed by us. It's supported by us. It can be upgraded by us. Right? That's what this is about. That's how we take care of the data requirements which banks are finding a massive challenge with, and also innovating with that data. This is our competitive position on analytics. I won't spend a lot of time on this. The fact that we are the only vendor to have about 100 and odd different pre-built analytical models, analyzing customer information, product information, transaction data for retail, corporate, wealth, across segments, and then do this analysis for different purposes, risk, profitability, just analyzing the journey to optimize the user journeys. That's not something we find in the market at all, right?
To be able to integrate that with the rest of the product set and to deliver these insights that we generate out of the analytics at the right places during the decision-making process, that's our differentiator. For a bank to actually put this all together with off-the-shelf products, it's immensely difficult. None of them have been successful just taking care of a data warehouse project, let alone deriving this kind of insight and embedding that into the places that are required. This is our competitive positioning on data lake. I think it's very common for people to think that there are so many data warehouses and data lake solutions out there. What can Temenos do that is different to what these people are doing? Can they be more sophisticated? The answer is truly yes.
The fact that we are able to collect so much data, not only that, it's about getting the data prepared for use into those analytical and AI models, getting the data models for the banking objects. That is a massively complicated exercise. There is so much banking IP that is required, knowledge that is required that goes into this process, which we have built already. That's one of the key differentiators for us. There are so many banks who are in this data lake transformation journey. They haven't even gone to the stage of actually collecting data from 10 or 15 of their systems, let alone the 400, 500 systems in a big tier 1, tier 2 bank, right? The second problem they face is the quality of the data. They can't actually really get a decent information about their own customers. The data is duplicated.
The data, it's fragmented. It sits across so many systems. How can you rely on that kind of information to generate the useful, personalized offering to a customer? Impossible, right? Those are the problems we are trying to solve with the data lake solution, which is pre-built with our software, right? Massive differentiator. With that, I'll get into AI specifically because that's something relatively new. Why AI is better? Why is our AI better? The characteristics of any AI platform have to have these in mind. One is about personalization. When AI gets involved, we are talking about a self-learning, autonomous way of looking at data and generating insights, and to be able to take some decisions automatically and actions. The platform should have wide-ranging algorithms to take care of different types of predictions, classifications, segmenting information about customers, understanding the behavior of the customer's transaction, right?
That is pre-built in our platform. That's what we have been focusing on. Adaptability, the self-learning nature, the way the customer behavior changes, the algorithms also have to adapt to it. That's another key factor. All this is good, but because AI is self-learning, it's not rules-based. How do you know that it has not learned a bias? How do you know that the decisions that it takes are accurate? We can trust it enough to actually run all of this in production. This is the question banks are facing, and that's where explainability comes in. I'll explain in a bit about how we do that. All of this is done with lots and lots of data, therefore, the solution has to scale.
As banks grow, as the volumes grow, as the channels through which the customers interacts with the bank grows, and the data point keeps multiplying, the systems have to scale. This is where the technology choices come in. Ours is a cloud-enabled solution. Automatically, we take care of the scalability problem, auto-scalability problem. Bank only pays for what they use. They don't have to over-allocate resources for storing data or computing with that data. The most important factor is it's okay to have a great platform. A bank can put all this together on their own. How do they integrate and take these insights and actually embed that into a user journey in a particular retail banking app or provide this information to a call center operator? This is where we come in, because we have the complete product set which is pre-integrated.
Embedding these capabilities as part of our platform has given that ability automatically for us. This is what we have been working on, and there is a roadmap of all the AI models. We have now an Explainable AI platform where all the decisions taken by the AI models, all the output that is generated out of the AI model are fully explainable. Explainable in a way that a human user can read and understand why the decision has been derived. Not only that, they can interact with that decision and they can change or override the decision if needed. This is a key differentiator. We have been focusing on credit scoring and improving the efficiency of the FCM decision-making processes as well.
There are quite a few other use cases in terms of providing personalization, understanding the lifetime value of a customer, understanding what's the next best product, classifying the transactions, predicting what could be the next transaction for a customer, and then fine-tuning the products and the service that a bank offers to the customer. These are trained by us, and these models are available as package software, and they are integrated with the distribution services in Infinity. This is how we provide that hyper-personalization that Brian was talking about. It's now a feature for us as a standard in Infinity. Quite a few other models which are in the roadmap, I won't get into the specifics of it, but you can see it's a very healthy roadmap. On this one, I just wanted to highlight how the distribution of these AI capabilities look like.
It's often easy to think that AI is more to do with just the customer experience and engagement and nothing to do with the back office or the core banking or the manufacturing side of it. Actually, it is not. If I just take an example of the product pricing capability, it can be completely transformed using AI and a data-driven approach. Banks don't often actually look at their products and try and simplify their products. Rarely they do. If products are being treated that way, pricing structures are even worse. They don't even go near the pricing structures because they have a fear of value destruction if they start looking at their pricing structures.
Treating it in a completely data-driven manner, understanding the customer's lifetime value, understanding the profitability of the products, understanding the holistic nature of the financial health of the customer, and then coming up with the right products and the services that can be bundled for a specific customer group or a customer itself, that can be path breaking. That's what we are working on. All this requires a lot of information data, so we are working with a number of banks who can provide us with the data and also help us actually fine-tune these use cases, but this is quite transformational. AI in manufacturing can be as effective as personalization on Infinity or front office can be. Okay, a little bit on explainability. Why is explainability so important? As I said, AI model is notorious for being a black box model.
Because AI model improves as it sees more and more data, it learns from more data that it sees. It's very difficult to understand how that learning has actually influenced the decision-making over a period of time. Without explainability, it's very hard for banks to be able to trust the model with massive decisions like credit scoring or credit underwriting. Banks should be able to explain why they have rejected a loan, why they are accepting a loan, and why an AI model came up with that specific score. This is where explainability comes in, and this is why our unique patented solution is so much different from what we see in the market. Traditionally, the explainability has been done as an after-the-fact explainability.
A decision has been arrived at, and then based on the outputs and the bunch of inputs that were captured at that point in time, some techniques are available that can explain how potentially this decision or the output could have been achieved. Unfortunately, that's not accurate at all. Explainability has to be more intuitive, and it has to be intrinsic. We use a fuzzy logic-based algorithm, which completely transforms the way we can throw that explainability back at the user and say, "These are the inputs. These are the factors that resulted in this decision, and this is the weightage the model has given to that decision." Not only that, we allow the user to actually go and interact with it and change that weightage, change the factor, and improve the decision-making. The model learns back from that.
That's why we are uniquely positioned. We have done the analysis on explainability with other vendors who claim to do explainability as well, and we have found that some of these techniques are, as I said, not really transparent. They are not fully explainable. It's not fully human-readable as well. Most of them are best guess. That's not good enough for a highly regulated industry like ours. I'll leave you with just some value statements. I'm not going to read them out. There is this significant improvement banks can achieve by applying AI into improving the efficiency and reducing the cost, and also providing hyper-personalization that cannot be done in any other manner. You will see Temenos investing a lot more in this space. You will see us building some of the capabilities through AI-driven solutions and not in the traditional manner.
With that, I will hand over to Holger, who can show you some demos of our software, particularly on Infinity. Thank you.
Thanks, Prema. I have here my colleague, Ed, with me, who will support me in that part of the day where we want to show you three different customer use cases that illustrate how customers of ours use our software to actually achieve and overachieve their targets. We have picked three examples that represent different geographies and above all, completely different types of banks. The first one is Partners Credit Union, and with this I will hand over to my colleague, Ed.
Thanks, Holger. A little bit about Partners Federal Credit Union. This is a U.S.-based customer. There are about 10,000 financial institutions in the United States. The vast majority of those institutions are small banks and credit unions. Those credit unions serve a very specific market, a very specific membership. Those could be employees of an airline, those could be construction workers, those could be very specific to a university, for example, and the list goes on and on. Partners members are all employees of Disney. They're what's called the Disney cast members. These cast members deliver every day these magical experiences to the Disney customers, whether those are audience members, people who go to a Disney theme park, people who are buying Disney merchandise. Partners specifically, it's a small credit union, $1.8 billion in assets under management.
They are charged with delivering to a group of members that have very high expectations in terms of customer experience. However, unlike the big banks, they do not have the budgets of the Chase or the Bank of America of the world, so they have to deliver on a much smaller IT budget. As Max mentioned, this is where Temenos is uniquely positioned to deliver these tailored experiences. What Partners has done is they have taken the Infinity Architecture and the Infinity Retail Banking package application, are in the process of delivering a number of other solutions to deliver this tailored experience to their customers. The way in which they have done this is that they have taken on all the development themselves, they have released in a very agile fashion to their membership. I am going to switch over to a live demo now on my device.
Before I launch the app, one of the things you'll notice as I launch it is they've really put their own little touches into the application. Right. Things like animation and a very personalized experience that's based on the geography. You'll notice, as I launch the app here, we have this nice animation. These are all things that are enabled on the platform as part of Infinity that we build applications on. In this case, this is the native mobile application. One of the next things you'll notice that they very much tailored to their needs, even though they're built on a packaged application, is something called Relationship Rewards. This is a very specific value to their members, where they can see their tier of loyalty, for example.
In this case, I only have a standard tier, but I can open it up and I can see where I stand in terms of my rewards. The more assets I have with the credit union, the higher my ranking gets, and I get a lot of benefits, discounts, better percentage rates on some of the financial products that they offer. They have all the functionality that one would expect from a Bank of America, and they have to. These credit unions are charged with delivering all the same functionality that a customer would get if they banked with Bank of America, Chase, Wells Fargo, et cetera. They can do a transfer. They recently just launched the ability to pay a person. What the large banks are doing with technologies like Zelle or Venmo, for example, they're able to deliver to their relatively small membership.
They also have some unique advertising that's all powered by something that we call campaign management as part of the Infinity platform. This is all focused advertising, very specific, and in alignment with the Disney brand, as you can see here. In addition to that, they can make mobile deposits. They can do bill payments, they can message the bank, get FICO scores, obviously find an ATM, all of the functionality that you would expect from a big banking application that they're able to, in a very agile way, deliver to their members on a very frequent basis. In fact, since they went live with their latest version in August of last year, they've released four to six versions of the application very quickly. Can you go back to the slides? Results.
As I mentioned, since they launched their application in August, they went from a 2.2 star rating in the app stores, both iOS and Android, to a 4.6 star rating. This is a very big deal for any customer of Temenos when they launch an application, is this drives the level of adoption that you see. If you have a satisfied customer, less risk of adoption. 80% of all non-cash transactions are performed through the digital channel, obviously reducing operating costs. They've had 16%, approximately, growth of mobile users, in 2019. This is a very big number. As I'd mentioned, they release very frequently, and they're able to do this because of the Infinity platform. Four releases in four months, and they've added a lot of functionality with each of those releases. One of the ones that I've shown is that payments functionality.
Our next customer is HSBC. Back to Holger.
Yes. Our next customer, as Ed mentioned, HSBC, completely different type of customer, different size of bank. HSBC launched a program in 2017 that was aiming towards offering all their products online to their customers. When launching this program, they had four principles in mind that they wanted to see fulfilled. First one was rapid time to market. They wanted a solution that is able to push that plan forward quickly. That led it into the next decision. A handcrafted development from scratch is probably not the best solution. That led it into the decision for a platform solution that brings out-of-the-box, ready-made capabilities that can be used as an accelerator, but in the same time provides all the flexibility to make these journeys the HSBC journeys as it is required by their guidelines.
It also needs an openness to be connected to the fintech ecosystem, to third-party providers of services. Whenever it comes down to customer origination, customer onboarding, you need integration of fraud detection, you need integration of scoring, you need integration of ID verification. In the end, all of that needs to result in an outstanding customer experience. Customer experience is not only the look and feel of the application. It's not only the graphical design of the screens. It's the behavior of the complete application, how the customer interacts with that, how immediate the feedback of that application is towards the customer. On the next slide, we see here my colleague Ed volunteered to apply for a credit card.
You can see he is filling out here the application form for that credit card, filling in his personal data, mobile phone number, address, and identity information, which is then double-checked against the entity or identity provider to see if that is real. In the background, we also run some KYC checks already. We get information back that we can then transform into a questionnaire where we present easy questions to the customer that only the real applicant should know. That is an additional layer of security within the application process. That just leads into the third step. We need to gather some information about the employer, about the salary information, which is obviously blanked out in this process, as it is a real application from my colleague, Ed.
In the last step, you then just need to register for online banking, mobile banking, and your application will be processed straight through. In less than 30 seconds, you will have an approved credit card application. This part of the process is only one half of the complete solution. The other half of the solution is how can we help banks to iteratively enhance the quality of these processes? How can we make them better? How can we drive a higher adoption rate, a higher conversion rate for their applicants? Therefore, we have an embedded journey analytics where you can analyze a given customer journey, and you will see immediately the KPIs, the bounce rate, completion rate, dropout rate. Not only you will see that on a overall origination process level, you will see that drill down into the various screens of that journey.
Not only the screens, you can also identify the fields inside a screen that make customers hesitate or drop out. You have the metrics how long they take to answer that question. You have the metrics how many keystrokes it takes them to fulfill that answer. You can filter that down further to figure out, are there any differences in between the different device types? Does our application behave differently in the web than on mobile phones? Does Android users have more problems than iOS users?
You can also drill down into a timeline that gives you, in a monthly drill down, the metrics of that process where you can see how your dropout ratio, completion ratio developed, you can then further filter down into, I only want to focus on my conversion rate to be able to see if that is going up or down, which we see in this part. In the last part of that section, you can see the average time it takes users to answer the complete questionnaire and to fulfill the process. How you can make use of that, I will give you an example. One of the first questions in the original version of the application process was an invitation reference number.
HSBC was sending out invitation reference numbers to their clients with the objective that if they enter this reference number, they would come to a prefilled page where all of their data is already filled in. However, it turned out when they looked into the analytics, that 4% of clients drop out on that field. That probably resulted in they were thinking, "I need an invitation code to proceed. As I don't have it, I drop out." That was not the purpose. By knowing this information, HSBC was able to simply skip that process, and that results into 4% higher conversion rate. 4% may not sound that impressive, but just imagine you can identify 10 of those fields that cost you 4% conversion ratio.
I think that is an outstanding result of how you can make use of the embedded journey analytics and how it helps banks to overachieve their targets. With that, HSBC was able to multiply their origination volume four to five, exceeding their own expectations by more than 50%, resulting into 75% of all applications are processed 100% straight through without any kind of manual intervention. Remember when I said in the beginning it was very important for HSBC to have a very short time to market and a platform that still allows an agile and flexible approach. I can give you another example of that. On a Thursday, basically today, HSBC decided they need to change one of the journeys. They wanted to introduce a new fintech into that journey to make it more comprehensive and better for their customers. On Thursday, that idea was born.
We helped the bank to design the new process, the adopted process, to integrate that fintech provider, to prototype the new process, to implement the new process, to test the new process, and to go live with that new process on Monday. Basically, four days, including the weekend, it took HSBC to completely integrate a new process step and to be live with an enhanced version of their credit card journey. I think that is an outstanding result. With this, we move on to our third example that we want to give you, which is Credit Union of Australia. It's again, a different type of bank, completely different geography. Credit Union of Australia is, again, slightly bigger than Partners, but is not one of the dominant players in the Australian banking market.
The Australian banking market is dominated by four major banks. They had to have a different strategy in mind. They couldn't simply outspend those four banks on innovation. They needed to out-innovate those banks. They came up with a plan to tackle three areas that are important for them. The first one is customer onboarding. Second one was customer servicing via a mobile banking application. Third is a new type of personalized customer relationship via chat that they implemented as well. They have chosen three different vendors for that to implement it. Now it happens that all of these vendors are part of the Temenos Infinity platform. Basically, they implemented Temenos Infinity even before we had it. Here you see the account opening journey. It's a little bit more simple than the HSBC one, and it also comes along with fintech or third-party integrations.
Whilst we are typing here, we can see that there is an address lookup service attached from Mastersoft, so it fulfills the address when you start typing. On the next screen, we then have, again, integration with identity verification. In this case, we use greenID in Australia to verify the passport data. When that step is done, you simply need to double-check if everything is correct and submit your data to the bank. When you are a customer, what happens next? Next happens that you'll most likely use your mobile phone to do your daily servicing. This mobile phone application is actually based on the very same platform as the partners' mobile phone application on the Kony Quantum technology.
It comes out of the box with a lot of features that help a bank to accelerate the process of go live, of offering that services to their customers. It starts with accounts and transaction details and ends with Samsung, Google, Apple Pay integration, plus, and that will be the last part of the demo, the integration with the unique chat solution. Here in this part, we will log in with our face ID. We will see the account overview, and we can drill down into a specific account. We see the transaction history, and we decide we want to initiate a payment. This payment is a third-party person that I can create as a payee on the fly by just entering his account details. I can use that payee for my payment.
In this case, I transfer AUD 10 and review the data submitted, authorize the transaction with a two-factor authentication. Now it comes. Then this transaction is being executed in real time again. So far we have seen standard functionality that is expected nowadays. You need to have that as a bank. Now we move on into the personalized chat solution. Okay. Here we start. This is a WhatsApp type chat embedded in the banking application. This WhatsApp type chat allows a customer to initiate a person-to-person communication with an employee in the bank. The first thing you do is when you log in, you can pick the agent that you'll like to interact with. These agents, you typically pick based on your interest, based on the product area you want to select. In this case, we have picked Sarah.
Ed introduces himself, Sarah writes back. You will be surprised how sticky customers are with their personal agent. 92% of clients would rather wait until their agent is online again before they start chatting with another person. This is really a person-to-person relationship that builds up based on this technology. Ed here is introducing himself and asking if they have any recommendation for products that could give him a little bit higher interest rate. Sarah comes back with two different product recommendations she could do for him, and he decides that he would want to have the product that gives him 2% interest rate, and he would like to invest $90,000 from his savings account.
By just instructing Sarah, via the chat solution, everything else that is required to set up this product can be initiated by Sarah, and this is a very, very efficient sales tool. In the end of the conversation, Ed just says goodbye, and we can move on to the summary screen. By introducing this service, CUA was able to really increase their metrics. There was a 40% growth in mobile banking adoption by introducing a better mobile banking application. 220% increase in payments via mobile. Out of their customer base, 20,000 customers are active users of their personalized chat solution. We call it Engage, and they are aiming to use or to service 50,000 customers in this year. Also, in average, the number of products that customers have is increasing from 1.9 to 3.1 products per person when they are active Engage chat users.
As you can see here, when you are able, with one single agent, to outsell eight branches in a week, that is actually a fantastic return on investment. That is really pushing new boundaries. Whilst I talk about return on investment, I would like to thank you for your attention, and I would like to hand over to my colleague, Kanika, who is introducing the Temenos Value Benchmark.
Thanks, Holger. All morning you've been looking at the product offerings that Temenos has for the market, and I'm going to shift the focus a little bit to the tangible business value that these product offerings bring to our clients. With that in mind, I'll introduce the Temenos Value Benchmark. We all know we've been talking about the disruptive technologies that are having such a profound impact on the industry. They're leading to the twin trends of digital and open banking, and they are changing the very structure and value chain of our industry. What is happening is, as we've been talking about, new entrants coming into the market, fintechs, technology players, but coming in at a cost income efficiency ratio of 30% or thereabouts, which is an order of magnitude lower than incumbent banks. Historically, banks have underinvested in IT. The operative word here is investment.
Although banking IT spend at 11% of revenues is significantly higher than other industries, two-thirds of that goes into just keeping the lights on, keeping the systems running, or on non-discretionary regulation. Only one-third is spent on true business value add growth and innovation. Banks are still running legacy systems. They have built a lot of complex modern systems around those legacy. They're hesitant to replace that legacy, not just because of the perceived risk or the disruption to the business, but because it is very difficult to justify a business case for a multi-year transformation where there are high initial investments and late accruing benefits, often many years after the program goes live. Disruptive technologies are changing that. This is a big challenge for banks. Banks have not had a great track record of business and IT alignment when it comes to transformation.
Historically, a lot of big transformational projects have failed because they were IT-driven and were not sufficiently sponsored by the business. This is also changing quite a bit today. Today, most technology transformations are sponsored and driven by the business. What that means is that in today's world, banks need to understand and have a strategic and very clear view on the value that their investments in technology will bring them in a way that was not as important before. Never before has it been so important to really understand the impact from a cost-benefit perspective of your IT investments. For Temenos, we need to engage with both the IT and the business leaders at our clients in a way that has reached new proportions. We need to be able to engage with the business and really explain to them what is it that our solutions truly bring.
Banks struggle, even today, to answer very basic questions about around their IT investments on the returns they should have, could have, and indeed, have brought. Senior banking executives today really need to understand the impact of IT to understand how to prioritize their investments, how to think beyond the short term, to build three to five-year plans. They struggle with this. I have personally been involved in a business case where the CFO insisted on only including the operational and IT cost savings. The business case that came out was not an accurate picture of what the investment could actually bring. With that in mind, we've launched the Temenos Value Benchmark. It is a strategic program whereby we, together with our clients, explore the drivers of business performance. We better understand in banking, what is it that really drives high performance?
How does technology enable that performance? How well are banks doing compared with their peers and with best in class? Our clients' data is kept completely confidential, as you would imagine in an exercise of this nature, with strict terms and conditions. It's very sensitive data. Our clients literally open their books to us. We conduct this very collaboratively on-site with strategy consultants who interview key stakeholders across the bank. In return, the bank gets a highly customized report with insights, trends, comparisons, and recommendations. We want to build a long-term relationship with our clients, so this is something that we would like to do on a regular basis, go back to the clients either every year or two years or at a significant event in the bank's life, whether it's a merger or whether it's a significant go live or whether it's a major upgrade.
As a market-leading provider of mission-critical banking software, we believe that we are uniquely positioned to provide value through this program. We believe that we can help our clients really understand how and why they perform better or worse than their peers, and how they can improve in a more credible way than our competition or indeed, even the strategy houses. Why is that? Firstly, we can capitalize on our 25 years of banking domain experience. All relevant product directors in this room, whom you've heard all morning, have input into the questions. The collective IP of our organization is reflected in the benchmarks. Secondly, we have a front to back product stack, which covers the entire banking value chain.
We have no competing or overlapping products. Our product map totally fits with the banking value chain and allows us to conduct a benchmark from the point of view of the bank very neatly. The depth and breadth of our client base, 3,000 banks across the globe, more than 800 running core banking, gives us access to a very rich database, much richer than our competition. Even the strategy houses struggle to expand benchmark programs beyond a region because the devolved nature of their organization. We provide a truly global perspective with representation from all our regions. The methodology that we use is proven in the software industry. It is based on a value lifecycle methodology of business-led technology transformations around value discovery, value realization, and value optimization. It was pioneered by Siebel many years ago, later adopted by Oracle, SAP, and other ERP providers.
We are not aware of any other competition launching a similar program so far. We want to capitalize on this first-mover advantage and build a really, truly industry-leading program. Finally, we've heard about how data is such a competitive asset in today's world for our banks. By providing data-driven insights through this program, we actually walk the talk. The benchmark is structured around the banking value chain, not around Temenos solutions. We cover eight domains. Six of them are part of the core chain, all the way from product management to sales and relationship, to payments, and to risk and compliance. There are two supporting domains, analytics and IT. In each domain, we ask our clients specific questions on quantitative metrics.
For instance, time to market or payment error rates. We also ask them to rate themselves on a scale of one to five on the importance and maturity of industry best practices. That's where our business domain knowledge comes in. These qualitative best practices help us to understand why a particular quantitative metric is high or low. For instance, commercially consolidated watch lists in FCM, is that something that drives false positive rates? Is there a correlation between them? The fact that we have qualitative and quantitative questions allows us to do that analysis. We are close to 50 banks in the program so far, and we've got a lot of momentum with our existing clients as well as with prospects, and we want to double this in the next year or so. I mentioned that this is a truly global benchmark.
We have covered many countries in all of our regions with adequate and a well-balanced distribution across all of them. We cover three banking verticals, retail, corporate, and wealth. We end up having very in-depth discussions with very senior stakeholders at our clients at the C-level and C minus one level because we ask them questions which are truly strategic to them. We've collected an enormous amount of data from a statistically significant set of banks. That has allowed us to generate some very interesting insights. Let me explain and introduce some of them to you. This is the banking capability model in the age of digital and open banking that we believe describes the capabilities that a bank needs to differentiate.
What we need is true differentiation and customer centricity on the distribution side of things in the front office, and we need standardization and operational efficiency in the back office or the manufacturing side. Both of these need to be underpinned by analytics and AI. Now, what the benchmark allows us to do is to really validate this hypothesis. The numbers that you see here, you can look at them as almost the voice of the customer. These percentages refer to the percentage of respondents that rated these capabilities very high, either four or five on a scale of one to five, one being the lowest. What we find is that 91% of our respondents said that front to back digitization and analytics is key. It's highly important for them.
On the front office side, contextual user experience, being all-knowing, understanding the customer's interactions at every touch point, and consequently being able to proactively produce personalized propositions in return, was rated the highest by 93% of the respondents. 90% of the respondents rated having an adaptive and resilient operating model in the back office as very important. This is all about having inbuilt self-monitoring and optimizing algorithms at the back in order to optimize your performance, and RPA comes in in a big way. You'll notice that open banking is relatively low, and that is partly because of the true global nature of our benchmark, and in many markets it is still nascent. We expect this to really go up as open banking gets adopted in multiple markets around the world. What we also find is that our top-performing clients significantly outperform the industry.
On cost-to-income ratio, the top quartile, the top 25% in our database had a cost-income ratio of 26.8%, which is really about half of the 59% global average across the world. This is the number that I mentioned is also in line with some of the digital challenger banks and the neo banks that are coming in. We already have banks of a very good mix. These are not all digital banks. This is a very representative sample of different types of banks in our client database that have this cost-income ratio. Similarly, on return on equity, the best-in-class have a return on equity of as high as 29%, versus the industry average of 9.5%.
If we look at how much of their IT spend is on growth and innovation versus keeping the lights on and/or non-discretionary regulation, we find that our best-in-class, those banks that are the highest performing banks by cost-income ratio, spend 51% of their IT spend on true value add, compared to the industry average of 27%. We find that this leads us to the conclusion that Temenos solutions help banks to focus their IT spend on real business value add. The greater the focus, the higher the performance. Temenos can really invest in commodities so that our clients can focus on differentiation. Here we explore the relationship between a bank's financial performance and some of the operational metrics. What is it that makes a high-performing bank different from the not-so-high-performing banks? What you see here are 15 operational metrics. They are not a random selection.
These are the metrics that positively correlated with either cost-income ratio or return on equity in our sample. What it tells us is that those banks that had the highest spend on growth and innovation, had the lowest loan origination times, or the lowest false positive alerts also happen to have the lowest cost-income ratio and/or return on equity. It's a correlation, it's not a causation. It does tell us what is it that is behind these financial metrics in terms of operational drivers. These have been categorized into five groups, and these are intuitive. This is what you would expect. Innovation and growth is all about how quickly and cost-effectively a bank can launch customer-centric, differentiated products or enter new markets very quickly. Customer centricity is about the omni-channel contextual experience that you can provide, giving greater convenience, relevance, responsiveness, and reliability.
Operational efficiency is end-to-end optimization of both operations and IT, from the front to the back. Risk and compliance is about managing enterprise-wide risk, and again, very cost-effectively handling regulatory and reporting obligations. All of this underpinned by analytics. How widely do you use analytics for managerial decision-making across your enterprise and how that helps you to improve performance from data, trusted data, both within the bank and outside the bank? There were three operational metrics. The percentage of digitally active customers, the percentage of front office staff on admin tasks, and loan origination times that positively correlated with either cost-income ratio or return on assets. By virtue of this fact, we can say that high-performing banks have the lowest origination times.
They engage digitally with more of their customer base, they have front office staff that spends more time on business value add rather than manual back office admin tasks. We went further. We said, what drives these operational metrics? What are the business drivers behind some of these metrics? Let's take the example of digitally active customers and the use of a single rules engine and a single point of integration to channels. If we explore this further, what we find is that those banks that have the highest percentage of digitally active customers also rate themselves the highest on this capability. The capability of having a single rule engine and how integrated their front office channels are. This leads us to the conclusion that banks that have siloed channels struggle to engage digitally with more of their customers.
Although the benchmark is totally structured around the value chain, we are able to also analyze the Temenos footprint at this client base, and we've drawn an interesting conclusion. One example of that is that those banks that run Transact only versus the ones that run Transact plus Infinity or any module of Infinity, as is our definition here, also fare better on some of these key operational metrics. Onboarding time is significantly lower when you have more of the Temenos stack. Similarly, the customers per FTE almost doubles, and the front office staff is also significantly lower when you have a front-to-back solution from Temenos. What does a client get? They get a 100-page report, very detailed, divided into three sections. The first section is really the trends that I just shared with you.
What we do is we plot each bank on the trend, and we give them specific recommendations on their positioning. The second section is on quantitative metrics, where we compare key quantitative metrics and ratios to the average, the top quartile, and the bottom quartile in our benchmark. The third section is on the qualitative best practices, where we compare each bank's importance and maturity against the top quartile, average, and bottom quartile. These reports have been very well-received. We have shared them with a number of our clients where we completed the exercise. I want to particularly cite one example of a CIO, whereby the bank was reasonably good on cost-income ratio versus the benchmark, but they were spending only half the benchmark average on IT. They were also very low on digitization.
What we found is that he was able to take that report to his board and get double his IT budget, approval for double his IT budget, and launch a digital transformation program at the bank. Another bank, which was a challenger bank, used the report to understand the full value of his IT. He had underestimated the amount that he was spending on IT. He had not included certain FTEs, and he then became very cognizant of the fact that as he was going to scale the bank from a very small base, he needed to watch out for costs. There were two insights, two very different banks, one a very established player, not so digital in an emerging market, and one a digital neobank. Now I want to talk about the sort of benchmark and how it impacts our own sales and go-to-market.
In that context, we believe that the benchmark is a foundation for value-selling across our enterprise. What we do is we build a database with the true metrics derived from our existing client base, clients that are mature on Temenos that have been running our solution, and we use that to build business cases for prospects. Now, the main purpose of value-selling is to complement and reinforce our already very effective go-to-market strategy with real business impact messaging and to become trusted advisors in addition to just providing the software. It's about improving our credibility as thought leaders in banking. For existing clients, it could unravel new opportunities to sell additional solutions, so cross-sell, but it could also just encourage the client to upgrade or to use our software better, thereby improving the relationship.
For prospects, we build compelling business cases that justify the investment that they're about to embark on. Let me give an example of an ROI model and how we would build it. A typical business case would have benefits from Temenos, the costs of the project, and any other dependencies on the bank. The benefits from Temenos we can derive directly from the operation and financial metrics that we collect from the benchmark exercise from the database. We are able to provide very tangible numbers, strongly justifiable because of the correlating best practices. These are essentially evidence of how our solutions enable the business and justify the financial benefits. This benchmark makes it easy for us to build business cases that are not assumption-based, but evidence-based. Thank you.
This way. Thanks very much, Kanika. Great. We're now going to break for lunch. If I can now ask everyone to be back in the room by 1:30, please, for the afternoon session. Thanks very much.
[Break]
Good afternoon. Good afternoon, everyone. Welcome back. I'd like to introduce our next speaker, Alexa Guenoun. She's very recently been appointed President of the Americas and Global Head of Partners. For the first time in a Temenos Capital Markets Day, she's joining us live from the U.S. in the thick of the action. I'll hand straight over to Alexa, who's going to be on one of the screens there. Thanks very much.
Hi. Hope everybody can hear me well. Good afternoon for you. I guess it's after lunch. It's great for me to be back here actually in the U.S. except for remembering that you need to be up early, so I'm still on morning coffee on my side. Yeah, been here probably about 15 years ago, so it's really great to be back and back in this market. I'm talking to you from our Malvern headquarter for the U.S. Hopefully, you'll be able to hear everything I want to say about this great opportunity that we have for Temenos in the U.S. Really, if we look at where we are today and our growing presence, our strategy has always been very clear. We've had a historical presence, but we've grown through acquisition. It is a market we cannot afford not to be in, obviously.
We've secured acquisition, you've heard recently, I would say the last year and a half, most significantly, Kony and Avoka. We now have about 700 people just in the U.S. Locally, it's about 50% more than we used to have just in one year, thanks to Kony acquisition last year. We're operating in about seven major offices. That's where our people are based, that's where we run the business. Overall, the combined client base now is actually quite significant. That's over 1,300 clients. Obviously, there's always, as you would imagine, flagship clients. That is different part of our portfolios. Citibank is one of them. Varo and Grasshopper on the digital front. Obviously, also credit unions, regions. You have Commerce Bank that everybody's heard about. Again, a big core client for us. Everybody's watching us too, as well.
Really today, for us, this is a big presence. This is a large footprint, and that's why we have invested there to make sure that we can capitalize on the opportunity. The opportunity itself is actually quite significant. By every measure and every research you can make, you obviously know that it is the largest market for us. Almost half of the asset under management globally are based in the U.S. Again, very significant. If we look at third-party software spend, again, the largest market. 2019, we were about 42%. 2020, we estimate we'll be at 50%. Definitely not something we can pass. 10,000 institutions in the market. A large play that we need to be in, and it's very attractive. It's something that we want to be part of. That wouldn't be enough though.
We have a lot of markets, and we have some large markets, obviously, historically Europe. It has to be sustained by strong drivers for us to be interested, obviously, and to make a play in that market. There are very strong drivers that we see in the U.S. Some of them are specific to the markets, others are quite close to what we see elsewhere. What we see really is around five drivers that will impact what we can basically drive out of this market. The first one is around deposits. We know that all the banks now are trying to protect the deposit share wallet, obviously protecting customer acquisition and increasing this. Making money for them is becoming very challenging.
The pressure really is on growing deposits and growing deposits at a lower cost, obviously, because that's also something that everybody's very mindful of in this day and age. What we also see which plays very well to Temenos strength is the new entrants, the new competition, especially the digital-first competition. In that space, everybody wants to play. Europe has been at it for a while with the likes of N26 and Monzo and Raisin. In the U.S., there's a lot of initiatives. You've all heard of Chime, you've all heard of Simple, you've all heard of Moven. We're seeing the big players thinking that they also need to play in that space. Marcus, everybody's heard of it. Goldman went at it, and Marcus is actually quite successful. Really, when it comes to digital first, it is a very big play now.
Big Tech are also going at it. They have a slightly different view on how they're doing it. They focus on distribution, obviously, and they usually are backed by incumbent bank or smaller banks. They don't usually do the manufacturing themselves. They focus on distribution. They're big players in the market. There's obviously like every year, everywhere, every market, a complex regulatory environment. U.S. is no exception. It's actually probably even more complex because of the state regulation as well. The layers of regulation is actually quite heavy. It has changed, though. Regulators especially are less interested these days in globalization. They're more interested in the trade tensions that we're seeing everywhere and how they're going to regulate this. On their agenda now, which we didn't really use to see before, technological changes. They used to be an enabler, now they are a concern for regulators.
It's actually slightly different. Then obviously like in every domain, the social concerns, including the environmental concerns, environmental sustainability. All of these are challenges that are not only now facing our day-to-day life, but the regulators are very concerned, and they are making sure that the financial sector gets concerned with this. Obviously, the financial services firms have to get ready for this. The other two are more classic. We've been at it for quite a while, but it's still there, and it's still there on every market. It's very present in the U.S. The pressure on cost. Everybody needs to find a way to operate cheaper. Everybody needs to find a way while they still need to be compliant and still there'll be a cost for them on the regulation.
They need to still find a way to spend less, spend better their cost to income ratio. All of these things are still in play as well as the pressure on interest rates. All of these really are challenges that we see in the U.S. But they are actually for us, very strong drivers. Yes, the size of the market is important for us to think we need to be there, but it is sustained by quite strong drivers that we can exploit and we have solutions to when it comes to offering solutions to the financial institutions in the U.S. At the helm of this, obviously, is the digital opportunity. All of those challenges, whichever way banks are trying to address them, most of them start from the digital front office. What should they do in the front office first?
Most significantly, really, how do they address those challenges through the digital play? For us, obviously, the answer was Infinity, which we launched last year. How to increase the speed to market of Infinity, our answer was Kony. We realized that that would give us really two things. First of all, increase our time to market on the product front, and obviously increase our presence in the U.S. specifically. On the product, really, with this being a global leader, we got a SaaS digital offering that is ready-made, that is at the heart of how this company used to operate. Again, plays well to our driver of growth around SaaS that you have seen earlier. The platform itself is an award-winning platform. It's well-recognized in the industry. The banking experience platform, the multi-experience development platform as well, complement our Infinity agenda.
Really combining this with Temenos Infinity and Avoka, we get a superior offering for Temenos Infinity, and we get it fast in terms of time to market. The low-code development platform, something that again, is very unique, very useful for CIOs and CTOs. Again, when you talk time to market for them and for us, it's a very good play. Finally, obviously, it's very functionally rich. It has the right technology underpinning it. Again, on the product side, it's really been a leapfrog for us. It's really helped in that front. Obviously, it's a U.S. player. It's the largest digital player in the U.S. That comes with a U.S.-centric product. Yes, Temenos Infinity will be complemented by Kony globally, and it helps globally our portfolio.
In the U.S., again, if I talk about leapfrog and jumpstart, we got it with Kony because their solution is tailored for the market from the get-go. It comes with 50 U.S. clients, especially good traction on the other tiers, again, where we play very well. Knowledgeable people, not only about the solution and technology, but the U.S. market, and a lot of cross-selling opportunity for us. Overall, that was one of our key way and key reasons for doing this acquisition and really thinking this is going to strengthen significantly our U.S. offering and U.S. presence. However, when we talk about this, yes, there is a specific for the U.S. and the narrative is different. The CIOs and CTOs have a different view of addressing their stack and their technology. We hear a lot, which we hear less in the rest of the world.
We hear a lot about system of engagement, systems of record, system of insight. If you look at it, compared to what you've probably heard in this morning, you heard probably a lot about distribution and manufacturing. Really, what this vision of the world, of the IT landscape in the U.S. is no different. You pretty much have system of insights sitting in the middle. In a way, and by and large, it is not a stretch for our offering. This is what we're doing globally. It is just a slightly different presentation and obviously some specific, I wouldn't say customization, but market specific features that we got from our market presence.
On that, really, we can capitalize on the 1,300 institutions that we have in the U.S. that are live, and which have one part or the other of the portfolio that we can then start cross-selling to. Of course, for us, that's probably not enough. We talked a lot about capitalizing the digital opportunity, and that's why we felt that we need to complement and enhance the offering in the U.S. with a specific and targeted offering for that market. That's why we launched, about a month ago, our U.S. SaaS offering. It's really a dedicated offering for digital banks, front to back, out of the box, continuously deployed, meaning continuously enriched and enhanced for banks who want to get into that market, want to get into that market quickly. It can be banks, it can be new entrants, it can be fintech.
The idea really is to say, in 90 days, you have a bank up and running. You have a front-to-back solution up and running, continuously deployed. You can then start servicing and entering and penetrating the market. As I said, really relevant to the play around the new digital entrants, specifically around deposits. I think all the banks that are starting up these days are only starting from two angles, deposit or loans. It's pretty much what we see. It's not super sophisticated in terms of what kind of product they're offering, but the key is time to market, quickly getting those deposits. We've seen a lot of interest in the U.S. We launched that a month ago, and there's really a lot of interest. We've had a lot of inquiries.
Interestingly enough, obviously, which is a good proof point for us. From the former Kony clients, from all the Akcelerant clients as well. All the clients that are at that end of the market where they're thinking, "I need to do something else," but also a lot from the big ones who are thinking, "We need to get into that market." Very encouraging for us. In terms of how we're planning to go to market in the U.S., obviously it is quite different from what we see in other markets. The structure of the market is really based on tier and the size of the organization. You have a very fragmented market, a very large market, over 10,000 institutions, and the behaviors, the spending patterns, engagement is different from every tier you go to.
The majors, obviously the big ones, the clients, the regions which are clients of ours, for example, they operate within their boundaries. They have different business segments. There are different things we could talk to them about. They are closer to what we see traditionally. The nationals, again, quite a large client base for us. We've all heard about Commerce Bank. We all heard about Sterling, the national banks, Ally. Again, slightly different, what you would equate to a tier 2. Closer to major, I would have to say, but again, less business segment driven, more global in the U.S. A very different play for us as well. The regional, there you have a mix of credit unions and banks. They're often community banks serving a particular community in a location or an affiliation.
Again, very specific in terms of the market they serve and the customers they serve, but usually not very broad in terms of what they do. In that space as well, we do have quite a lot of clients, partners, one of them, I don't know, you might know that it is the credit union for the Disney employees. All the Disney employees today are serviced by us, which is quite fun if you look at it this way. The techs as well, if you look at First Tech Federal Credit Union, that's the bank for the Silicon Valley employees. In there, lots of LinkedIn, Facebook, Google, Apple, Microsoft employees, very trendy. Again, as a place where it's very specific in what they do, it's very narrow. It's a different market for us.
The digital banks we talk about, we talk about at length, whether you're talking new entrants, whether you're talking affinity banks, whether you're talking big banks, majors wanting to launch new brands and attack a new market. For us, again, a different play, a different way of going at it. The funds and wealth segment. In the U.S., we have half of the world's AUM sitting in the market. A place where we have offerings, a place where we are well-positioned to attack the market, and quite significant for us to go after. In terms of how we're going to work, it's really about tiering the market and finding which are the right solution to offer us. We know that our solutions are diverse. We have a large portfolio. We have five drivers of growth. Some of them apply to all segments, others don't.
We need to be focused. We need to understand what to offer. With 10,000 institutions, quite frankly, you need to know what you're going to attack where, and which solution you're going to deploy. Obviously the majors we know. There's a play around Infinity, of course. There's a play around the core. There's a play around anything to do with analytics as well. If you look at the nationals, pretty much everything is of interest, not funds. That's not something they do. On the regional, it's really going to be centered around Infinity and cloud. That's what they're interested in. That's the entry point. They might then move into looking at Transact and the back, but the entry for us is going to be through the Infinity platform and the cloud. The digital bank, a bit of everything.
As we know our solution anyway, the way it's been built, it's on cloud, so that's one tick. It has front to back end analytics. Pretty much everything is in there. Payments, obviously, underpins all our core banking platforms. Wealth sector, in that front, it's Infinity, because Infinity covers the wealth. It's Infinity from the front office point of view, whether it's for wealth managers or for fund administrator, the platform we can give to them on the front side, as well as our dedicating offering for the front side with Multifonds. If you look at this, really, we're actually quite clear on how we're going to attack with segments. However, one thing is also very clear, and I'm sure you've heard that before. We can't just go at it with a big bang deployment.
All of this is going to be underpinned on our side with how we're going to distribute and deliver those solutions to them. Microservices are key, especially the higher you go in tiers to majors, they're not going to do a full core banking replacement, big bang, every product line in one go. We need to be able to offer distribution services to them. We need to offer different Transact services also so that they can start plugging and unplugging their legacy. That's something that we're going to have to pick and choose for every single segment. We have the portfolio. The good thing for me getting back into this market is really the offering, because yes, it is what we have globally, and Temenos is like that. We deploy globally our solutions. We don't really do specific.
However, with our presence in the U.S., with the knowledge we've acquired through acquisition, and now through the microservices, we have a different way of going after the market that is probably more suited to the way the CIOs and CTOs in this market operate. A good proof point, I don't know if you've been reading the American Banker this week, but there was a very good article, we're very proud of this, on Varo. Varo's been one of our very early adopter. They've been a partners of ours from the beginning. Actually, we tested pretty much our U.S. model bank, which is at the heart of our SaaS offering. We tested that with them because they're using Transact on the cloud, they're using Lifecycle Management, they're also using Payments.
Really everything within our portfolio that we are actually putting on the SaaS model they've been using, they've been piloting with us. They've been steering us in the right direction. What better proof than having the FDIC saying, "You're good to go. You are now able to get your charter. You can launch your operation." For us, it's been a great week, I have to say. We've been working with them for a while, and getting this on the newspaper is actually proof point for us that what we have can be deployed, can be approved. It's actually state-of-the-art, if you look at what Varo is going to do with this. Quite frankly, all the work that's happened and all the acquisitions have actually paid off, and it's a good launchpad for us. If I summarize really where we are now, it's all about scale.
We know that in the U.S., the market is there in terms of scale. Our offering is there in terms of scale. We do have our five engine of growth there are relevant. We have a great partner network. We've been working with the partners in the region for a while, with the Cognizants, the Deloittes for the deployments. Now, and Max has talked about it, we are actually focusing also on the big tech companies to make sure that we leverage as well their distribution network and their sales force. Complementing this with our own sales force, which has actually grown significantly. We've added 25 headcounts in the U.S. just in sales. We went from 44, sorry, to 69. If you look at this, I think we do have everything to succeed in the U.S. We have the product. We have the scale of the organization.
We have the partner network. We just need to go and get it. I think it's starting big. We've done quite a lot of very nice customer acquisition over the last two to three years, and I think we have now the next wave ahead of us. I'm actually very excited to be leading this. Hope to hear more of you, and I'll be talking to you more also on what we see coming here.
Thanks very much, Alexa. Thank you. Very glad that went fine in terms of technology as well. Dialing in from the U.S. is not necessarily easy. I'm now going to hand over to Takis, who's going to cover the section on creating shareholder value.
Yeah. Welcome to this afternoon session. As usual, we're not going to talk about Q4 results. We did this yesterday. We have given an outlook for 2020. I think we're convinced we can deliver on those. This is more about taking first a look back, but then also give you some of the background required, why you believe this is an exciting story, not just for 2020, but for the midterm and the long term. If we look at the basics, I think this is good, classic, strong business model based on packaged software, continuous investment into R&D, and put that back all into software, make it available to all the clients, and therefore, building this very strong business model. It has delivered, as we heard from Max, 25% total software license growth CAGR over the last couple of years.
It is 64% of total shareholder return over the same period, and I think that's something. It's a testimony to the strength of the team, to the strength of the ecosystem, but also the strength of our culture, as Max pointed out. If we take a look at the revenue KPIs over the last couple of years, you've seen the 25% already. If you look at recurring revenues, and this is, I think, important for the investor community, that the growth here is also building. It gives you the visibility, and it gives us also the confidence that this business model is also working in the future. We touched upon SaaS revenues in more detail today. 53%, you see a massive acceleration.
Yes, there was also M&A included, definitely this is for us. Max mentioned or quoted this as a tectonic shift. I'm going to talk about this. This is really a step change, and this is really something we believe will be more important going forward. The good thing about this, it's incremental. So far, we're not seeing or a very minimal impact in terms of cannibalization. It's still on top of a strong license business model which we project for the future. Now, just delivering growth, and there are many companies out there in the U.S. or many software companies which can deliver growth, but they lack the other ingredients for what we believe is the perfect business model in the software industry. You also need to deliver profitable growth, and you also need to deliver cash. We're going to talk about this.
Here you see actually that over the last couple of years, the margin expanded an average of 100 basis points. I think that makes sense about there to see for the next couple of years for the medium term. This is what we believe is possible. It may be in a year a bit less if we do M&A or invest in sales and marketing. It may be a bit more in another year, but I think that's a good average. What is also important is to see that EPS growth was basically at the same pace. Whatever we do is not diluting to shareholders. I think that's very important. M&A is always prudent and not dilutive in the mid-term. Looking now at cash flow, we talked about the small bump we had last year at the end. Overall, this is tracking very well.
It's not just delivering growth and profit, it's also delivering cash. This will continue, and we believe it's also a testimony to the hard work of the team out there. We believe with doing more with Tier 1, 2 banks, obtaining even better payment terms than we have today. Bringing more of the services to partners, as we have already seen, and especially having a larger contribution from SaaS will help us increase operating cash flow and get DSOs down to, I think, 90 days will be an appropriate level. I'm going to talk about this in a minute. What about capital allocation? Now you can be wasting shareholders' money. We definitely have proven not to be in that category. If you look at the last five years, there was $1.2 billion we spent on accretive acquisitions and returned $800 million to shareholders through buybacks and dividends.
This is all driven by a strong free cash flow generation we have just seen. Dividends, while we're not a dividend stock, still in the last five years, the dividend has more than doubled, $0.40 to a proposed $0.85 per share to be paid out after the AGM, if approved. Still, we maintain a very disciplined approach to cash. We're targeting to basically go back towards 1.5 times net debt to EBITDA as a leverage from today 2.6 by the end of 2020. I think with our strong cash flow profile, that is a very feasible target. You heard from Max this morning, and basically from the entire team, we touched upon the three acquisitions done last year, which added a tremendous technology portfolio, but also a lot of talented people, global clients, and also scale in general.
I think this has been a very good year in terms of the different areas we're going to be focusing also in the future. Data, AI, analytics, as we heard from Prema, is an important driver. The Infinity portfolio will remain a significant focus of ours. Overall, we always stay very disciplined in our approach to M&A. I think that's important for you as shareholders, that we are very responsible in what we do with the capital. The pace. If you look at the last one, five, 10 years, okay, the Nasdaq beat us by a margin. Last year we had a small blip in Q3, basically the share price took pace again. This is adjusted for FX and believe is a testimony to the strength of the business model and also to shareholders seeing the value a true software business model can generate, i.e.
package software, upgradable software, investing in R&D, widening the gap to competition, and expanding the number one leadership position. Some very big numbers. I think outside of if you were to compare the big tech giants to that, I think with the exception of Netflix and Amazon, we would be up there with the best. That's, I think, a good testimony. What is going to drive growth in the future? We heard about technology being a cornerstone. We heard about the broad product portfolio. We heard about the U.S. opportunity just some minutes ago from Alexa. Overall, those engines of growth are firmly in place, and the market remains very attractive and continues to grow. If you look at the-A small box on the right-hand side. We talk about $14 billion growing to $16 billion by 2022.
Still, third-party spend at those 8%, but the addressable market as a whole is also growing. It's not just one dimension, it's basically moving in two dimensions. For us, very important, as we've seen Infinity and Transact being the largest ones, but also Payments and the other products offering a very attractive growth profile. What we have done in the past, and these are some of the milestones reached in the last couple of years. The addressable market has expanded by a factor of six in the last 10 years. We added Payments. We added Multifonds. There was 2015 with the Multifonds acquisitions. We added origination capabilities. There was Avoka, for example. This is still what we believe the right way to address this large opportunity. Again, growing in two dimensions.
One is the market itself is growing, also carving out a bigger piece for us, which we can address with our product portfolio. There has been a lot of debate in the last couple of years. What about Tier 1 and Tier 2 clients? I think this is a clear testimony to Tier 1 and Tier 2 banks doing more with us. If you look back five years, it was around 26%, and the other tiers, contributing the rest. Last year, it was 43%. It always can fluctuate between years depending on the number of Tier 1 deals. We still believe those wallets at banks are still vast, and we have everything in place to address those wallets. We believe, in the medium term, this should be maybe around 45%-55%. I think that's the right value.
On the one hand, we're seeing Infinity also being something large banks are looking at. On the other hand, with very, very fast adoption of SaaS and cloud, especially by smaller banks, this is a bit of an offsetting effect. 45%-55%, I think is probably the right number in terms of a medium-term target. Medium term in that context is always about three to five years. North America, we heard this opportunity from Alexa just before. Again, showing very good development, also helped partially by M&A. I think, we have been winning reference customers in the last five years, and with more and more of those going live. We just saw Varo as an example. There's going to be larger ones going live this year.
I think it's a huge opportunity for us because once the difficult part is building a reference base, building a localized product, and we have that in place. That's why we believe there is going to be an even stronger acceleration of our U.S. business. We're very confident that the U.S. business or North America as a whole will grow faster than the rest of the world out in the future. I think 35%-40% is probably the right number in terms of what we see based on our current forecast as a medium-term share. We talk a lot about SaaS metrics, and you've seen some of the slides, ARR and TCV on an annual basis.
As you've seen, a forecast on ACV now for the upcoming period, i.e., we are expecting ACV to at least double for 2020 based on the $21 million we have achieved in 2019. Why we're showing this is on the one hand help you with the modeling and why we're so confident that this SaaS business will continue to grow tremendously, but also to underline our conviction that we can achieve with more and more SaaS business providing very good visibility. That we can achieve our 15% total software licensing growth in the long term. You've seen those, and I'm not going to go into more details. I think it's really a shift in growth acceleration we've never have witnessed before, and pretty massive.
Yes, there is M&A involved for both time periods. We believe this is something we'll be closely watching. It's really a tectonic shift. We believe, and that's the important message here, it's not one or the other. I think, we're going to continue to grow license bookings at a very strong pace, even stronger on the ACV side. Specifically, if you look at it more on a short-term basis, this is just 2019 versus 2020. The bookings growth on ACV is set to accelerate even further. It was already more than four times if you take the run rate for Q4 2019, it's going to be even faster if you look at the current forecast for 2020. An acceleration here and a multiple of five times, I think it's very attractive for shareholders.
I think we have everything in place, the product, but also the organization, the partners to deliver on this one. If you look at this from a long-term perspective, and we did a lot of number crunching to see whether this contribution or what the contribution to overall total software licensing growth of SaaS would be. You look at the slide, and we started with 5%, 2019 obviously also helped by M&A. We believe, more than 60% of our growth in total software licensing will already be coming from SaaS. If you look at the size difference, you can imagine, what kind of growth rate we're seeing here. In the long term, and this is the left chart, we believe SaaS should be anywhere between 35%-40% of total software licensing. Really a massive volume.
The good thing about this is not dilutive to margins. Why not? We're still relatively small versus the size of the company, what we do in SaaS. There is still a lot of operating leverage coming from improving our SaaS offering and really scaling that. It's growing as a percentage, it's growing in absolute terms, but it's also growing in terms of profit contribution. We had this discussion internally, I thought, okay, let's try to show how we build those models internally and to basically give you some of the building blocks, which are the basis, which are the pillars for achieving our midterm growth or long-term growth and our EBIT target.
On the left-hand side, this is more the regional split and probably not much of a surprise, but even Europe, which is our largest region, we see a lot of opportunity there across all products. North America coming from a lower base, also helped by M&A, definitely helping, but also the other regions. APAC, which had a strong year in 2020. It's broad based. It's not just, we're betting the company and the growth just on one region. If you look at how do we get to these 36% in the medium term, I mentioned already the operating leverage and the SaaS growth, which is profitable growth. Yes, SaaS has still lower margin than our license business, but this is improving fast thanks to Colin and his team.
Maintenance, as you know, a software company, this is an important driver that's basically pure profit, what we have in terms of maintenance growth, which should remain double-digit. Then services, yes, we're offloading more and more to partners, which makes it more profitable. Even without that, I think we have still some optimization potential. Then the other cost lines, we're leveraging G&A and also R&D, definitely continue to invest in sales and marketing because we see this as a really important element to deliver the kind of growth we're expecting. Looking at cash, what are the building blocks on this one? On the left-hand side, first for the operating cash flow performance, definitely profitability is one thing. That's pretty straightforward. We also see the growth in SaaS and maintenance revenue obviously boosting deferred revenues. This is a material contributor as well.
Finally, yes, there is some way to go on DSOs, partly offset by payable days, this should get us to operating cash flow growth, which is obviously at least in line with what we expect for EBIT growth. On the DSOs, 120 as a starting point, I think we can definitely improve or still improve our terms on our license business. The SaaS mix will help tremendously, as I just mentioned, services DSO, some regions are very well advanced and optimized. Others, we still have a bit more headroom to improve to get to the 90 days in the next three to five years. M&A, we did the backward-looking view. Going forward, I think it's still the same strategy. As Max pointed out, we want basically M&A to accelerate our organic growth. That can happen through various areas or pillars.
Yes, we can accelerate our R&D roadmap and basically gain access in key markets and new segments, or expand our position as we did with Kony. Increased scale, that was also partially covered by Kony, especially in the U.S. Adjacent markets and complementary products. I often get the question, would you go back into capital markets? I think we can clearly say this is right now definitely not a priority. We do not want to dilute our growth. I think that has been also a message by the shareholders, that they want to have somebody, a pure play in banking, delivering consistently on this growth target. Okay. Six minutes to go. Let me get to the growth targets. We confirmed the long-term targets this morning, as you can read in the press release.
Maintain the at least 15% total software licensing growth, 10%-15% CAGR on total revenue growth, the EPS growth of at least 15%, tax rate, and cash conversion. What we did on the medium-term targets was we basically brought forward the EBIT margin. That was a long-term target, 36%. We pulled this forward for the next three to five years. If it's three years, it's an average of 130 basis points. If it's five years, it's an average of 70 basis points, 80 basis points. Now, obviously, we have the ambition to achieve this in three years. However, we're not going to do something which is not smart in terms of the organic growth. If we have the opportunity to invest in sales and marketing to accelerate organic growth, we definitely will do this. DSOs, as I mentioned, 90 days. We should get there before the five-year period.
Tax rate, we're not yet running out of deferred tax assets, but I think this is something which will slowly creep in and push our tax rate a bit higher. Okay, I think that's it from my side. With that, I conclude. I think that was helpful to build your models and get the DCF values up there. With that, I hand over to Kalliopi. Thank you.
Hello to all of you. We're going to talk about corporate social responsibility, a little bit different from what you've been listening the whole day. We at Temenos, we rely on 8,000 people of 90 nationalities in 68 offices in 40 countries, in client sites, and from everywhere, to deliver value to all our shareholders. Let me briefly give you a little bit of background in the kind of environment we are operating in right now. I'm pretty sure that last summer we saw at the Business Roundtable, the CEOs of 200 of the most prominent U.S. companies updated the purpose for corporations in order to include the interests of suppliers, clients, employees, and the local communities at the same level as those of the shareholders.
At the same time, a few days ago, we heard the CEO of State Street saying that ESG is not going to be optional anymore. A couple of years ago, we all heard BlackRock CEO saying that sustainability is going to be in the center of its strategy. At the same time, we see a lot of teenage world change makers to be sitting on the same table as CEOs in big events like the United Nations or the World Economic Forum events. At the same time, we're also witnessing a lot of adverse environmental and public health events that are actually changing the way we live on a daily basis and the way that companies are operating globally. I could name a lot of other examples of that sort. At the end of the day, what we are seeing is that sustainability is becoming mainstream.
It's going upwards on the corporate agenda, and it's affecting the way companies are working, are planning, and operating. Temenos has been operating with integrity and responsibility for over 25 years. Our goal is to grow our business in a way that takes care of the world around us, delivering value to anyone associated with us. How we do that, we do not just simply have a CSR strategy as an add-on. What we do is we incorporate sustainability into the way we operate, promoting a more sustainable business model. Our sustainable business model actually helps us create value for all our shareholders with a positive impact on our business model. At the same time, it helps us manage our risk with a positive impact on our operations.
At the same time, it helps us give back to the local communities with a positive impact on society. We do that because we have commitment from the top. We have our CEO, Max, mentioned it in his presentation. We have our CEO, Max, chairing the CSR and ethics committee and driving the sustainability agenda in the company. At the same time, we have board oversight of the CSR and ethics framework. This is something that goes beyond regulatory requirements. This is something we do on our own initiative. Our ESG strategy focuses on three priority areas: ethical governance, environment, and society. Let me briefly start. Let me give you a couple of examples. I don't want to get into too much detail. Ethical business conduct and governance. We have a 97% compliance with our business code of conduct and mandatory trainings.
At the same time, we also do responsible procurement, meaning that we risk assess and all our new, and also existing suppliers based on environmental and social criteria. At the same time, information security, data privacy, and resilience are a material issue for our company, meaning that we are delivering secure products that comply with global international standards. On the environment side, environmental management, we have rolled out a global environment management system, which is ISO certified, in our offices globally, covering so far 60% of the total Temenos population. At the same time, we are also looking into climate change and carbon, which is something really important to us. We measure our carbon footprint. We also reduce as much as possible and offset our business travel, which is our biggest environmental impact.
At the same time, we organize sustainable and carbon neutral events, just to name Temenos TCF, Temenos Community Forum, as well as Temenos Kick-Off. On the society part, on the social part, what we are doing is we're focusing on something that we know really well, and this is part of our mission, is how to actually help young children, and especially kids in India, which is a very material location for us since more than 55% of our Temenos population is based in India, to help them gain digital skills and help them have a better future for themselves and their families and their communities. How we do that, we have so far built five computer labs, solar powered computer labs in five government schools in great need in India.
At the same time, we have built girls' restrooms because we would like to help girls have equal opportunities with boys in life. We didn't stop there, because innovation is part of our DNA. We created a Temenos Innovation Lab in one of the leading universities in India, College of Engineering. At the same time, we have initiated a program where for the coming years, we're going to provide scholarships to College of Engineering students, second, third, and fourth year students. Also we're going to promote a new initiative of how to encourage more girls, more women, to study engineering, to study IT, and then have a career in IT. At the same time, we are going to provide them with job opportunities at Temenos. This is because digital skills is something really close to our mission.
On the gender diversity and equal opportunity front, we are very proud of being 8% above the average. We have above average women in the IT sector. For the past six years, we have been following a diversity strategy, a gender diversity strategy. We can actually say that at this point, we have targeted young women getting into Temenos and encouraging young women to get into an IT career. Right now, we're at 47% of women in Temenos, young women under 30 years old. At the same time, we're also targeting senior women, advancement of senior women in senior positions. We can say that we are at 45% of female senior managers reporting to the CEO. Last but not least, we're focusing a lot on giving back to the community, through our people, through our expertise, and also through our time of our people.
For year 2019, we have had 800 unique and returning volunteers, offering 1,400 hours doing community service, mainly in the schools and at the university in India, but also globally. Following also the London Benchmarking Group model, we monetized the amount of hours that were actually given by our employees. The money is like $28,000, which is part of our community investment as well. It's good to do all these kind of things and to see how you can actually incorporate sustainability into your strategy, and see that the results at the end of the day are really rewarding. We see a really positive feedback coming from the markets. We have been among the 25 most sustainable companies in the Swiss SMI Expanded Index. At the same time, we were also among the 10% of the world leaders listed in the Dow Jones Sustainability Index.
We had the highest score in information security, cyber security and resilience. At the same time, the highest score in environmental management and environmental policy. At the same time, we listed in the FTSE4Good. We have really positive and good ratings on MSCI and ISS, environment and social scores. We have received a gold medal from EcoVadis, which actually evaluates the supply chain. We are also happy and proud of our people, as we have been recognized in five different regions, in five different countries, with five great place to work recognitions in Luxembourg, Greece, Europe, UAE and India. I would like to close with one very simple message. That we will continue to do what we know best, which is actually delivering IT services, IT software to financial institutions of any size around the world.
This is exactly what we know how to do best, but the right way, not just the easy way. Thank you very much.
Thanks, Kalliopi. Thank you very much. Amazingly, we're about 30 seconds ahead of schedule, if you bear with us just for one second, I'm going to set up some chairs for Q&A. Anyone on the webcast, if you'd like to submit a question, you can do so through the link under the main screen. I've got an iPad here, I can read those questions out. If I can ask Max, Takis, Mark, Colin to join me on stage, we'll go to Q&A. There'll be some mics around the room as well, please just put your hand up if you have a question you'd like to ask. Good enough? Go ahead. Just a second. If you could just introduce yourself and who the question is directed to, that'd be great.
It's Charlie Brennan here from Credit Suisse. Just a high-level one to start with, if that's okay. On one of the opening slides, you laid out the market opportunity that suggested that payments was the fastest-growing opportunity and fund administration was pretty high up there. We've hardly heard about payments and fund admin at all. Do you feel like you're underweight in payments, especially relative to what's been going on in the U.S. and some of the M&A? Can you just update us where you are with the Bloomberg relationship? I haven't heard from them in a while. Thank you.
Thanks, Charlie, for that. I would say it's a very good question. We tried to package the day in the most efficient as we could. If you look at some major initiatives that we've done the last 12 months, clearly, we thought we should focus the discussion today more on Infinity following the acquisition of Kony and Avoka. That's probably why we focus more on that part. Definitely, we've done a lot on the payment. On the payment, in fact, what I can say, we are doubling the investment we are putting in the product. I truly believe that there is a big opportunity on the payment side. It's not because we've not spent 30 minutes on payment today, that we don't see that as a big opportunity for us.
At the same time, on the Multifonds side, we continue to invest, we continue to innovate at the whole UX side of things. We're putting this on the cloud as well. A lot is happening. Somehow, I think it was already quite a long day. We tried to focus. Next time, we'll spend more time on them. On the Bloomberg opportunity, we announced that around a year ago, I think it took us longer than we were expecting to be able to package the offering within the Bloomberg network. Obviously, Bloomberg operate at huge volume and scale. Whatever goes into the network of Bloomberg has to pass so many tests that it took longer than expected. Finally, all the tests have been done, we expect to sign our first customers very soon. Clearly, I was expecting this to go faster. Let's be honest.
I still believe that once we've got the first customers that will sign up with the offering, the business case is very strong. I think there is really a market for that, for shadow accounting as such. Once we've got the first customer, we will see the traction. Bloomberg continues to be highly focused, committed to it. Probably the mention to us when we engaged in the partnership that it takes longer than you think to get through all our different security walls and to be able to be up and running. Typically, the Temenos way, we want to go fast, we want to go and deliver immediately, and probably, it took longer than we were expecting. To summarize, I believe the opportunity is still there, and I'll keep you posted on the progress.
Great. James?
Yeah, thank you very much. It's James Goodman from Barclays. Thank you for the presentations. I wanted firstly just to come back to the cross-selling opportunity in the U.S. and not Infinity into your core base, which you've articulated very well. Whether it's realistic at all to think that you can increasingly sell Transact into some of the Kony base over time. I just remember this time last year that you, or the last Capital Markets Day, I think you talked about a front office client, which was seriously thinking about implementing a back-office Transact system. In light of those sales cycles, what needs to be done to get that to come to fruition? Just secondly, on the proportion of revenue from larger clients versus smaller clients, which we've discussed a few times today, and you've emphasized the larger client focus.
I think yesterday was one of the biggest skews we've seen towards actually the lower tier banks. I just hope you can help us understand what it is that at the moment in your sales structure is focusing on some of the smaller banks, which is going to change towards the larger. Thank you.
On the U.S. Temenos Infinity, I think it's not just in the U.S., but clearly we believe that to enter a relationship is it on the front with Temenos Infinity or in the back with Temenos Transact. Ultimately, the full benefit, as we've seen during the Temenos Value Benchmark, is to have an end-to-end solution. Hence, probably in the U.S. right now with the dynamics in the market, we see the Temenos Infinity probably as a better way to start into a relationship. Definitely the goal is to go through an end-to-end transformation. That customer that you mentioned before, who is an Temenos Infinity customer and are using at the back a legacy third-party core.
Now that they are going through the benefit of our modern technology at the front end, they see the limitation of what they can get ultimately out of the solution because of having a back end software which is still batch and so on. If you really want to have the whole opportunity of our solution, we believe the end-to-end transformation is ultimately where you need to go. It takes time, as we know that to renovate the back end takes time. We do believe that once we are into the relationship, that the best way to go about it.
Let me take the second one. If you look at current trends, you have three which are basically putting or working into that number. On the one hand, you have the increasing number of, let's say, smaller banks or tier 3 to tier 5 moving to the cloud. That's obviously pushing to a lower tier 1, tier 2 share. On the other hand, we have Infinity being also actively marketed and sold to the large tier 1, tier 2 banks, that's offsetting that. If we can get it done, and we strongly believe it will happen, what Max just said, eventually selling front to back also to larger U.S. banks, Commerce Bank and these kinds, that will push it up again. Overall, that's why we think it should be around 45-55 in the medium term with those trends basically equalizing more or less each other.
Michael, do you have a question?
Yeah. Actually, I wanted to follow up on the Sorry, it's Michael Foeth from Vontobel. Wanted to follow up on the cross-selling. You were very excited about cross-selling when you acquired Kony, I was wondering if you can update us on how much of your Infinity customers actually taking up the Kony offer. How the cross-selling is really working out in the U.S. there more specifically.
Okay. I think what you mentioned about Kony is Kony is now part of our Infinity offering. I think this is so exciting. One of probably the distinction of Temenos is when we buy a company, we integrate, we fully integrate those companies. That's why, within a year, we've been able to come up with the best digital front office platform by putting the Temenos assets, the Avoka assets, and the Infinity assets. That's why all of that together is now our Infinity platform. Definitely, we see this as an opportunity to create massive synergies and to accelerate sales. I think you've been able to see how over the years, M&A has been able to accelerate our sales
Because of being synergistic transactions. On that side, I'm very pleased, and we will continue to look at transactions that can complement and accelerate our growth rates.
Maybe a second question regarding, you talked about Europe as also being a significant driver of growth still over the next five years. Can you maybe talk a little bit about the growth dynamics of Infinity in Europe versus core banking?
I think Temenos Infinity, and this is why Temenos Infinity is clearly not just a U.S. play, it's a global play. We've got some very exciting discussion happening in Europe with some of our largest customers on the Temenos Infinity side. I think, Temenos Infinity is extremely well fitted for every market. There is no limitation to what it is. I think, you've got two clear trends on the digital front end. You need to be able to provide a more personalized customer experiences. You need to be able to onboard faster. You need to offer all those things that we've discussed in the morning. On the back end, you need to be able to automate, to bring more efficiencies. We clearly see those two drivers being very strong.
Probably in Europe, on the Transact side, because of the fact that banks are struggling on the return on equity and the cost base is so high that they need to address that. Where potentially in the U.S., the profitability is higher and hence, there is a focus on driving growth. Then once you get the growth, you also want, obviously, to have the full benefit of an end-to-end solution.
Josh, from the back.
Josh Levin from Autonomous. My question is about the long-term guidance. A big focus today has been about the robust outlook for SaaS. You also said that SaaS is not cannibalizing existing sales. They're incremental. You think that would be accretive to your long-term earnings forecast. On the other hand, SaaS has a different revenue stream profile than on-prem. You collect less revenue up front and more over time. As you went and revisited the long-term guidance ahead of the Capital Markets Day, maybe you could talk a little bit in more detail about the puts and takes and why the long-term forecast hasn't changed either up or down.
Okay. I think what we can say today, and with our current forecast, with incorporating strong ACV or SaaS development, we're very confident because of the good work Colin is doing, that despite the increasing proportion of SaaS, we still have a lot of tailwind also on profitability, just by scale. What we see in the long term is still eventually a large part of the, let's say, non-tier one Transact business, okay, moving to the cloud. Okay? That's basically the basis of our long-term forecast. Whether we, in seven or 10 or 12 years, always get to the 15%, we honestly don't know. However, from today's perspective, given the market size and the market opportunity and seeing it as incremental, we said implicitly it's 15% plus, we're very confident on this one, despite the SaaS business becoming more important.
Far, we really haven't seen any material impact in terms of the license business. Okay. Should this happen in three, five years, we obviously would have to revisit then, and then we would have to look at the profitability and the famous fish curve, how would that look like? Okay. From today's perspective, I think this is the right assessment.
Adam.
Thanks. It's Adam Wood from Morgan Stanley. I've got three, if I could. First of all, you've talked a lot about microservices today. In the past, we've heard about the move from a kind of big bang migration for banks to modular approaches. Now we're talking about microservices. Could you maybe just tangibly talk a little bit about how that's different for a bank? Are you basically breaking modules down into microservices so that the change can be at an even more granular level than in the past? How does that make it easier for banks to move versus how it would've been on a modular approach? Could you maybe just talk a little bit about integration between Infinity and backend? I appreciate there's open APIs, but I guess that 30, 40-year-old mainframe-based core banking systems are pretty challenging to integrate to.
Could you talk a little bit about how you're managing that? Maybe finally, could you talk a little bit about deal sizes? How does an Infinity deal for a same size bank compare to a Transact deal? How do some of these SaaS deals compare to what you would've got from on-premise? Thank you.
Colin .
Yeah. On the microservices piece, as I talked about, kind of this history of innovation where things come and go, and we talked about modules and modularity before. To be ready for cloud and the SaaS market, as I said, years ago, we decided to change the way that we built software and to make it much more granular. That was the start of a change for us. That was an internal thing. Years ago, we'd acquired a company, and they were hosting banks, and the size of the change that the bank could digest overnight had to be much smaller. In the past, you did big chunky kind of 1,500 a day kind of change. There's no way you could be bundling those and implementing those on a frequent basis if you had 50 credit unions on a multi-tenant kind of system.
Everything changed to be more granular.
That's fine, the way we wanted to architect the system, those pieces had to be completely ring-fenced, if you will. They had to be componentized, they had to be built in a way that you know exactly what changes and how the whole piece is interlinked. Even if you do that smaller chunks of change, there's more work to do around the architecture of the product. They're going to microservices. People often talk about the spaghetti to chunk it into ravioli. The clever bit is knowing the status of those, such that a bank can take changes in a piece without having to change the whole bit. Even now, if you put a fix in, you can do that one fix, but it's going to drag everything it needs, and you end up putting a whole load of change in, you don't need to.
The beauty of microservices is that you are containerizing the code in a way that I was talking to someone in the break about leakage. Price leakage, you get revenue leakage. They've got multiple back ends, they don't know the pricing as accurately as they need to. We talked earlier about us offering the way to do enterprise pricing regardless of the back end, right? We've got all the code to do that, it's only by introducing microservices and writing it in a way that it can be implemented standalone safely, that banks can then take that value quickly. We would still say that over time, they need to renovate their cores. They need to swap them out to modern 24/7 real-time digital cores. That to us, it is not if they need to do that, merely when.
As part of a business case and getting the thing written to take value quickly, they can take these microservices, be it distribution or be it in Transact, and take value quickly, and then build out as they go to allow then a different implementation option. That's all it is. It's merely to be able to do it safely and to be able to do it in the order that they want. They can get value quickly. That would be how I would characterize the microservices thing. In a sense, there's nothing new under the world because you can have modules and stuff like that. What we've done is make it clever so that we know exactly which level of code is which. You can take that bit of code, you can say, "Hey, that pricing thing worked well.
I want to take this next. Maybe a product hub. Despite the cores you've got in the back, you can have a central way of deploying new products to your customers quickly. We would still say that over time, and there was a question in the U.S. about a digital-first will they go core. We believe they will, because if you implement a new digital front end, a piece of Temenos Infinity, if you will, it merely helps to point out how old-fashioned, how restricted that core is, whether it's running batch overnight, whether there's a single view of the customer even, things that we take for granted. I think this putting microservices out there will mean, A, banks that wouldn't do change because they're scared now can, and B, it merely serves to underline the shortcomings of their existing legacy cores. That was that bit.
Hi, Adam. Let me answer it this way. Today, given we just integrated Kony and a large number of banks in the U.S., the average deal size Temenos Infinity versus Temenos Transact is definitely smaller, whether it's in the license or an ACV model. If you look forward, Max talks about it, if you look at the Temenos Infinity pipeline and seeing some very large banks interested in that, you could have million or multimillion deals in Temenos Infinity, and not just in Temenos Transact. I think it will be shifting towards a much higher average deal size on the Temenos Infinity side. While on Temenos Transact, I think we'll maintain our strong position there with more banks like Varo Bank coming on stream. Maybe there is a slightly lower value going forward.
Also, you have to consider that the sales cycle for Infinity is much shorter as it is for the implementation timeframe. For us, this is not a KPI we are specifically tracking to judge the health of the business.
Felix, did you have a question? Yeah.
Felix Ramos from Tech Capital. Two question, if I may. You talked last year about six drivers of growth. Now you just mentioned five. It appears Wealth Management slipped away. Can you update us on that? The second question, you express your confidence on your long-term targets, specifically on 15% plus licensing growth. Your guidance for 2020 appears to be a bit lower than that. You mentioned that you want to be cautious, but why do you want to be cautious? What is causing that cautiousness?
Listen, on the five, six drivers ago, that was intentional. We wanted to make sure that you were following your year-over-year. What happened is, as we've integrated the wealth part, which we were showing the sixth driver was the wealth front office, and this is now fully integrated within the Infinity platform. That's why now we classify this as part of Infinity. There is nothing. It's still the same products, however now it's fully integrated within Infinity. With that, the six we were talking before is now equivalent to five. On the guidance, listen, it's early 2020. We gave a guidance, which organically the growth is 10%-15%, and we take a cautious start to the year. As we did last year, and ultimately we delivered, again, 15%+ of like-for-like growth.
That is the way we start the year, and this is how we started this year as well.
Great. I've got three questions on the webcast here quickly. I think first one from Mark: Is it possible to upgrade from T24 to Temenos Transact without a full migration?
Yes, it is. We've done a whole range of upgrades over the years, and one we're really proud of is pre-T numbers. We took on a pre-T number and upgraded that. I think it was to R18 at the time. You can always upgrade with a minimum amount of work. There are certain pieces of the new architecture as we go forward that you'd probably have to say you've got to go to that release as a base case for doing some of the work. Probably need to check that with Tony on the exact name, but I think there are a couple of things we're putting in now where to leverage the newer offerings, you'd have to get to at least R18 or 19.
I may need to check that, but you don't need to do any more than a normal upgrade process to get you through it. It's not like a reinstall or anything like that.
Great. Second question is actually for Kanika. I don't know if we can get a mic over to Kanika there. A question on Temenos Value Benchmark. Is there any cooperation with partners? Is the program part of the partner model or just provided by Temenos alone, given that some of your partners have consulting practices?
No, this is exclusively Temenos because of the sensitive nature of the data, and it's built on that inherent trusted relationship directly with our clients. We've had to incorporate in the legal terms and conditions that the content will not be shared with any third parties, either on the client side or on our side. There was one clarification I wanted to make. I mentioned ex-strategy consultants. They're all in-house Temenos professionals sourced from strategy houses. We do this exclusively ourselves.
Great. One question here on Infinity. Which competitor do you meet the most in front office bids? Do you want to take that, or ask Brian?
Listen, probably one of the main competitor is Backbase that we see, I would say, in Europe quite a bit. I think since we bought Kony and we came up with Infinity, I think we've massively been able to strengthen our position and to show the leadership and how our offering is much stronger. I think one of the things that we discussed during the session is how we are able to offer an end-to-end solution where, for instance, those competitors would be only at the front-end side only. Clearly, the fact that we can also have the full end to end, it strengthens our proposition.
As well, just on the Infinity, I think what we did build is by far the best in class, and there is no reason why we should not be winning against anyone in the market because of the strength of the offering.
I would just add to that, obviously done a fair bit of M&A, and the Kony one was one that, because of the culture of the companies where we were based, what we wanted to achieve. What, despite it being the largest, was also the quickest in the sense of we knew exactly which components from Temenos, from Avoka, from Kony as it was, we would put together and how. We had that worked out. We couldn't do certain things before we got the sign-off, but once we had the sign-off, we had an ambitious 30-day and 90-day plan to just put the thing together because it was so clear how it was going to fit. This bit went there. That's really helped us repel the opposition quickly. It hasn't taken months to do this.
We knew exactly which technology we'd base it on, and how we'd go to market.
Great. Was there one final question from the floor before we wrap up? I think, yeah, sure. Hannes, do you want to go ahead?
Thank you. Hannes Leitner from UBS. I got a couple of questions as well. The first one is, you talked much more about front office, so Infinity product group. It feels that this is a reflection of the market. Maybe you can talk a little bit about the trends you see. When will be the core banking coming back? How is the pipeline shaping up for this year and next year?
I think we talked a lot about Infinity because it's a newer solution. I think that Transact continues to represent the largest part of our business, continues to be growing at a double digit. We continue to be very excited. We discussed quite a bit about what we are doing on the microservices side as well for Transact to find ways to continuously renovate even the largest bank. We are doing a lot on Transact, but it's true that Infinity is very exciting because it's a huge market. It's growing very fast, and we see here a very strong opportunity for us to position our solution there and also ultimately to cross-sell our back end solution. That's why I think probably we made more focus today on Infinity is because of being a newer solution for us.
Regarding the U.S. opportunity, you showed a couple of good growth rates in terms of headcount and salespeople. If I exclude the Kony contribution of that, it seems rather more that the headcount in the U.S. remained flat year-over-year. Could you talk about the opportunity there in terms of your implementation at Commerce Bank, which should, I think, go live in Q1, and then about the pipeline, and specific about the U.S.?
Recently, as I said, we look at acquisition as a way to accelerate growth. Clearly, the case of Kony was around the product side, about the talent, the people. Clearly, the fact that they had so many go-to markets, people that knew the U.S. market so well, East-West coverage, that was part of the interest of the acquisition as well. That's why very pleased that we've been able to gain so many skilled people that will sustain the growth going forward in the U.S. As I said yesterday on the call, Commerce Bank is due to go live in H1, so that's a very major milestone. Things are going extremely well. We're in testing mode right now, so I expect everything to be in line, so no surprise on that item.
The pipeline in the U.S. continues to build very nicely, both on the Infinity side, but as well on the Transact side. On the payment side, we've got initiatives on the Multifonds side. Clearly, we've got a very large portfolio. I think as we discussed, the U.S., we do see a focus on the distribution side, on the Infinity part, but definitely the core and the other products, we're also structuring our sales force to be able to address all those different products.
Thank you, Max. Look, that just leaves me to say thank you very much for joining us today. Just a quick plug, Temenos Community Forum in Madrid at the end of April to meet clients, partners, developers, all of us again, more product people, see demos. Love to have you there. If you would like to join, please just let me know. Thank you very much again.
Thank you.
Thank you.