• We gathered some brief insights from the annual Digital Collaboration and Transformation (DCTx) conference hosted by Silverlake Axis for over 200 delegates representing banks, mostly from Asia. 
• The event serves to reinforce the need to go digital in the banking sector and offers a preview of some of Silverlake Axis’s new products to existing customers. 
• Management sounded upbeat on winning new core banking contracts ahead. Maintain ADD with an unchanged Target Price of S$0.56. 

Over 200 Delegates Attended

Silverlake Axis hosted its annual Digital Collaboration and Transformation (DCT) Conference on 21-23 Sep in Penang, Malaysia. More than 270 delegates – mostly from banks using Silverlake Axis’ solutions – from 17 countries attended.

The event seeks to instill the need for banks to embrace new fintech technologies to serve the new millennial generation of consumers, as well as to re-engage Silverlake Axis’ existing customers.

Banks’ IT Spending in Malaysia to Grow to US$1.4bn by 2020

• The event was graced by Penang’s Chief Minister, Chow Kon Yeow, who touched on the banks’ need for digital transformation and fintech disruptions in the areas of payment, loan financing and advisory services in his opening keynote speech.
• The event also highlighted that tech spending from banks in Malaysia is expected to grow to US$1.4bn by 2020 (compared with ASEAN’s average of US$896m per country in 2016) according to IDC forecasts, with about 25% of the amount to be invested in new technologies.

Möbius – An Easy Way to Open a Bank Account at Your Fingertips

Möbius offers an innovative way to open a bank account or obtain loan financing via smartphone and is among some of the solution offerings by Silverlake Digital Economy (SDE) that was showcased at the event. The Möbius app utilises phone cameras and cloud platform for ID verification and fraud detection during the account opening process and works with Silverlake Axis’ core banking solutions.

Silverlake Axis acquired Silverlake Digital Economy (SDE) in Apr this year.

Merimen Highlights Healthy Growth Prospects

We also gained a better understanding of TrueSight analytics and insurance processing business from Silverlake Axis’ subsidiary Merimen at the event. 

TrueSight employs data analytics to offer insurers better cost efficiency and potential fraud detection. Merimen believes it is the market leader for general insurance claims in Singapore, Malaysia and Indonesia and now looks to the rest of ASEAN and Hong Kong for growth from new client acquisitions.

Positive Key Takeaways From DCT Conference

We gathered that Silverlake Axis’ existing customers (mainly banks) continue to expand their service offerings to cater to customers’ rising online banking needs and would typically look to Silverlake Axis for solutions that could integrate with their core banking systems. Management also sounded an upbeat tone on winning new contracts for core banking upgrades/replacements that could act as catalysts in FY19F.

Maintain ADD with unchanged DCF-based Target Price of S$0.56.

Downside risk include delays in project executions.

Source: CGS-CIMB Research - 26 Sep 2018