Yesterday, Accenture plc (ACN) clinched a deal with Banco Bilbao Vizcaya Argentaria, S.A. (BBVA). Per the terms of the deal, Accenture will provide its services and support to uphold and enhance the existing core banking system ('CBS') at BBVA's Chile subsidiary. No financial terms of the deal has been divulged.
Banco Bilbao Vizcaya Argentaria provides financial services, which include retail banking, asset management, private banking and wholesale banking businesses across the world.
The CBS that is currently under use was implemented by Accenture. In April 2011, BBVA selected Accenture's Alnova Financial Solutions to employ a CBS across its subsidiaries. Accenture's Alnova Financial Solutions is a core banking solution, which was developed by its subsidiary Alnova Technologies Corp. The solution helped BBVA in delivering real-time bank processing capabilities and supporting increased transaction volumes while streamlining and enhancing the bank's risk management functions.
Accenture's core banking solution has already been used by BBVA in its operating units spread across nine countries. This recent agreement furthers the relationship and we believe that the need for CBS will increase the demand for Accenture's banking solution.
Core banking systems form the backbone of the information technology (IT) infrastructures at banks. The system integrates banking services through a group of networked bank branches. Bank customers can access their funds from any of the member branch offices. They can also make simple transactions such as the opening and transferring of deposit accounts, processing loans, mortgages and payments. Banks make these services available across multiple channels like ATMs, Internet banking and branches.
Accenture's CBS solution is already being used by 200+ financial institutions. The solution's increasing demand has attracted recognition from Celent, an industry analyst firm. The firm conferred the 'XCelent Functionality Award' to Accenture for its contribution toward the successful implementation of CBS within large and midsized institutions.
Accenture's comprehensive service offerings have made it a key IT service provider. A large product and service base has also provided the company a top spot in the market. Accenture has regularly won deals from all industrial sectors as well as the federal vertical.
Though stiff competition from IBM Corp. (IBM) and significant European exposure are concerns, we have a positive view on the stock given string synergies from its recent acquisitions and deal wins.
Currently, Accenture has a Zacks #2 Rank, implying a short-term Buy rating.