Kuwait-based International Turnkey Systems (ITS), owned by Kuwait Finance House, appears to be for sale. A number of discussions with main rival in the Islamic core banking systems sector, Path Solutions, have been held, but with no agreement, at least to date.

Kuwait Towers

A ‘turnaround’ programme was instigated at ITS in April 2013, along with an overhaul of the supplier’s senior management. It was intended to ‘put the company back on track’, according to new CEO, John Loomis, and to make it agile, profitable and focused on becoming a ‘cutting-edge IT and business solutions provider’. However, Loomis, who had worked at a number of banks in the region, left in early 2014 after less than a year. ITS’s majority parent, Kuwait Finance House (KFH), appointed a new CEO from within the group.

It seems that KFH decided some time ago that ITS was no longer strategic and started to look to offload it. ITS has a core banking suite called Ethix which is mainly aimed at the Islamic banking sector. For many years, ITS distributed the Phoenix core system in the region, with this now owned by US supplier, D+H Corporation. Ethix originates from the Phoenix system.

New-name sales of Ethix have dwindled in recent years. In 2014, the vendor recorded four new takers of Ethix, in 2013 it had one, and in 2012 it had three.

A source on the ground claims that the takeover of ITS by Path Solutions came close a while back after several rounds of talks and, while it seems that the discussions have ended, such a consolidation might still be on the cards. ITS has responded stating: ‘we deny and reject any and all takeover discussions’ with Path Solutions.

Path Solutions is the market leader in the Islamic banking systems sector and, despite a relatively quiet time of things in terms of new-name deals last year (four new customers), it has been a consistent performer with its iMAL core banking system over the years (ten new-name wins in 2013, eleven in 2012). Whilst some conventional banking vendors have made inroads into this market by adapting their systems to Shari’ah rules, Path Solutions’ offering was built from the ground up specifically to cater for Islamic banks.

ITS has 50 or so sites for Ethix, nearly all in its home region. KFH itself is a multi-site user but it has selected other systems from time to time (it is obliged to consider, but not necessarily select, offerings from its subsidiary) and, indeed, has iMAL in Kuwait, alongside ITS’s investment module of Ethix.

by IBS Intelligence