Crealogix – a digital engagement software provider from Zurich

With fintechs and digital banks (e.g. N26, Klarna, Revolut, etc.) gaining in influence, traditional banks are faced with the ongoing threat of losing customers, in particular younger customers, to their digital counterparts. As a result, established banks are keen to digitally transform, implementing digital services and features that help improve the retention of existing customers as well as the acquisition of new ones. This is also reflected by PAC’s annual global CxO survey, in which 36% of the participants (n=334) from the banking industry said they intended to spend more on digital transformation with respect to the customer experience (CX) in 2021 and 2022.

This is where Crealogix intends to come into play as a partner for banks and wealth management companies to improve customer engagement, increase client loyalty, and attract new clients via digital services. Crealogix, headquartered in Zurich, is a provider of digital banking solutions and platforms. Today, 25 years after its foundation, the company employs approx. 660 people and has become an international player in front-end digitization for banks and wealth management firms. Back in 2011, Crealogix started expanding into new markets, first to Germany, then to other important financial hubs, such as London, Singapore, and Riyadh (Saudi Arabia). In Europe, they also made several acquisitions which helped the company to increase its market share. Today, Crealogix generates more than 60% of its revenues outside its homemarket Switzerland, with the Middle East & Asia region (e.g. Thailand, Malaysia, Indonesia) showing the greatest growth potential. From a global perspective, Crealogix claims to have about 500 customers worldwide, including tier-1 banks such as DKB, Julius Bär, Saudi National Bank (SNB), and Bangkok Bank.

With its key ‘Crealogix Digital Hub‘ offering, the company provides banks with the appropriate technology for creating their own open ecosystem. By doing this, banks assume the role of a service orchestrator by bringing clients, external fintechs, lifestyle companies, payment service providers, and other providers together on a unified digital platform. The offering is basically a front-end environment which is decoupled from a bank’s core banking system and built upon different layers: an online banking layer (e.g. for onboarding, risk profiling, proposals), a social layer (e.g. client communications with advisor), a marketing layer (e.g. cross-selling and upselling, displaying recommendations and offers), and a third-party layer. According to Crealogix, using a front-end which is detached from the sometimes outdated back-end architecture can help banks develop and launch products faster, better engage with clients, and consequently increase customer loyalty.

The offering is available as on-premises or SaaS solution, with modules based on the different segments of financial services (wealth management, retail banking, and, more recently state development banks). However, Crealogix also uses its standardized offering for further customizations, especially when it comes to large, global financial institutions. For instance, in July 2020, Crealogix managed to win a ten-year SaaS contract to develop and maintain a shared customer portal solution for a consortium of seven state development banks (Förderbanken) in Germany, based on its core product. Crealogix has invested into products for state development banks as there is significant market potential with more than 250 state development banks in Europe. In addition to rolling out the portal solution, Crealogix will be overseeing the further development of the portal over a ten-year period.

All in all, Crealogix’s goal is to become the leading global provider of digital banking software as a service. In FY 2021, which ended in June 2021, Crealogix actually managed to win some new customers. According to Daniel Bader, CFO of Crealogix, the company expects overall growth to be in the same range as the previous year, despite the switch of the licensing model from initial licenses to SaaS (software as a service). Also, the outlook for FY 22/23 of double-digit EBITDA margins and a recurring revenue share of more than 60% was confirmed at the analyst call for the 20/21 year-end results. However, in our view, in order to achieve this ambitious goal, it is crucial for Crealogix to continue entering important financial hubs, including those in the Americas. However, competition from companies such as Backbase and global (core) banking providers such as Temenos and Infosys (Finacle) is fierce, as these continue to develop their front-end systems, decoupling them from the back-end components of their core banking systems. When competing with core banking providers, Crealogix should maintain its technological lead, emphasize its agnostic positioning and the integration capability of the Digital Hub, and focus on a target group below the tier-1 banks.