Andreas Andreades – Chairman’s Statement

It is with great pleasure that we present our Annual Report for 2020 to our shareholders.

With the global pandemic still raging around the world, we are looking back at 2020 with a degree of sadness for those that suffered directly from the pandemic, those who lost loved ones and for their families. The economic consequences are still to be fully understood, with the social and psychological impact on humanity even less discussed or addressed.

On a business level, given the level of disruption, one has to feel a sense of pride for the way Temenos and Temenosians in particular rose to the challenges posed by the pandemic. Within a few days of the pandemic accelerating last March, Temenos was able to move to a work from home model around the world. We were able to seamlessly support our clients, over 3,000 banks around the world, from our kitchen tables, homes offices and bedrooms. As borders closed we were able to continue implementing our products remotely and deliver successful go lives throughout 2020, as if it was business as usual. We were able to continue building our products without disruption or loss of productivity and we were able to continue offering our solutions to new and existing clients alike in a remarkable shift in the way we have operated for decades. Within a few weeks we were able to articulate propositions to our clients to help them be part of the solution to Covid-19 rather than part of the problem, whether it was in distributing Covid-19 relief funds or offering other support to their customers.

Temenosians rose to the challenge by participating in a solidarity effort, forgoing part of their salaries and other benefits for most of 2020 to ensure we have the maximum opportunity to deliver as seamless a support to our clients as possible. Management agreed to take voluntary pay reductions of up to 50% of their base compensation to achieve the same objective.

And finally, we were able to weather the brutal impact of the pandemic on new business during the first six months of the year as banks diverted their attention to immediate and very pressing business continuity issues, and finish the year strongly with a return back to a new normal.

Covid-19 has accelerated trends that existed prior to the pandemic including the digitization of banking, the use of AI in banking, the turn to Software-as-a-Service (SaaS) – these are all trends that pre-existed Covid-19. Covid-19 has caused a significant acceleration of these trends and as we are coming out of the pandemic, the opportunity for Temenos is fully intact. Banks are faced with the imperatives to make their operations more efficient, provide returns that are higher than their cost of capital (which is not the case for up to 70% of the world’s banks today), digitally service an ever more demanding and tech-savvy client base as well as satisfy regulators on security, compliance and business continuity.

We therefore have confidence that our role in shaping the world of banking software and, by extension, banking itself for the 21st century will continue to grow.

The total market for our products continues to grow at high single digits with growth coming from all aspects of the business, digital as well as core, wealth, the funds and the payments business. Cloud and SaaS is gaining significant traction in financial services in both mature and emerging markets as banks appreciate the efficiencies that can be achieved through cloud deployment and regulators are convinced about the security and availability of cloud networks. Temenos has been a leader in offering our products in the cloud with our first deployments taking place as early as 2011, giving us the credibility to lead the market in this respect. We are very excited by the spectacular growth we see in this segment. Let me just say that in five years of growth in our cloud and SaaS business we have achieved an equivalent size business that took us 19 years to grow under the traditional on-premise model.

Implementation and adoption of on-premise software is expected to also continue growing based on the low penetration of third party software within banks.

Temenos is in an excellent position to service both models. We build and support a single product, a single code set that we run for our SaaS clients and which our on-premise clients run for themselves either using traditional technology stacks or cloud deployments. This unparalleled architectural advantage is what propels us to create a sustainable, profitable and growing proposition for the years to come. Our size gives us the opportunity to be able to afford the investments required to be successful in a fast changing and demanding market while our state-of-theart modern technology, with more than 27 years of business capability built in our model banks, is the cornerstones of our winning market presence and continuing market share gains.

Temenos has successfully navigated different crises in our 27-year history, whether this was the 2001 dot-com market collapse, the 2008 financial crisis or the 2011-2013 Euro crisis. Our culture, unrelenting focus on what counts, and our long term investment mindset has meant that we always come out of each crisis stronger than before. This is the case with Covid-19. Our products are well invested and our people fully focused with a unique set of values and a sense of purpose which has propelled us to success all these years. I often talk about these in my addresses to shareholders and I will do so today, because in Temenos we passionately believe that this is a key differentiator.

Values and sense of purpose

More so than before Covid-19, business models are changing globally while at the same time our roles as business leaders have been transforming. With digital technology minimizing the distance between businesses and their stakeholders and new generations questioning the ‘traditional’ ways, businesses must revisit their purpose, rethink how they deliver value to their stakeholders, shifting from mass production to personalization, and — more than ever — operate with responsibility, integrity, transparency and the highest ethical standards.

Covid-19 has in many ways acted to strengthen our relationships with our stakeholders. We have navigated the pandemic together, whether it was within Temenos amongst us Temenosians or with our clients and partners. Out of adversity came solidarity and a common sense of purpose which we carry together in the new normal. Maintaining the trust of our stakeholders and remaining accountable to them is critical to us, especially at difficult times.

It took us more than 27 years to build Temenos as we know it today and we have done so with a strong sense of purpose, guided by our Temenos culture and values. We believe that this is our true competitive advantage. We call this Temenosity and we celebrate Temenosity as the cornerstone of our success. Our business is about building trust and strong relationships with all our stakeholders, our clients, our Partners, our shareholders and between us Temenosians. Responsibility is in our culture. Our passion for innovation and for seeing things differently will ensure that we continue to develop winning products for our clients. Our determination, energy, enthusiasm, resolve, integrity, commitment, people focus and never-give-up attitude will ensure we remain the leading banking software company and overcome any challenges that may lie ahead of us, like we have done in the past.