With disruption as the new normal, companies need to use their long-term vision as their North Star to navigate through uncertain times. Silverlake Axis 5CP has enjoyed the benefits of doing so. By focusing on its vision of becoming Asia Pacific’s largest digital economy solutions company, Silverlake Axis has grown from its modest beginnings back in 1989 to become a multinational firm with record revenue of RM765.9 million ($220.2 million) for FY2023 ended June.
Silverlake Axis also won the Best Return on Equity award in the banking & investment services, collective investments, fintech & infrastructure, and insurance category of The Edge Singapore’s Centurion Club. Its weighted ROE was 23.8% from FY2020 to FY2022, which was the period under consideration for this year’s awards.
“We’ve had two years of stable growing revenue, which is primarily built on the back of our core banking business. Additionally, our insurance and retail businesses help us to enter new markets, develop new solutions and diversify our revenue sources,” says Cassandra Goh, Silverlake Axis’ executive director and deputy executive chairman, in an interview with The Edge Singapore.
She continues: “What differentiates us from competitors is our strong domain knowledge and local presence. We’ve built up a lot of domain knowledge in banking across Southeast Asia for over 30 years by helping banking customers use tailor-made solutions to keep pace with change. Moreover, we take a mathematical approach in how we work to ensure that our business is sustainable. By harnessing mathematics to develop and refine products, we can maximise the potential of technology to solve real-world problems across multiple industries and markets.”
Focusing on the core
According to market research firm International Data Corp, 60% of banks in the Asia Pacific region are expected to make significant changes to their core banking systems in the next three years. By shifting to digital core banking systems, banks will be able to free up technical debt, respond to changing regulations faster, and leverage the ecosystem model of banking. They can also develop innovations faster and deliver more customer-centric experiences to better compete with digital-native banks.
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The good news is that 40% of the top 20 largest banks in Southeast Asia are already using Silverlake Axis’ digital core banking solutions.
Goh shares: “We’re helping banks modernise their core banking systems so that they can achieve short-term goals, pivot to customer needs by launching new products, offer customisation and increase speed-to-market, as well as ensure those systems are stable and reliable even in the long run. That way, they can focus on their core business such as growing their loan books while having the flexibility to capture new opportunities that may arise from hype or emerging technologies like artificial intelligence. This is in line with Sun Tzu’s Art of War teachings.”
However, she notes that the traditional rip-and-replace approach to modernising core banking systems is highly risky, and banks cannot afford service disruption. It is with this understanding that Silverlake Axis designed its end-to-end banking platform Möbius to co-exist with legacy core banking systems, allowing banks to migrate to the new platform progressively. Möbius supports all aspects of commercial banking from the access point via its digital bank channels all the way through various product orchestrations (including onboarding, origination, and product management) to customer accounting and product processing.
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For example, Siam Commercial Bank is using Möbius in AutoX, its subsidiary offering micro-loans. AutoX uses the Möbius Digital Core and Möbius Open Banking Platform to handle end-to-end processing — from application, loan origination, digital onboarding, and disbursement — using a cloud-native approach deployed outside its legacy core. It can therefore automate the loan cycle, which can be completed in 20 minutes and does not require any face-to-face contact with the customer. This project took less than 10 months to be remotely completed (from inception to soft launch) during the pandemic.
Beyond banks
Besides banks, Silverlake Axis is also helping organisations from other industries to transform and thrive in the digital economy. It serves more than 400 enterprises in 70 countries across Europe, Africa, the Indian subcontinent, the Middle East, Asia, and the Americas.
The insurance industry holds significant growth opportunities for Silverlake Axis. Goh explains: “The insurance industry is still very much reliant on paperwork and manual processes so there’s a lot of interest from insurance companies to digitalise their operations. Through our insurance tech arm Fermion, we can help them build more interconnected insurance ecosystems too.”
Fermion can connect insurers to banks and financial institutions so that insurance products can be seamlessly embedded into the customer journey. Providing personalised, needs-based contextual experiences this way will help insurers find new sources of revenue through the ecosystem and remain competitive in the digital economy. Currently, Fermion has more than 12,000 ecosystem partners across 29 markets globally.
Silverlake Axis’ efforts to diversify its revenue channels have been fruitful. Its total recurring revenue — comprising maintenance and enhancement services, insurance ecosystem transactions and services, and retail transactions processing — increased 5% from RM540.6 million to RM569.4 million in FY2023. This recurring revenue contributed approximately 75% of total group revenue and has consistently remained the key revenue driver for the group.
Moving towards the cloud
Regardless of industry, digitally transforming an organisation is a continuous journey due to tech advancements and the ever-changing demands from customers and the business. Committed to being a long-term digital transformation partner, Silverlake Axis will keep on enhancing its solutions and developing new ones that can help its customers optimise their operations and grow their business.
Delivering more cloud-native solutions like Möbius will be one of Silverlake Axis’ priorities moving forward. Goh says: “Cloud is one of the avenues of our business growth. Our clients are increasingly looking at cloud-based solutions to improve business and operational efficiency. We are also seeing more smaller banks willing to scale up with the cloud. Besides that, some organisations choose to focus on their core business and outsource parts of their back-end IT. So, managed services is also a big focus area for us.”
The move towards offering more cloud-based and managed services is supported by the company’s financial results. RM96.8 million or 13% of total group revenue was delivered via cloud computing in FY2023, 2% higher than RM95.3 million recorded in the previous year. Additionally, revenue from software-as-a-service (SaaS) grew 37% to RM52.2 million, constituting 7% of the total group revenue in FY2023.
As for maintenance revenue, it increased 5% to RM257.3 million. Silverlake Axis expects this revenue segment to grow as new maintenance contracts and support will commence when current projects are completed and successfully handed over to the clients. Meanwhile, enhancement services revenue increased 1% to RM255.8 million in FY2023.
Cloud Link is among the company’s new solutions, which Goh says will enable organisations to successfully leverage emerging technologies while ensuring the reliability of their IT systems.
“Cloud Link provides the linkage between the open, digital world to the old world of say your stable core banking systems. It can help manage the life cycle and communication between microservices to enable scalability and fault tolerance. It can also orchestrate and manage application programming interfaces [APIs] so that when an organisation, for instance, plugs in AI models, it has visibility on how the models are accessing data and what data they are using.”
Transforming to sustain success
Similar to its customers, Silverlake Axis is transforming itself to keep pace with changes and continue delivering value. This includes changing its organisational structure to be more “anti-fragile” by organising its teams around specific domains of knowledge instead of products. “We want to have groups of people who are hyper-specialised in understanding the loans market, the credit card market and so on, so that we can better offer our knowledge and solutions in a more consultative way,” says Goh.
She adds that the company is looking to leverage new technologies to improve internal processes and get employees familiarised with them. For instance, generative AI may be used to handle routine tasks in coding to enhance a software developer’s efficiency.
In terms of product development, Silverlake Axis is building solutions based on new frameworks like microservices and ensuring those solutions are open in nature (or can be connected to third-party services) so that customers can be agile and easily adapt to changes.
Having the right talent is also key to business success. Goh shares that Silverlake Axis is planning to launch an academy to train its employees with the necessary skills such as banking domain knowledge or Java skill sets.
This is in addition to its recent partnership with Forward School, a skills school based in Penang, Malaysia, to foster the next generation of technical talent and build a sustainable talent pipeline for itself and the region.
Goh believes these transformation efforts will help secure Silverlake Axis’ growth in the region and beyond. She says: “These initiatives will empower us to solve customers’ problems in a better and more creative way instead of simply selling products. This leads to a win-win situation for both sides — for us, it helps generate repeated income.”
She adds that the company is keen to further expand into growth markets within Southeast Asia, namely Indonesia, Thailand and Vietnam. It is also putting in resources to solidify its position in the Middle East.
