One of the world’s oldest still-active software companies originated in Omaha and has its biggest office here.
Today, its customers are in 90 countries — Brazil, Canada, Chile, China, Columbia, Great Britain, India, Indonesia, Italy, Kenya, Peru, Saudi Arabia, South Korea, Taiwan, Thailand, Uruguay and Venezuela, to name a few — as well as the United States.
It’s ACI Worldwide Inc., whose software handles 90 billion consumer transactions each year and processes $12 trillion in wire transfers per day.
Yes, that’s per day.
ACI was founded in 1975, one of thousands of software companies started in the 1970s, but few have survived 35 years as ongoing enterprises.
It all started with Nebraskans’ penchant for automated teller machines, which became widespread because state laws restricted the number of branch offices banks could open. So banks added more machines, and those machines needed software to function properly.
ACI’s founders came along just at the right time.
The company’s software also helped create systems for debit cards in the 1990s, changing the way people buy things.
“It was a slow go, and then it took off,” said Jeff Hale, senior vice president for global sales at the Omaha office. “It’s pretty clear that the growth in electronic payments will continue for a long time yet.”
The company’s future fortunes still are tied to the burgeoning electronic payments industry, which is beginning to switch to “smart card” technology that will let consumers and companies conduct even more of their business through computer-savvy plastic cards.
In the United States, ACI also could get a boost from new federal financial regulations, including the law’s emphasis on preventing fraud, Hale said.
“A lot of clients continue to look for the latest and greatest systems to reduce payment fraud. It goes back to the founding of our company.”
Fraud was a concern even in the early days of financial software, when ACI, then Applied Communications Inc., made one of its key early sales, to the New York Stock Exchange. The integrity of the trading system was vital, and ACI’s software delivered that sort of security.
ACI’s products spoke for themselves, even overcoming the time company founder James Cody went on a sales call to a large Chicago bank and realized he had packed one brown shoe and one black shoe.
“I figured that they had seen plenty of slick salesmen, and that they would think that nobody would have the nerve to show up dressed like this and lie to them,” Cody would say later.
By tying the software to “fault-tolerant” computers made by Tandem Corp. — now part of Hewlett-Packard — ACI’s software became standard for large segments of the industry.
In the highly fragmented world of financial software, ACI occupies a leading position in the electronic payments sector, said Kurt Strawhecker of Omaha, whose company consults for the payments industry.
“They’re the big dog,” Strawhecker said.
Hale said the company has about a 5 percent share of the global electronic payments software market and more in some countries. For example, its share in the United Kingdom is approximately 10 or 15 percent, he said.
“ACI is the largest provider of software that banks and retailers and processors deploy in-house,” he said.
While the U.S. banking system is based on thousands of local banks, with some big national and regional players, most other developed countries are dominated by a few national banks.
They are prime candidates for large, sophisticated networks for payments and other financial deals. ACI’s software is designed to link computers so that the networks work smoothly and quickly while preventing fraud.
In recent years, Hale said, developing countries such as China have become an important market for ACI because their economies and financial systems are networking rapidly amid growing consumer demand.
In all, Hale said, about 60 percent of the company’s annual revenue of $400 million comes from outside the United States.
“You’ve got a large group of people in Omaha, yet for the most part they serve an international customer base,” he said. “You can easily find ourself in Singapore or China or Europe or Latin America. It’s pretty interesting for people to experience that, yet live in Omaha.”
Demand for ACI’s software may grow as changes in the world’s banking systems take place.
“A lot of it depends on what goes on in different parts of the world,” Hale said. “Until recently, the U.S. market has had a fairly benign regulatory environment for banks.”
Rules changes cause banks to revise their payment systems, and that’s ACI’s specialty.
Rule-making for the new U.S. financial regulations is just getting started, which Hale said likely will result in a “fairly tumultuous environment” for ACI’s main customers — large banks, large retailers and large payment processors, such as Omaha’s First Data Corp.
ACI will offer software that meets the new government requirements, he said, as it has in recent years in Europe.
“That creates a lot of change throughout the payment environment. That will create more opportunities for us, to be more efficient and supply more secure payment systems.”
Other factors affecting ACI clients: Profits are being squeezed by the recent recession and related financial problems; and lawmakers are enacting new rules for merchants’ processing procedures.
“One response from banks and from Visa, MasterCard and other payment systems is to move toward more efficient infrastructure, and that usually lends itself toward people like us,” Hale said. “We have the most efficient systems.”
Another big line of business for the past 35 years are wire transfers and high-value payments, including those made across international boundaries and between different currencies. Tens of millions of dollars can pass through in a single transaction.
ACI has grown partly through acquisition, typically by working with another software company for a time and then making a friendly purchase offer.
“That’s not a bad model because it helps us get into a country without overinvesting and finding out we can’t compete,” Hale said.
“There is no end in sight as people look to leverage technology to make payments more efficient, more reliable and more secure. We’re in the middle of that highway as far as I can see.
Source:-http://www.omaha.com/article/20101128/MONEY/711289949
