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IBM Announces Buyout of Canada-Based Expertus Technologies

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International Business Machines Corporation (IBM - Free Report) recently acquired Expertus Technologies Inc for an undisclosed sum to boost its digital payments offerings. Post-acquisition, Expertus Technologies is now a part of IBM Global Business Services division. Earlier, the company was working with IBM Payments Center Canada.

Expertus Technologies is a fintech company engaged in providing innovative cloud-based electronic payment options to the enterprises in the financial services vertical.

The company processes more than $50 billion worth of transactions daily for over 1000 organisations that includes banks, regulatory agencies, credit unions, and corporates, added IBM.

 

Expertus Technologies is also one of the leading services bureaus of the Society for Worldwide Interbank Financial Transactions (SWIFT) in North America. The company  was founded in 2001 by Jacques Leblanc and is headquartered in Montreal, Canada.

Cloud-Based Payments Solutions Presents Abundant Prospects

Cloud-based payments options are gaining traction as these aid in fraud detection and compliance with government regulations for data transmission. Further, there has been a massive spurt in cashless and digital transactions due to the coronavirus crisis.

Per a Grand View Research Report, worldwide payment as a service (PaaS) market is expected to witness a CAGR of 16.9% between 2020 and 2027.

IBM noted that banking and financial institutions are increasing spending on revamping their payment systems. Citing a Gartner report, IBM further added that revenue opportunity in consulting and business process services market in banking and financial market is worth more than $100 billion.

IBM stated that the Expertus Technologies' buyout will help upgrade and expand its portfolio of hybrid cloud-based payments solutions by infusing innovative technologies like Artificial intelligence (AI) and data and analytics. This in turn will help financial institutions to improve payment solutions and upgrade treasury management to cater to the changing consumer preferences.

The latest buyout complements IBM’s earlier acquisition of TruQua Enterprises, LLC. In November 2020, IBM announced the acquisition of TruQua that will help IBM customers deploy SAP solutions such as S/4HANA to automate and modernize financial processes like cash flow and budgeting.

Expertus Technologies acquisition will help IBM in moving forward with its hybrid cloud strategy. The company considers hybrid cloud to be a trillion dollar revenue opportunity. IBM announced the split of its business into two separate companies as a part of its hybrid cloud strategy. The company’s legacy Managed Infrastructure Services business will be formed into a new organisation by the end of 2021.

Due to the coronavirus pandemic, business organizations are scaling back their expenditures and this is likely to affect demand for IBM’s offerings at least in the near term. Further, rising debt amid extensive restructuring activities along with stiff competition in the cloud space are added concerns for this Zacks Rank #4 (Sell) company.

Key Picks

Some better-ranked stocks in the broader technology sector are Qorvo (QRVO - Free Report) , Avnet (AVT - Free Report) and Cirrus Logic (CRUS - Free Report) . All stocks flaunt a Zacks Rank #1 (Strong Buy), at present. You can see the complete list of today’s Zacks #1 Rank stocks here.

Long-term earnings growth rate for Qorvo, Avnet and Cirrus Logic is currently pegged at 15.8% 19% and 7.1%, respectively.

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