Cognotec Ltd has taken a $20m venture capital boost to fund the worldwide roll-out of its hosted internet banking service. The Dublin, Ireland firm claims that banks who use its service can save up to 80% of their dealing room charges. The investor is Japanese internet investment firm Softbank Corp, which has taken a 10% stake, joining Warburg Pincus & Co, which paid $30m for a 22.5% stake in July 1998.
CognotecÆs Autodeal Lite service automates the dealing process. Traditionally, says Cognotec chairman Brian Maccabi, eight or nine pairs of hands ætouchÆ the deal, from the sales personnel talking to the client, through credit and risk assessment, back-office processing, settlement and accounting procedures and confirmation of funds transfer. Cognotec claims it can reduce this to either one or no people, with obvious savings.
Privately-owned Cognotec has yearly revenue of approximately $20m and has offices in New York, Chicago, San Francisco, London, Frankfurt, Hong Kong, Tokyo, Sydney and Dublin to install systems in a direct sales model. The companyÆs revenue is expected to rise, says Maccabi north of $50m inside three years. He says that firms funded by Softbank, Japan’s top investor in internet companies, usually opt for rapid flotations, and he expects an initial public offering inside 18 months either on Nasdaq or the stock exchanges in London or Tokyo.
CognotecÆs competition is likely to come from Reuters, which has entered the market as a financial information supplier and has a global network already in place. Maccabi, however, dismisses the media groupÆs chances, saying that Cognotec already has 20 banks signed up and dealing online, with more sophisticated systems. Autodeal Lite costs $100,000 for an initial installation and Cognotec charges between $5 and $15 per transaction.
