When Goh Peng Ooi founded the software company Silverlake Axis over three decades ago in 1989, he knew he had to find an opportunity for a breakthrough. Goh’s product, developed on the cusp of the technological revolution of the 90s, was prime for adoption; he only needed someone to take a chance on the business.
It wasn’t until the then-chairman of United Overseas Bank (UOB), the late Wee Chow Yaw, hired the company for a total technological revamp that Silverlake Axis began to make headway. Today, the SGX-listed company sells its proprietary software to major financial institutions like banks, insurance companies, payment firms, and retail and logistics groups. Silverlake Axis says it serves over 40% of the 20 largest banks in Southeast Asia, including UOB and Siam Bank.
Yet, as the digital world continues to evolve at a lightning-fast pace, Silverlake Axis once again finds itself at an inflection point: adapt or perish. This time, Goh’s daughter, Cassandra Goh, will lead the charge.
The younger Goh, the new CEO of Silverlake Axis, already knows that her challenges are different from those her father faced. In less than a decade, the digital world has moved from cloud computing to artificial intelligence to quantum computing at breakneck speed.
Silverlake Axis cannot survive another 30 years just by being a core banking software business because the banking landscape has changed, says the younger Goh in an interview with The Edge Singapore. “That’s something our board leaders have [anticipated] 10 years ago and we’ve been slowly reorganising ourselves to be a financial institution solutions provider,” she continues.
A look at the group’s most recent results would not tell the story of a company that needs to overhaul its business to adapt to everchanging times. In its 9MFY2024 results ended March 31, Silverlake Axis saw a total recurring revenue growth of 8% y-o-y to RM449.5 million ($133.21 million). According to the group, this total recurring revenue is the group’s best indicator of earnings visibility, as it accounts for 75% of the group revenue, including maintenance and enhancement services, insurance ecosystem transactions and services, and retail transaction processing.
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In addition, revenue across its other business segments grew — software project services grew 44% y-o-y. In comparison, cloud computing-based revenue and Software-as-a-Service (SaaS) revenue increased 54% to RM97.3 million and RM60.3 million respectively. However, net profit for 9MFY2024 fell by 16% y-o-y to RM111.9 million due to higher operating costs.
The group also closed contracts worth RM98.7 million in 3Q2024 and expects more deals to close in the coming quarters.
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We need to always be innovative and sell more new licences and new products that help us build the base of our maintenance revenue, says Goh. Photo: Silverlake Axis
Goh is not about to take the hard work of her predecessors for granted. A large part of the recurring revenue is from maintenance services, an indication of satisfied customers. This recurring revenue growth constantly indicates to Goh that Silverlake Axis has done “a very good job” maintaining its relationship with its customers and meeting their needs.
“So it’s stable, but we shouldn’t just rely on the goose that lays the golden eggs. It’s not enough to carry us to the future,” she says. “We always need to be innovative and sell more licences and new products that help us build the base of our maintenance revenue.”
Growing non-recurring revenue
Silverlake Axis’s non-recurring revenue for 9MFY2024 came in at RM147.1 million, comparable to the same period a year before, which is one aspect of the business that the new CEO is trying to grow. These include software licensing, software project services (professional services) and the Silverlake Axise of system software and hardware products.
At the core of it, problems in banking have not changed much. Goh says many banks still grapple with cybersecurity, fraud, customer satisfaction, and customer retention, which have been key challenges over the years.
The opportunity for Silverlake Axis lies in how they can provide new software project services for these firms to deploy to stand out among their competitors. These include using open tools to develop programmes on the cloud, better machine learning applications for fraud detection and more efficient call centres.
Many of Silverlake Axis’s clients are also at different stages of the banking lifecycle. Some are trying to completely modernise their core banking systems, while others are trying to have “quick wins” on the front end, which refer to the user interfaces that their clients interact with, giving the software company even more opportunities to craft tailored solutions.
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Now, Silverlake Axis provides 90% of the technology and partners with external technological companies to provide the remaining 10% “last mile” solution for its customers to deploy, a strategy that Goh has used to avoid “overly investing” in their technology stack.
So far, the journey in growing this part of the business has been nonlinear. In FY2023, Silverlake Axis recorded a 12% y-o-y decrease in revenue from the software licensing segment due to the bank’s delayed IT transformation and digitisation efforts. For 9MFY2024, the group saw this revenue segment declining by 40% y-o-y to RM38.0 million, which Silverlake Axis attributes to having one large software licensing transaction from an Indonesian client last year.
Instead, to compensate for that “large ticket licence booking” in the prior year, Silverlake Axis says that it has had major contributions from professional services from key core banking projects secured in the current and previous financial years — namely, new Möbious, SIBS and Symmetri core banking installations in Malaysia, Thailand, Indonesia and the Middle East; and digital identity and security software project implementation in the Middle East and Africa.
“The banking software industry in Southeast Asia and the Asia region is navigating through a period of cautious but strategic investments, with a clear eye on not just weathering current economic uncertainties but also laying a solid foundation for future growth,” explains the firm in its 9MFY2024 report.
“We continue to craft strategies that not only ensure continued investment in new technology but also maintain relevance in the market and foster a win-win relationship with clients,” it continues.
Venturing beyond banking
Goh is also looking to grow its insurance and retail businesses. Having gained a foothold in the insurance claims business, Silverlake Axis is now looking adjacent to life and medical insurance to help its insurance clients grow the size of their insurance portfolio under them.
On the retail side of the business, Silverlake Axis has started providing inventory management as a solution for e-commerce players. Her next goal is to better integrate her portfolio of customers with the services they each provide. For example, Silverlake Axis’s insurance could cross-sell cyber insurance or loans to enterprises on the platform.
To Goh, this is a key unique selling point of Silverlake Axis and its ability to localise solutions to each market they serve. “A lot of international players have a big box product, but we might know the market needs here better,” she says.
Just this July 1, Goh has taken over Silverlake Axis as CEO, a few months ahead of the originally announced Jan 1, 2025. Goh was last named the group’s deputy executive chairman on Oct 27, 2023.
Her focus moving forward is ensuring that the company can assemble itself and regroup to pool its domain knowledge and grow new business lines. Goh says tapping into artificial intelligence is only good if the knowledge base is firm and the group has organised itself.
Two personal philosophies remain at the top of Goh’s mind when leading the business. The first is to know how to declutter.
“If you’re looking at a business that has been going on for 30 years, we would have built up many processes or ways of engaging customers. To change and become more efficient, we have to let things go,” she explains.
The second is to use humour. “When we’re trying to transform a company, we need a little bit of storytelling and humour to let everybody understand why we want to make the changes. And I do think that cultural change requires a little bit of human EQ,” she ends.
