One should not expect that Netcompany’s acquisition of the data center SDC will significantly impact competition among the country’s data centers in the short term. However, in the long run, competitors BEC and Bankdata should be keeping an eye on developments. That is the assessment of Robert Bo Nielsen, CEO of Thursday Consulting, who has spent years advising clients in the financial sector. "In the very short and medium term, Netcompany will focus on modernizing SDC and turning it into a profitable business. This won’t change the overall strategic landscape, but it is a significant change for one of the key players — and it will have an impact in the long run," says Robert Bo Jensen. Banking researcher and senior advisor at Aalborg University, Lars Krull, also foresees increased competition among the data centers. "Netcompany hasn’t just pulled a billion out of the coffers to acquire the current business of SDC. It’s about leveraging that platform and customer base for something bigger over time and attracting more customers. This might finally unlock the almost stagnant situation we’ve been seeing," says Lars Krull. When Lars Krull refers to a "stagnant situation," he is pointing to the fact that Danish banks typically seek merger partners among other banks or savings institutions that are part of the same data center. This is because data centers impose so-called exit costs, making it more expensive to leave a collaboration. At the same time, migrating customers from different IT systems is costly. If a bank wants to merge with a financial institution using a different data center, it must account for higher expenses to make the deal feasible. Make or Break According to Robert Bo Jensen, Netcompany’s acquisition of SDC is primarily a strategic move to gain access to a sector the company has long wanted to enter. "The acquisition also accelerates Netcompany’s entry into the financial sector, as the employees and systems come with the deal. It would have been a much longer process if Netcompany had to develop new core systems on its own," says Robert. "I believe Netcompany has a much bigger vision, which likely includes Sweden and Norway and the opportunity to offer services to larger Danish banks as partial solutions." Netcompany has previously focused on the insurance sector, delivering systems such as an AI-powered chatbot. In mid-January, Netcompany also signed a billion-kroner deal with the pension fund Forca. All these steps move the Danish IT company further into the financial scene — though not into the banking sector. Until now. This opens up new opportunities for the company in the Nordic region. "The real game-changer will be in the Norwegian market, where there’s more business to pursue. There will now be two commercial players — IT companies, not bank-owned data centers," says Robert Bo Jensen, referring to SDC’s main competitor in Norway, Tietoevry. For this reason, he does not expect significant immediate changes in the Danish data center market. "Netcompany has many opportunities with this acquisition, but I don’t think the Danish market is the primary focus at first — other than generating revenue and getting customers on the books by acquiring SDC," says Robert Bo Jensen. However, he acknowledges that there is some risk involved in Netcompany’s new ventures. "It’s make or break for their success with these two major projects — Forca and now SDC," he says. The significant change, according to Robert Bo Jensen, is not that the acquisition will pave the way for more mergers and acquisitions in the banking sector to boost revenue but that SDC has the potential to become a stronger player — particularly in Norway. Potential Discounts Lars Krull believes that the fact that Netcompany is a commercial provider could be a game-changer, altering the dynamics for mergers. "A commercial provider opens the door to a player that can set new market standards because they need to do something to attract banks to their platform," says Lars Krull. In his view, this means increased competition, which could come in the form of special offers for switching to Netcompany’s platform or changes to the current exit cost structures. "The problem for bank-owned data centers is that their owners are fundamentally competitors. Therefore, it’s difficult to offer discounts or similar benefits to new potential partners because it would be a cost for others in the consortium. This is possible for a commercial company, which could make switching more attractive," says Lars Krull. However, Robert Bo Nielsen from Thursday Consulting does not believe this will be Netcompany’s chosen path for acquiring more customers. "It would be very expensive to offer such discounts because you’d also have to cover the exit costs for the data center the bank is leaving. I don’t think we’ll see much of that. Looking at the merger landscape, this won’t change much," says Robert Bo Jensen. How does it affect Bankdata?