New Zealand loves a battler. Two good sporting examples are Peter Blake taking on Dennis Connor or our cricketers taking on a cheat from across the Tasman. We’re less excitable about corporate David versus Goliath stories, but that might change depending on how much traction a new action gets.
In the annals of corporate battles, the clash between Montoux, a Kiwi actuarial startup, and Fidelity National Information Services (FIS), a $46 billion fintech titan, is a stark example of this Kiwi battler story. Despite it occurring within the world of Actuarial provision (a sector that, it has been said, makes financial auditors look exciting) it’s still worth a look. It’s a story of innovation, monopolistic practices, and the harsh realities of the global legal system. At stake are not only the survival of a promising Kiwi startup but also the broader principles of fair competition and innovation in a market dominated by industry giants.
The Innovator vs. the Incumbent
Montoux started as a scrappy underdog, designing its actuarial modelling platform (now there’s a term guaranteed to raise the loins) and building partnerships with major insurers globally. It’s a boring, but lucrative space that is dominated by FIS’s Prophet. Montoux’s jam was all about offering insurers a fresh alternative to the decades-old systems underpinning the industry.
Prophet, part of FIS’s Insurance Risk Suite, is a juggernaut in the actuarial world. With origins dating back to the 1980s, the software has become the default choice for insurers in New Zealand and Australia, markets where FIS enjoys near-total monopoly. But Montoux’s tools attracted several high-profile Prophet customers and posed a growing threat to FIS’s dominance. Hence the big player is being roused out of its slumber. Alas, not to innovate, but to litigate.
The Legal Goliath Strikes Back
In November 2024, FIS filed a lawsuit in Delaware accusing Montoux of misappropriating trade secrets, including allegedly using FIS’s computer code to build competing software. FIS claims that Montoux’s “Model Replication Module,” directly copies FIS code and recreates it in Montoux’s system. Montoux is further accused of training artificial intelligence models on Prophet’s proprietary data and inducing FIS customers to share information in violation of their contracts.
And if you’re scratching your head wondering WTF is going on when multi-billion dollar insurance companies starkly breach the terms of their contracts with technology vendors and share proprietary data – you wouldn’t be alone. In fact, at first glance, it would seem that the claims FIS is making are outlandish at best and downright demented at worst.
Lawfare and Its Costs
I’m slightly nervous writing this since I am currently ensconced in a hotel room in Las Vegas and may not be let out but… what the hell. Let’s face it, the U.S. legal system, notorious for its complexity and expense, becomes a weapon in such disputes. For FIS, with its bags of cash, the US courts are a natural battleground. For Montoux, however, defending the allegations—regardless of their merit—proved ruinous. Facing initial legal costs of $400,000–$600,000, the Kiwi startup was forced into liquidation.
This practice, dubbed “lawfare,” exemplifies how deep-pocketed corporations can wield the legal system to crush smaller competitors. FIS’s choice to litigate in the U.S., despite Montoux’s New Zealand origins and global customer base, underscores the imbalance. In a jurisdiction like New Zealand, such a case might be dismissed swiftly. But in the U.S., where defending against legal action can become an existential threat, Montoux stood little chance.
Whose Side Are We On?
Montoux’s shareholders argue that FIS’s actions go beyond intellectual property protection. They see this as an effort to preserve FIS’s monopoly in New Zealand and Australia at the expense of competition and innovation. FIS dominates the actuarial modelling market in these regions, leaving insurers with few alternatives.
This raises a question for New Zealand’s banks and insurers, many of whom are FIS customers: Whose side are you on? By supporting FIS’s entrenched position, they risk perpetuating a system that stifles innovation. Montoux’s platform arguably represented a chance to shake up an industry reliant on aging systems. Backing monopolistic practices could ultimately harm consumers by entrenching outdated solutions.
Monopoly or Fair Play?
The case also draws attention to broader regulatory concerns. Montoux’s shareholders are reportedly considering an anti-trust lawsuit, a move that could shine a spotlight on FIS’s market dominance and aggressive tactics. Such a lawsuit might also spur action from regulatory bodies like the New Zealand Commerce Commission, which has been called upon to examine whether FIS’s actions amount to anti-competitive behaviour. A side note, however, the Commerce Commission has a great track record for saying much but actually doing little. If you’re a Montoux shareholder and the commission is your best hope, don’t hold your breath.
The Bigger Picture
Beyond the legal claims, this case highlights the challenges startups face when competing in markets dominated by multinational giants. For Montoux, the cost of challenging FIS’s monopoly wasn’t just financial—it resulted in the company’s forced liquidation. But the story also serves as a rallying cry for supporters of fair competition. Without startups like Montoux, industries stagnate, innovation stalls, and consumers ultimately lose.
I know a little bit about this – I was an investor and a director of a startup that also aimed to bring competition to a market dominated by a couple of huge entrenched players. We ultimately failed, despite huge amounts of effort and great customer adoption.
Conclusion: A Fight Worth Fighting
The Montoux vs. FIS saga is a cautionary tale of how market power, when paired with legal muscle, can suppress innovation. It’s a story of a little Kiwi startup that dared to challenge the status quo and paid the price. But it’s also a call to action for regulators, competitors, and consumers to examine the broader implications of such battles.
For now, Montoux’s shareholders, and the spirit of innovation it represented, remain standing. In a world that thrives on new ideas and disruptive thinking, the Davids of the business world may yet find a way to triumph against the Goliaths.
Small NZ software exporter here. The government keeps asking what they can do to make life easier for our sector, to which my answer has always been to make it easier to accept payments from overseas – not that they’ve ever done anything about that. But now I have another suggestion – provide legal backing for cases like this. If NZ became known for standing up to the legal bullies, we’d get startups flocking here.