Fidelity National Information Services Inc
(
FIS
) continues to add community banks to its strong clientele. The
leading banking and payments technology solutions provider recently
announced that its core banking solutions platform has been
selected by a number of community banks, including Ohio-based
Valley Central Savings Bank, Texas-based AccessBank Texas and West
Virginia-based Calhoun County Bank.
Fidelity's core banking solution platform has been a
game-changer for these small community banks. The shift to
Fidelity's platform has enhanced their ability to process files
within a short span of time, thereby facilitating cost management
and further focus on customer service.
Enhanced operating efficiency has been the primary reason for
Fidelity's ever-growing banking clientele. Currently, increasing
consolidation, tightened regulations, lower interest rates and the
liquidity crunch have forced U.S. banks, particularly small banks
to look for ways to differentiate their services in a cost
effective way. Fidelity's low-cost platform has emerged as a savior
for these institutions in recent times.
Apart from community banks, large financial institutions have
also chosen Fidelity's solutions. Over the last 12-18 months,
Fidelity's banking and payments technology solutions have been
chosen by more than 80 financial institutions, which include First
National Bank of Omaha, People's United Bank and Marquette Bank. We
believe that a steady flow of new banking customers will boost
Fidelity's top-line growth going forward.
Moreover, the expanding client base will boost revenues in the
Financial Solutions division, offsetting the sluggish growth in the
Payment solutions group and any negative impact from its European
operations. Financial solutions revenue increased 7.0% year over
year to $538.9 million in the first quarter of 2012.
We believe that Fidelity's strong customer base will provide it
a competitive edge against major rivals such as
Fiserv Inc. (
FISV
)
in the financial and payment solutions segments. The increasing
international exposure, particularly in the emerging economies of
Latin America and the Asia-Pacific, a diversified product
portfolio, cost synergies from acquisitions and a loyal customer
base are other positives driving its growth over the long term.
However, increasing consolidation in the banking sector, a
challenging environment for the Payments Solutions business and an
uncertain regulatory environment are the primary headwinds, in our
view.
We maintain our Neutral recommendation on a long-term basis (for
the next 6 to 12 months). Currently, Fidelity has a Zacks #3 Rank,
which implies a Hold rating (for the next 1-3 months).
FIDELITY NAT IN (FIS): Free Stock Analysis
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FISERV INC (FISV): Free Stock Analysis Report
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