Fidelity National Information Services, Inc.
) entered into a multi-year IT managed service agreement with
Beneficial Bank of Philadelphia. As per the terms of the
agreement, Fidelity will be providing technological support and
help manage its IT operations, including desktop support,
inventory management and server operations.
Beneficial Bank wanted to utilize its resources in business
operations, increase operational efficiencies and at the same
time reduce costs by outsourcing the company's hardware support
services including servers, network, desktop support and telecom
to Fidelity. This will help the bank to improve its customer
support services and reduce turnaround time.
The demand for new technology is constantly on the rise in the
banking industry. Banks are consistently trying to improve
operations and consequently the demand for outsourcing some of
the non-core services and adopting software as a service (SaaS)
offerings has increased.
Fidelity's offerings are expected to make it easier for
mid-tier banks to launch new and competitive products quickly and
in a cost effective manner and enable them to serve customers
FIS has made it clear that the company wants to focus on its
core banking and financial institution business. Previously,
FIS finalized a deal with
Bank of America Corp.
) to sell its electronic benefits-transfer business, which is
expected to fetch more than $200 million. These are some of the
ways adopted by Fidelity to help banks and other financial
We believe that Fidelity's commanding position in the
financial services market, increasing international exposure,
recurring revenue model, diversified product portfolio, cost
synergies from acquisitions and a loyal customer base will drive
growth over the long term.
On the other hand, increasing consolidation in the banking
sector, a challenging environment for the Payments Solutions
business and uncertain regulatory environment are the primary
headwinds, in our view. Additionally, new offerings from
competitors such as
) pose challenges for the company in the near term.
Currently, Fidelity has a Zacks Rank #3 (Hold).
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