Fiserv Inc (
recently signed contracts with three leading credit unions namely
Greater Nevada, MIDFLORIDA and Navigant. The credit unions chose
Fiserv's DNA account processing platform to upgrade their
The three credit unions on a combined basis have more than 302K
members. The DNA account processing solution has gained
significant momentum in recent times. The solution won 5 new
contracts in the first quarter of 2013.
The DNA banking platform was the primary reason behind Fiserv's
acquisition of Open Solutions early this year. DNA was Open
Solutions' flagship product and had more than 800 customers at
the time of acquisition.
The acquisition of the DNA platform is expected to expand
Fiserv's customer base going forward. Most of the DNA contracts
are long term in nature, which is significant. These will add a
recurring revenue source to Fiserv's top line, going forward.
Fiserv expects to earn revenue synergies of at least $75.0
million and cost synergies of $50.0 million over the next several
years from the acquisition of Open Solutions. The acquisition is
expected to be significantly accretive to earnings per share
Accretive acquisitions have been a key growth factor for Fiserv
over the years. In the first quarter of 2013, processing and
services revenues increased 7.6% year over year to $966.0
million, of which $65.0 million was derived from acquisitions.
Acquisitions have helped Fiserv expand its foothold in the
financial and payment solutions business through its diversified
product portfolio and continued technology upgrades. The
company's advanced product ranges are likely to further enhance
its revenue streams.
This is evident from the fact that the company signed 90 new
clients, which helped it to expand its total number of clients
for the Mobiliti solution to 1,500 at the end of the first
Client demand for the Popmoney solution continues to remain
strong as Fiserv signed 89 new institutions in the quarter,
bringing the total number of customers to 1,900. During the
quarter, Fiserv signed 78 electronic bill payment clients and 36
debit processing clients.
We believe that various contract wins and accretive acquisitions
will help Fiserv to fight stiff competition from
Global Payments (
in the near term.
However, a volatile macroeconomic environment, banking and
financial service consolidation, poor cash flow, tough
competition and increasing industry regulations are the primary
Currently, Fiserv has a Zacks Rank #3 (Hold).
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