HQ location: Jacksonville, FL
Number of employees: 32,000
Frank Martire, President and CEO
Thinking globally has helped Fidelity National Information Services increase revenue in a moribund spending environment for financial technology.
While other U.S. core processing vendors remain firmly planted in the domestic market, FIS keeps expanding abroad through acquisitions, joint ventures and a general focus on penetrating overseas markets.
And although the Jacksonville, Fla., company passed on an acquisition opportunity this year that would have added to its global client base, its executives say they remain focused on solidifying its reputation as a diversified, international technology provider.
"You shouldn't draw any conclusions as it relates to our M&A strategy," says Frank Martire, FIS' president and chief executive, referring to the decision in August not to make a bid for Misys, a U.K. company.
FIS' revenue rose more than 40% last year, to $5.3 billion. Revenue from financial services grew more than 30%, to $4.4 billion, vaulting it to the top spot on this year's FinTech 100 from No. 3 last year. Its 2009 acquisition of Metavante Technologies for $4.2 billion was instrumental in FIS' growth.
Buying Metavante gave FIS new or added capabilities in lines like cash management, electronic bill payment and card payments processing.
Such large acquisitions often strangle product development and customer service, but FIS has avoided letting integration efforts stemming from the deal affect either department, says Christine Barry, a research director who covers core banking providers for Aite Group.
Banks' spending on information technology has slowly picked up during the last year and a half after taking a nosedive during the financial crisis. And though no one expects a huge spike in new spending next year, FIS is confident the current pace of investment will continue, Martire says.
The company is eager to further leverage its acquisition of the global technology consulting firm Capital Markets Co. NV, which it bought in December for $411 million.
Capco consults with large banks on technology products. The ability to pair Capco's advisory services with its technology products appealed to FIS.
The goal is for FIS to pitch its software as a way to carry out recommendations Capco gives clients. "Capco tends to work with the executive of a financial institution evaluating a particular need right before they really formulate what the solution to that need is," says Gary Norcross, an executive vice president and chief operating officer of FIS.
In August, Norcross said that, though FIS had not landed any significant technology sales as a result of consulting work Capco is doing, it was confident the strategy would bear fruit.
A risk in the Capco strategy for FIS is becoming too exposed to international markets under economic stress.
FIS' revenue growth from Capco has "come at the cost of higher" cyclical and discretionary spending by banks, Tien-Tsin Huang, an analyst with J.P. Morgan Securities, wrote in an Aug. 24 research note to clients.
David Koning, a senior analyst who follows financial technology vendors for Robert W. Baird, says, "They've made acquisitions that have had international components over the years. They have beachheads in other regions to grow core processing where some competitors don't have scale."
Bankers expect spending with their core processing vendors to increase 4% in 2011, according to Robert W. Baird's midyear survey of 114 financial institutions. In Baird's poll at the beginning of the year, the projected increase was 3.7%.
Norcross points out that FIS is trying to help its clients go after untapped markets, such as underbanked consumers. For example, it recently rolled out an electronic funding account product that banks can offer underbanked consumers.
In December the company announced the availability of mobile applications that a bank's customers can enroll in using their debit card number. The apps prevent the need for customers to first sign up for their bank's online banking platform, which is a common requirement that most banks have for their mobile services.
There are opportunities for FIS to raise its global profile some more.
With the acquisition of Metavante, FIS gained new capabilities for handling banks' cash management needs, Barry says. While the technology itself is good, FIS "hasn't had a great deal of success outside of the U.S." selling the technology, Barry says.
This product area is primed for investment. In an Aite Group global survey of 80 financial institutions in the first quarter, 22% of the institutions overall and about a third of the European ones said they were not satisfied with their cash management system.
