HQ location: Brookfield, Wis.
Number of employees: 20,000
Jeffery Yabuki, CEO
Fiserv is betting big on digital payments. The Brookfield, Wis., technology company took steps this past year to bolster capabilities in mobile banking as well as mobile and online person-to-person payments, products that generate a lot of fanfare but have yet to result in significant financial gains for most banks.
Fiserv's growing list of competitors includes Google, Apple, Amazon.com, PayPal and clearXchange, a joint venture of Wells Fargo, Bank of America and JPMorgan Chase.
Fiserv CEO and president Jeffery Yabuki doesn't mince words over the promise of mobile payments. "There's not a single financial institution I talk to that hasn't completely bought into the importance of the mobile channel," Yabuki says. "The challenge is, how do we prioritize the thousands of things that each of our clients want? That's why I am so bullish on what mobile is going to be for us over the next five to 10 years."
Fiserv, which is No. 2 on this year's FinTech 100, kicked off the year with three small acquisitions in March, including mobile banking software company Mobile Commerce, for a combined $49 million. The trio included a prepaid card company and a software hosting company for credit unions. It followed those with the announcement in June that it was buying CashEdge, a competing provider of investment account and P-to-P software, for $465 million. That acquisition hadn't closed at press time.
The CashEdge deal is not the type of transaction that will transform Fiserv's business like its 2007 acquisition of CheckFree, an electronic billing and online banking company for which it paid $4.4 billion. That deal made Fiserv a powerhouse for bill-payment and online banking technology.
CashEdge could help cement Fiserv as the leading bank-centric provider of P-to-P tools, a market dominated by eBay's PayPal subsidiary, traditionally viewed as a competitor to banks despite its recent efforts to offer its technology to financial institutions.
Fiserv began its P-to-P push in mid-2010 with the rollout of ZashPay, its online payment platform that about 870 financial institutions had agreed to offer customers as of June 30.
"The revenue right now from all of these innovation investments is … disproportionately small, based on the value that institutions are ascribing to those kinds of initiatives," Yabuki says.
While not quite a return to the heady years before 2005 when Fiserv had more than 125 acquisitions in about a 20-year span, the company's recent moves demonstrate it sees value in deals to create a strong product lineup, says Peter Heckmann, a senior research analyst with Avondale Partners in Leawood, Kan. "Fiserv continues to look for ways to accelerate growth and find new technologies, new channels, that they can then market to their existing base of customers," Heckmann says.
The strategy poses risks, though, notes Andrew Jeffrey, an analyst with SunTrust Robinson Humphrey in San Francisco. "Some next-generation payments technology seems more like a solution looking for a problem," Jeffrey wrote in a research note.
Technology will be necessary for banks to meet their customers' demands, Yabuki says. Fiserv's acquisitions will help it build "a more converged system" for end users of the technology.
"Consumer expectations are moving exponentially ahead of existing capabilities within most financial institutions today," Yabuki says.
