The freeze on spending for core-processing upgrades is continuing to thaw with several large and small banks looking at overhauling their technology, according to Fidelity National Information Services Inc. executives.
"We are seeing quite a bit of demand on the core processing front," Gary Norcross, executive vice president and chief operating officer for FIS, said Tuesday during the Jacksonville, Fla. core-banking company's earnings conference call.
"It's not totally surprising for us but it is a little more demand on core processing than what we expected," Norcross said. "I think a number of our clients are looking to improve their foundational elements, putting in the next generation of technology to be able to take share in this market."
For example, the company said Tuesday that Cole Taylor Bank, a Chicago banking subsidiary of Taylor Capital Group Inc., plans to replace its core banking platform with FIS' Integrated Banking Services product.
Technology vendors have been saying core upgrades that were ditched because of the industry downturn would move forward this year as more banks work to shore up their balance sheets.
FIS said it experienced a pick-up in demand in the first quarter. Its processing and services revenue rose 57.4% year-over-year to $1.25 billion. The increase was partly due to results from Metavante Technologies Inc., which FIS acquired in October.
It posted a net profit of $93.6 million, or 25 cents per diluted share, up from $33 million, or 17 cents per diluted share, a year ago.
Many banks are still grappling with economic challenges but FIS is optimistic about upcoming technology spending, Norcross said.
"We want to continue to monitor it and see if these trends continue but I do think in general financial institutions, after they've come through this economic crisis," are "taking a hard look at their technology and wanting to improve their infrastructure and technology layers so they can compete more effectively in the market," Norcross said.