Fiserv Inc. watchers received a measure of satisfaction this week when the banking technology company provided its first substantial peek at a long-expected corporate overhaul that executives have termed "Fiserv 2.0."
The Brookfield, Wis., company had hinted in September that a major revamp was in the works, but it had provided few details of how it planned to reduce costs and accelerate revenue growth. But this week it announced a plan that would simplify Fiserv's complicated corporate structure by folding 77 business units into five major groups aligned with specific markets.
The plan was announced by Jeffery W. Yabuki, who was named Fiserv's president and chief executive in November of last year. Among the key features, he said, the new structure would help the company make deeper inroads into the big-bank market, where Fiserv historically has not been a major player. He also said that the plan would foster cooperative sales efforts and ultimately boost cross-selling.
And in another sign that Fiserv sees cooperation, rather than internal competition, as a critical part of its future strategy, the company has hired an executive to make sure all the individual units are offering similar terms to other vendors.
This sense of cooperation is somewhat new for Fiserv, which has long permitted its units to function independently, and even to compete head to head for customers.
Fiserv has acquired more than 140 companies since its founding in 1984, and in the past "we have not asked our businesses to work together," Mr. Yabuki said. "Each person was looking to optimize their own results all the time."
But under the new structure, "we're taking a collection of 70-some-odd businesses and getting them more energized by working together." And by putting business units into groups organized by functional lines or customer type, "we can bring the power of Fiserv to bear on that segment," he said. "Where it comes from doesn't matter."
Norman J. Balthasar, a senior executive vice president at Fiserv and its chief operating officer, agreed that cooperation is critical for the company's future. "If we're going to take Fiserv to the next level, we've got to do it by collaborating."
Four of the five groups are new ones: payments and industry products, financial institutions, depository institution core processing, and health and insurance. The fifth, investment support services, was formed last year.
As part of the reorganization, Fiserv named presidents for the four newly created groups Tuesday, promoting two employees and hiring two outsiders.
Rahul Gupta, who will join Fiserv this month from the Scottsdale, Ariz., transaction processor eFunds Corp., will run the payments and industry products group. Mr. Gupta was eFunds' president of U.S. operations.
Mr. Yabuki said the group, which generates 50% to 70% of the company's revenue, includes Fiserv's electronic funds transfer business, its BillMatrix online bill payment unit, and its Banklink cash management unit.
The payments group does not include check processing; that business is in the financial institutions group to be headed by Thomas Warsop, who is joining Fiserv from Electronic Data Systems Corp. of Plano, Tex. Mr. Warsop was EDS' vice president of U.S. financial services.
Mr. Yabuki said the financial institutions group will target large banking companies that may not use Fiserv for core processing but may be candidates for its other products and services.
Tom Neill, previously the president of Fiserv's credit union and industry products group, was named the president of the depository institution core processing group. That group has two divisions: bank and thrift; and credit unions.
Mike Gantt, who was the group president of bank systems, was named the president of the health and insurance group.
Those four executives, in addition to Bob Beriault, the president of the investment support services group, will report to Mr. Balthasar.
Fiserv also hired Matthew Epstein as senior vice president of strategic partnerships. Mr. Epstein was director of Merrill Lynch & Co. Inc.'s financial institutions group and Fiserv's coverage officer.
His job will be to bring consistency to Fiserv's contracts with other vendors, Mr. Yabuki said. Until now third-party vendors have negotiated individually with the company's various business units, leading to a situation where "you've got 19 different deals, all with Fiserv but many of them having different terms and conditions, and may have different economics."
Mr. Yabuki described the five groups as "businesses we can aggregate that will bring the most value to bear on the marketplace." The reorganization is not a shift from "a bottom-up organization to a top-down organization," because "power, per se, is resident in these groups that have the needs of the client as their only objective."
Fiserv's goal is to put the groups "in the roles where they can best contribute," he said. "We won't have any false boundaries."
Mr. Yabuki would not discuss any plans to sell or shut down units. However, he has floated that possibility this year, and it is clear that doing so is still on the table.
"There is no upside for us to talk about businesses we are going to sell," he said. "We're comfortable with the businesses we have."
John Kraft, an analyst at D.A. Davidson & Co., said he is generally skeptical about the impact of management changes, and that the test will be whether Fiserv can deliver on the promises of increased profitability and reduced costs.
"There are a lot of things Fiserv could do. They have a lot of services and a lot of products," Mr. Kraft said.
The payments group in particular has plenty of room to grow, he said. "Payments are very big right now. That's a focus for a lot of folks, and Fiserv has a lot of potential."
Jeanne Capachin, the research director of corporate banking at Financial Insights Inc., a Framingham, Mass., research unit of the Boston technology publisher International Data Group Inc., said creating the groups was a logical next step for Mr. Yabuki.
"He is trying to put his mark on the company," said Ms. Capachin, who has not discussed the changes with Fiserv executives. "They are going to try to make them more functional groups, rather than legacies of companies they have acquired."
