Norwest Corp. has hired Fiserv Inc. to handle a portion of its check processing business in Wisconsin.
Financial terms of the deal were not disclosed. But the five-year contract, which marks the fourth in a series Fiserv has signed this summer with large North American banks, is a departure from the Brookfield, Wis.- based firm's usual strategy of growing by acquisition.
Minneapolis-based Norwest, which has $77.8 billion in assets, said the deal calls for it to farm out a remote check capture business in Wisconsin to Fiserv's processing facilities in Chicago and Milwaukee.
The Wisconsin operation handles about 4% of Norwest Corp.'s daily volume of 10 million checks. Fiserv plans to offer jobs to 12 of the 14 employees affected by the deal.
"We get to retain our talent and we get better scale with this contract," said Webb Edwards, chief technology officer at Norwest.
The deal comes on the heels of three other Fiserv check processing agreements - with Wells Fargo & Co., Sanwa Bank California, and Canadian Imperial Bank of Commerce. Collectively, the four contracts will add 1.4 billion items to Fiserv's annual processing volume of 3 billion.
And, coupled with some other recent agreements for check processing and data warehousing services, the contracts will boost internal revenue growth by between 10% and 15%, said George Dalton, Fiserv's chairman and chief executive.
The activity is a recent phenomenon for the company. Since its founding in 1984, Fiserv has acquired an average of six companies each year, according to data supplied by Computer Based Solutions Inc., a New Orleans consulting firm.
But this year, no significant acquisitions have been announced. Stock analysts said the latest contracts hint at a new corporate strategy.
"Certainly as of last year, their focus has shifted away from obtaining clients by cluster and toward internal growth," noted Merrill Lynch & Co. analyst Stephen T. McClellan.
Consultants believe the recent wave of agreements with large banks, while not necessarily comprehensive in scope, show that Fiserv had to adjust because the pool of attractive acquisition targets is quickly evaporating in a consolidating outsourcing industry.
"That game will come to an end," said M. Arthur Gillis, principal at Computer Based Solutions. "Fiserv has been very conscious in its efforts to show that it is expanding its client base through sales."
Indeed, the company has been courting the large-bank market in a public effort to go beyond its long-standing reputation as an item processor for community banks.
The firm got a taste of large-bank business last year, when it signed a $450 million contract to do check processing for Chase Manhattan Corp. That deal will be phased out now that Chase has merged with Chemical Banking Corp.
But Mr. Dalton admits the latest string of deals might not have been possible without the Chase contract. "Our phones began to ring once we announced that deal," he said.
