Fidelity Information Services is fulfilling goals set during its earlier incarnation as Alltel Information Services by speeding up its marketing and sales efforts overseas. FIS is now modifying its products in check processing, accounting, deposits, call centers, lending, Internet banking, cash management, mortgage processing and origination, consumer loans, and auto financing to accept multiple currencies and languages."So now, every time we do something here, we have to add that capability for the non-US client," says Ernest Smith, president of Fidelity Information Services and co-COO of the parent firm, Fidelity National Financial, the nation's fifth-largest title insurance company.
"Every enhancement we do for a lender in the U.S. is also an enhancement that banks overseas would want." FIS's international division, led by Jim Wilson, has 600 employees around the world. In 2002, it had $80 million in sales, representing about 10 percent of the firm's total revenue for the year. The company had total revenue of $530 million in 2002, with cash flow from operations of nearly $815 million. Wilson was unavailable for comment.
So far, FIS products are in banks in 50 countries, including Saudi Arabia, Japan, Taiwan, Australia, New Zealand, Denmark, Hong Kong, England, the Philippines, Singapore and Scandinavia. "Our system could be the dominant one in Southeast Asia," says Smith, noting that Thai Military Bank recently finished its conversion of the back-office applications at its retail branches to an FIS platform. The bank had been a long-time user of another Fidelity product for its customer-information systems, deposits, consumer lending and general-ledger operations.
And last month, the Bank of the Philippine Islands renewed a 1989 agreement with the firm for the supply of software and services for its deposits, lending and customer data-management operations. Fidelity has developed interfaces that integrate its software with other Websphere MQ-enabled applications systems.
In April the Asian Development Bank chose Fidelity's Advanced Commercial Banking System to manage its lending activity. ACBS will provide the bank with loan administration services for its LIBOR-based products, which feature customized currency and interest rates. ABSC is an end-to-end multi-currency commercial-lending system that automates loan activity from deal origination to settlement and accounting, on through to risk management and loan trading. Clients of the system include ABN Amro, Bank of America, Barclays, Dresdner Bank and JP Morgan Chase.
The decision to expand overseas was actually made by Alltel Information Services, the firm Fidelity National acquired for $1.05 billion in April and renamed Fidelity Information Services. Alltel was one of the world's largest providers of information-based technology products and processing services to the financial services industries. Its systems process about 50 percent of all U.S. residential mortgage loans and 48 of the largest 50 U.S. banks.
"Alltel had made the decision to expand overseas before we bought them," he says. "It occurred to them it would be a good idea. And that's what attracted us to the firm initially-the ability to cross-sell a full suite of products to banks overseas. There's big growth potential abroad. And it gives us an opportunity to take our existing infrastructure and continue to grow. ...We took all the capabilities that the old Alltel Information Systems had for core processing in banks and leveraged that out to create an international division and to modify those products to work overseas," says Smith.
The next big opportunity, he says, is China, where Celent Communications says banks will spend $10.5 billion on technology by 2005. "There are 265,000 little bank branches that don't have a real infrastructure and deposit base and there's pieces of that spending that we would like to see fall into our product offerings," he notes. The nation, which was admitted to the World Trade Organization in 2001, has until 2005 to open up its banking market-as well as other sectors-to foreign firms. In the meantime, those U.S. vendors that arrive first will have the earliest edge into supplying products to a woefully backward industry.
In addition to China, Latin America is rapidly becoming a focus for the firm arlier this summer, it inked a deal with Mexico City's Instituto del Fondo Nacional de la Vivienda para los Trabajadores (INFONAVIT) to use its Advanced Lending Solutions (ALS) product to process its portfolio of mortgage loans. Founded in 1972, INFONAVIT is a social organization serving the country's workforce. With assets of $26 billion, its mortgage portfolio includes1.8 million loans, and is projected to reach three million in the next five years.DTS Latin America a Pan-American company based in Sao Paulo, Brazil, and with North American headquarters in Miami, inked a deal in July to introduce Fidelity's retail banking product in Brazil.
Smith says the firm's overseas deals are a perfect fit, which aims at the one-size-fits-all retail banking market. "We focus on providing best-of-breed products for the retail side of the bank," he notes. "With retail banking, sometimes the bank will want only one piece and have a different provider for ATMs or other functions. However, when you get to a small bank, they need to be able to do everything because they can't do it in-house. So if you're opening a community bank, I need everything you're selling-and I need you to train all our tellers. We can do that. We have a whole division that provides these products for any banks up to $10 billion in size. We can help run your whole bank."
Smith says the firm also will continue to seek U.S. acquisitions in the core mortgage and consumer loan-processing space.
