Bank of America Corp.'s decision to drop its controversial debit-card fee may have come too late to retain some accounts because a large number of big-bank customers already have defected to smaller banks in protest over fees (
Though BofA's plan to charge a $5 monthly debit fee was reported only at the end of the third quarter, enough customers were upset by similarly unpopular pricing changes at large banks that they already were taking their business elsewhere, according to Fidelity National Information Services Inc., or FIS.
"We saw a spike in our new-account openings [at community banks] due to some of the fee-generation tactics that the large financial institutions put in place," Gary Norcross, FIS executive vice president and chief operating officer, said during a conference call Nov. 1 to discuss the company's third-quarter earnings.
FIS has benefited from smaller banks outsourcing both core banking and payment transaction processing to its payments business, Norcross said.
For the quarter, FIS, of Jacksonville, Fla., reported that net earnings attributable to shareholders rose 8%, to $145.4 million from $134.3 million during the same quarter a year earlier. Revenue rose 4.3%, $1.43 billion.
FIS does significant business with smaller banks, but it also provides a range of services to larger banks, analysts say.
"When a big player like FIS says its smaller banks are growing accounts, it means its larger banks are losing accounts," says Lee Kyriacou, a partner with Novantas LLC of New York.
FIS is benefiting from an industrywide outsourcing trend domestically and abroad, Kyriacou says.
But as larger banks continue to consolidate, FIS also will find it competes with them for core processing and transaction payment services, Kyriacou says.
Norcross agreed.
"As you move up in size, our largest single competitor in the large financial institutions is the in-house developed software," Norcross said during the call.
FIS reported international revenue increased 49.3%, to $298 million. In 2010, FIS entered into a joint venture with Banco Bradesco S.A. to process its portfolio of 14 million bankcards (
Its acquisition, also in 2010, of global technology consultancy Capco, of Antwerp, added to revenue it earned from its European operations.
"The continued strong performance is due primarily to higher card-processing volumes in Brazil as well as growth within Capco's European business, which continues to perform very well," Mike Hayford, FIS executive vice president chief financial officer, said during the call.
What do you think about this? Send us your feedback.
