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Buying its next-largest competitor in core processing will make Fidelity National Information Services Inc. a giant in banking technology and position it against the even larger companies it expects to enter the market, reports CardLine sister publication American Banker. The Jacksonville, Fla.-based processor announced a $2.94 billion stock deal for Milwaukee-based Metavante Technologies Inc. yesterday (CardLine, 4/1). The purchase will make Fidelity the world's largest provider of banking technology products and services, Lee Kennedy, Fidelity's president and CEO said during a conference call yesterday with analysts. Fidelity will need that kind of scale to face the newcomers that are eyeing the payments market, he said. "There are going to be larger competitors in this space in the not-so-distant future," including Oracle Corp. and International Business Machines Corp., Kennedy said. Both Oracle and IBM are already in the financial services technology market, he said. "They dabble in this space, but not in a big way yet." He also mentioned Hewlett-Packard Co., whose chief, Mark Hurd, is the former CEO of Dayton, Ohio-based NCR Corp. "Those companies have the capital and resources to move into a market when they want to," says Frank R. Martire, Metavante's president and CEO.
April 2 -
Fidelity and Metavante contend they will be able to generate significant savings by joining forces as technology spending has been pushed to the back burner at many banks, reports CardLine sister publication American Banker. The Jacksonville, Fla.-based processor announced a $2.94 billion stock deal for Milwaukee-based Metavante Technologies Inc. yesterday (CardLine, 4/1). Because the two companies have similar product lines, cutting costs was a big factor in their decision to get together. Executives say they anticipate $260 million of "cost synergies" through consolidating duplicated operations and streamlining product offerings, with $210 million of the savings to be achieved by the end of next year. "Our intention is not to cut cores or core platforms," but rather "the ancillary products around them," Michael D. Hayford, Metavante's chief operating officer and a senior executive vice president, said yesterday during a conference call with analysts. "Those relationships are so strategic for the ability to cross-sell. We don't want to jeopardize any of those." Bankers increasingly will demand integrated data processing systems from well-integrated vendors, says Christine Barry, a research director at Aite Group LLC, a Boston-based consulting firm. "It's almost impossible to deal with multiple vendors because of all the information you have to provide to regulators," she says. "The fewer vendors you deal with, the lower the cost."
April 2 -
