Fidelity National Information Services Inc (FIS) recently announced that its debit card processing and card personalization services have been selected by Topeka, Kansas-based CoreFirst Bank & Trust.
CoreFirst Bank & Trust operates 36 branches in Kansas and Colorado and was the first bank in the region to provide automated checking, ATMs with 24-hour access and extended banking hours.
Earlier, CoreFirst used its own software for card processing and personalization services. The shift to Fidelity’s platform will enhance the bank’s ability to process files within a short span of time, thereby facilitating cost management and further focus on customer service.
Enhanced operating efficiency has been the primary reason for Fidelity’s ever-growing banking clientele. Currently, increasing consolidation, tightened regulations, lower interest rates and the liquidity crunch has forced U.S. banks, particularly small banks to look for ways to differentiate their services in a cost effective way. Fidelity’s low-cost platform has emerged as a savior for these institutions in recent times.
Over the last few months, a number of banks from different parts of the country have chosen Fidelity’s solutions. Recently, Fidelity’s banking and payments technology solutions were chosen by more than 80 financial institutions. Banking institutions such as First National Bank of Omaha, People’s United Bank and Marquette Bank also opted for Fidelity solutions. We believe that a steady flow of new banking customers will boost Fidelity’s top-line growth going forward.
The expanding client base will boost revenues in the Financial Solutions division, which will offset a sluggish growth in the Payment solutions group and any negative impact from the European operations going forward. In the recently ended third quarter of 2011, Financial Solutions revenues rose 7.8% year over year (0.6% organically), as opposed to a 0.5% increase in Payment Solutions revenues. For further details please see Fidelity Beats Marginally.
We believe that the increasing client base will also boost Fidelity’s competitive edge against major rivals such as Fiserv Inc. (FISV) in the financial and payment solutions segments. Moreover, increasing international exposure, particularly in the emerging economies of Latin America and the Asia-Pacific, diversified product portfolio, cost synergies from acquisitions and a loyal customer base will drive growth over the long term.
We maintain our Neutral recommendation on a long-term basis (for the next 6 to 12 months). Currently, Fidelity has a Zacks #3 Rank, which implies a short-term Hold rating (for the next 1-3 months).
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