In a bid to help financial institutions leverage real-time banking capabilities and reduce costs considerably, Fidelity National Information Services, Inc. (FIS - Analyst Report) recently rolled out a cloud-based real time service for mid-tier Central and Eastern European banks.
Banking, as an industry, is evolving every day, consequently the demand for outsourcing some of the non-core services and adopting software as a service (SaaS) offerings is increasing everyday.
Fidelity’s latest offering is expected to make it easier for mid-tier banks to launch new and competitive products quickly and in a cost effective manner and enable them to serve customers better.
FIS has made it clear that the company wants to focus on its core banking and financial institution business. FIS finalized a deal with Bank of America Corp. (BAC - Analyst Report) to sell its electronic benefits-transfer business, which is expected to fetch more than $200 million.
Last year, the company sold its health-care benefit business to Lightyear Capital LLC for $335 million for the same reason. Therefore, we can expect innovative banking solutions, new products and more involvement from the company in this segment in the coming days.
We believe that Fidelity’s commanding position in the financial services market, increasing international exposure, recurring revenue model, diversified product portfolio, cost synergies from acquisitions and a loyal customer base will drive growth over the long term.
On the other hand, increasing consolidation in the banking sector, a challenging environment for the Payments Solutions business and uncertain regulatory environment are the primary headwinds, in our view. Moreover, competition from Fiserv (FISV - Analyst Report) and Global Payments (GPN - Snapshot Report) is a major concern in the near term.
Currently, Fidelity has a Zacks Rank #3 (Hold).