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Analyst Blog

Fidelity National Information Services Inc. (FIS - Analyst Report) recently helped New Zealand‘s ANZ to shift from its core banking system to single FIS core platform. The bank migrated approximately 3 million customer records and transferred $48 billion (AU$46 billion) onto FIS platform.

The current migration was a part of a long standing agreement between National Bank of New Zealand and ANZ when the latter acquired the former in 2003. More importantly, FIS was preferred by ANZ due to its wide variety of solutions and services in the financial segment.

FIS core banking solution platform has been a game changer for banks over the last couple of years. The shift to Fidelity’s platform has enhanced their 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 have forced 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. 

We believe that Fidelity’s new customer wins and customer retention success are the keys to the company’s future prospects. We believe that Fidelity’s commanding position in the financial services market, expanding international operations, recurring revenue model, diversified product portfolio and, accretive acquisitions will drive growth.

Moreover, Fidelity is well positioned to benefit from increasing investments in emerging technologies such as mobile banking. Mobile banking is developing as an extension of online banking, as mobile usage continues to accelerate globally.

Nevertheless, increasing consolidation in the banking sector, a challenging environment for the Payment Solutions business and an uncertain regulatory environment are the primary headwinds in our view.

We maintain our Neutral recommendation on a long-term basis, primarily due to a highly-leveraged balance sheet and intense competition from other major players such as Fiserv Inc. (FISV - Analyst Report).

Currently, Fidelity has a Zacks Rank #2 (Buy).

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