outsourced offering for medium-sized banks using competitor Fiserv ITI’s Premier core system.


In September 2005 it was announced that FIS was to


merge with Florida-based card and check processing vendor, Certegy. Among other things, this gave the company a means by which it could go public. Under a share exchange deal involving FIS common stock, FIS would gain a 67.5 per cent stake in Certegy while Certegy shareholders would pick up 32.5 per cent of FIS.


That same month, FIS formed an alliance with Computer Sciences Corporation (CSC) to market, maintain, support and offer an ASP service based on three of CSC’s Hogan core banking system modules across North America, Mexico and the Caribbean, effectively adding yet another core retail banking system to the FIS picture. However, this did not seem to achieve much and by 2012 CSC confirmed that there were no Hogan customers using the FIS ASP service, with the level of cooperation more or less around sub-contracting of resources between the two companies. Further to the supplier’s merger with Certegy in 2005, FIS announced the acquisition of another payments processor in August 2007. The all-cash transaction was valued at $1.8 billion and was for Arizona-based EFD/eFunds Corporation. FIS gained three lines of business: US payments, US risk management, and an international business. The acquisitions kept coming. Around the same time as the Sanchez purchase, FIS acquired US-based Hamilton & Sullivan (H&S). This provided online banking, wire transfer, cash management and account analysis software products for the financial services industry. It too was integrated into the new organisation and brought over 40 clients.


Despite their overlapping customer bases, Horizon and


Miser remained as commercial offerings, in part as both had loyal customer bases. However, some analysts felt that the true reason Fidelity acquired Aurum was for its item processing business to better compete with rivals Fiserv and Metavante


Horizon


Horizon is a modular, but tightly integrated, retail system for small to medium-sized banks and savings & loans. It runs on the IBM iSeries platform (the IBM AS/400 midrange, as was). Horizon is positioned as a broad solution – a ‘best-of-suite’ versus ‘best-of-breed’ solution. At its center is a relationship management system with all customer information, the Acquire Enterprise Content Management component. It spans multiple delivery channels – branch, online banking, telephone voice response, ATMs and debit cards. Processing is across deposit accounts and loans (including mortgages), with a general ledger, reporting, document imaging and compliance. There is an Integrated Relationship Management component to provide a one-stop view of customer interactions. There is also wholesale banking functionality, including


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and to provide a more complete outsourced service for banks. This may have been the same reason InterCept was acquired, as it processed checks for 720 community banks. With InterCept, Fidelity added two more systems to its portfolio, Windows NT-based BancPac, sold as either an in-house system or as a service bureau offering, and Unix-based BancLine. FIS has sought to put a common layer across its disparate systems, the Sanchez-derived Xpress, plus common components.


On the corporate front, FIS itself was the target of a


$15 billion leveraged buyout by three private equity firms, Blackstone Group, Thomas H Lee Partners and TPG Capital. This was hailed as the largest leveraged buyout since the start of the financial crisis, but it was not meant to be: FIS turned down the offer of $32 per share (reportedly, the vendor had a much higher amount in mind). It was believed FIS intended to go down a leveraged recapitalisation route instead. FIS then added Belgium-based consultancy firm, Capco, that specialises in the financial services space. This was announced in November 2010 and was a notable departure for FIS, which to date had largely focused on product-related deals.


Another corporate twist came in June 2011 when FIS made


a cash offer for Misys. Such a coming together would clearly have been complex, with a range of overlapping systems and adding even more to the FIS mix. However, the deal fell through. A statement by Misys on 4th August 2011 said the offer made by FIS ‘materially undervalues the company’ and so the board ‘unanimously decided to reject it and took the decision to withdraw from further discussions with FIS’. FIS announced it was ‘no longer considering making an offer for Misys’. Vista Equity Partners ultimately acquired Misys in April 2012 for 350 pence per share, lower than the 400 pence per share offered by FIS.


online cash management, ACH origination, wire transfer, secure file transfer, and positive pay, aimed at banks that target small and medium-sized businesses. FIS offers Horizon from its Horizon Technology Center in


Albany, New York, which supports FIS customers located east of the Mississippi River. Most of these customers have a range of five to ten branches, 80 to 90 workstations, and 40,000 to 50,000 accounts on the system. The proprietary IBM iSeries platform reflects the age of Horizon but is less of a problem in an outsource environment, when banks have little or no direct interaction with the underlying technology, than is the case for an in-house scenario. There are a number of other iSeries-based systems on the US market, so it is a relatively well-known platform and is recognized for its reliability. FIS has an array of other solutions that can be integrated with Horizon.


US Financial Services Technology Market Report | www.ibsintelligence.com


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