Fiserv's (FISV) Digital Banking Solution Expands Clientele

Fiserv Inc (NASDAQ:FISV). (NYSE:V) recently announced that Affinity Plus Federal Credit Union has chosen to implement the Architect digital banking solution to provide smooth digital banking experience to more than 130,000 online and mobile members.

The latest deal reflects growing clout of Fiserv’s digital banking solutions among banks and credit unions owing to its robust and expanding product portfolio.

Fiserv’s base solutions like DNA, Mobiliti and Now have been the primary growth factor for quite some time. We also note that solutions like Notifi, Architect, Premier, and Precision platforms are not only aiding it to win new customers but also expanding relationship with the existing ones.

Moreover, recent acquisitions like British financial services technology firm Monitise Plc and Online Banking Solutions (OBS) will help it to fast penetrate the mobile and digital as well as commercial banking arena. These will eventually drive the top-line growth consequently boosting stock price.

We note that Fiserv has outperformed the S&P 500 on a year-to-date basis. While the stock returned 17.3%, the industry gained 9.3%.

Acquisitions, New Products Key Catalysts

Acquisitions have been a key driver of Fiserv’s product portfolio. Notably, the company has added more than 100 DNA clients since its acquisition of Open Solutions way back in 2013. Another acquisition – Architect digital banking solution – has gained significant traction (14 clients at the end of first-quarter) within a short span of time. Management noted that at least 70 institutions are currently exploring this solution, which is a healthy pipeline.

OBS’s digital commercial banking product – Commercial Center – is also anticipated to provide additional revenue growth driven by strong demand from larger, commercially focused institutions.

Moreover, the acquisition of Monitise Plc will expand Fiserv’s capabilities in providing mobile payments solutions. This market has immense growth opportunity, according to Visa (NYSE:V) , which believes that by 2020 “mobile payments could become the preferred method of both consumers and merchants.”

We also believe that new products like the BillMatrix Next, the company’s biller-based digital payments platform and the recently announced real-time cybersecurity platform SecureNow will strengthen its competitive position going forward.

Expanding Clientele to Drive Top-line

Fiserv’s expanding clientele is key catalyst. First National Bank of Pandora recently selected the company’s Premier core account processing platform along with Retail Online and Business Online, Mobiliti, CheckFree RXP, Web Hosting & Design Services to expand digital presence.

Another Ohio-based bank, Apple (NASDAQ:AAPL) Creek Bank selected Precision core account processing platform and added multiple back-office tools, along with services for retail and business customers. The bank also enhanced its person-to-person payment capabilities by selecting Popmoney.

The company is also rapidly expanding in the overseas markets. In recent times, Fiserv’s offerings like Signature core account processing platform and DigitalAccess have been selected by the likes of BDO Unibank – the largest bank in Philippines and Australia-based Bank of Sydney, respectively.

We note that across Asia-Pacific Fiserv supports approximately 68 clients in 13 countries, including some of the largest banks in Australia, Thailand, and Indonesia.

Zacks Rank & Key Picks

Fiserv carries a Zacks Rank #3 (hold). Total System Services (NYSE:TSS) and Vantive (NYSE:V) carrying a Zacks Rank #2 (Buy) are two better-ranked stocks in the broader sector. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Long-term earnings growth rate for Total System Services and Vantive is currently pegged at 12.50% and 14.50%, respectively.

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