Payments

04:00 PM
Nancy Feig
Nancy Feig
News
Connect Directly
RSS
E-Mail
50%
50%

Fiserv Acquisition of Checkfree Expands its Core Offering

The recent deal between Fiserv and CheckFree changes the core systems and online payment landscape.

One of the last independent electronic payment facilitators has just been snapped up. Brookfield, Wis.-based Fiserv announced in early August that it is acquiring CheckFree Corp. (Norcross, Ga.) for $4.4 billion. While the deal isn't expected to be completed until Dec. 31, industry insiders are already speculating on the effects it will have on the financial technology sector.

According to Nancy Atkinson, senior analyst with Aite Group (Boston), the move will elevate Fiserv to the level of its closest competitor, Milwaukee-based banking and payments technology provider Metavante, giving banks another one-stop vendor for an end-to-end core banking solution. Fiserv will now have a broader solution set after incorporating CheckFree's online bill payment processing business, which was an obvious gap in its solution offerings, she asserts. "After years of ... failing to emulate chief competitor Metavante in growing organically its own payment processing business, Fiserv has finally reverted to its primary skill -- using its stock as currency to grow the company by acquisition," Atkinson comments.

The acquisition gives Fiserv leadership positions in important growth areas within the transaction-processing universe, according to Fiserv President and CEO Jeffrey Yabuki. "It will give us the ability to deliver a unique core banking solution that integrates core account processing, Internet banking, electronic bill payment and presentment, and transaction settlement all wrapped with risk management capabilities," he said in an Aug. 2 conference call with analysts and reporters. CheckFree offers solutions in electronic billing and payment, online banking, investment management, ACH payments, and fraud and risk management.

Fiserv currently serves almost 6,000 core processing clients, including all of the top 100 banks in the United States. CheckFree's electronic commerce business serves 21 of the top 25 financial institutions in the U.S. and processes more than 1 billion transactions per year. "Our client bases are very complementary," Yabuki noted.

While Aite's Atkinson acknowledges that "Fiserv has evolved through strong M&A activity," she says it "has not done a great job of making its sum better than its parts." In many cases, she contends, Fiserv's solutions compete against each other because the company's divisions have been allowed to run themselves independently. But, "A focus for Fiserv this year has been on reconsidering its organizational structure," Atkinson notes. Fiserv likely will retain CheckFree's recognizable brand initially, she adds.

Consolidation to Continue

Although Atkinson says she was a "little surprised that CheckFree was willing to be bought," the deal is consistent with industry M&A activity, she notes. In fact, "There is going to be continued consolidation," Atkinson predicts.

CheckFree made its own share of acquisitions in the months leading up to its acquisition by Fiserv. In May it purchased online banking provider Corillian Corp. (Hillsboro, Ore.) and investment solutions provider Upstream Technologies (Boston), and in April it acquired software provider and consultant Carreker Corp.

Comment  | 
Print  | 
More Insights
Register for Bank Systems & Technology Newsletters
White Papers
Current Issue
Bank Systems & Technology Oct. 14, 2014
Bank Systems & Technology's new Must Reads is a compendium of our best recent coverage of customer analytics. Learn what big data means for banks, meet Wells Fargo CDO Charles Thomas, find out how to connect with your Gen Y customers, and more.
Slideshows
Video
Bank Systems & Technology Radio
Archived Audio Interviews
Join Bank Systems & Technology Associate Editor Bryan Yurcan, and guests Karen Massey and Jerry Silva from IDC Financial Insights, for a conversation about the firm's 11th annual FinTech rankings.