Fiserv Grew the Old Fashioned Way-Acquisitions

Fiserv increased part of its core customer base in 2008 by 1.3 percent and its revenue by 1.0 percent the old fashion way-through acquisitions.In the old days, George Dalton, co-founder of Fiserv, traveled a lot. Even though I had not met the man until about 1986, I viewed him as sort of a Marlborough man-on horseback, in the heartland, rounding up stray service bureaus, offering them a better value at the market by joining his corral. The idea worked then, and the current CEO, Jeff Yabuki, is still making it work in 2008. Fiserv acquired two independent outsource companies last year and added 83 core customers and $39.2 million in revenue. Not too shabby considering no company is producing those numbers by selling onesy-twosy deals. It's too early to tell but Fiserv leads the group in new core sales every year, so they add customers and revenue the other way as well-with onesy-twosy sales.

In my opinion, consolidation of tech vendors is a good thing for everyone-customers, investors, acquirers, acquirees and employees of bank tech companies. Right now there are 27 bank tech companies that provide core solutions. In 1987, there were 113. I believe we all learned something good from that reduction. I know I did. During the past 35 years I have been recommending core solutions to my clients-321 of them. I never thought the field of good vendors was limited. I found 11 good solutions to serve my clients very well. The 11 still exist. My clients had no trouble accepting my recommendations because they never switched.

Will the consolidation trend continue? Of course it will. Four years ago, I created a list of potential acquirees. As of today, 57 percent of the list has been acquired. There are seven companies left.

Disclaimer: The numbers used in this blog were taken from "Automation in Banking-2008." Percentages were derived from those numbers. I believe the facts and the math are correct, but I invite any and all dissidents to take exception. To encourage you, I will readily admit that I have made four and a half mistakes in the past 35 years, so I'm not perfect.