At the end of each major core vendor's profile in my annual report on bank tech vendors is a commentary about what I think of the company. My comments are a reflection of how many sparks fly based on the company's 2009 activities. Because I own a "sparks meter" handed down to me by my blacksmith grandfather, I am able to gauge the volume objectively and the winner this year is FIS. So I'm offering my comments on FIS in this blog only because I believe it makes for unusual reading in a world of numbers, spending habits and complex tech capabilities. For what it's worth, this blogger is the only one who has seen these comments at the time of this posting. I hope more sparks will fly now that we've all survived the boring year that 2009 was.Consultant's Comments: I'm trying to decide which was the better acquisition for FIS - ALLTEL Information Services or Metavante. Many would say Metavante and I understand why. Metavante was as close to perfect as any other company in the space. However, in my opinion, Metavante didn't need to be acquired. It would have done well on its own. So I believe AIS was better for FIS because it had greater potential and it needed to be healed. It's been seven years now so I can say with confidence that AIS's potential was exploited successfully and the healing took place mostly because AIS was taken away from a telecom company and placed under the wing of a bank tech company, even if it was a young one. It wasn't the ALLTEL name that got my attention originally. As far back as 1972, Systematics (the original AIS) was the shining star of the bank tech industry based on its ability to establish a powerful bank core system as the engine for a business then called "facilities management."
I had the guts to invite this five-year-old Arkansas company to Rhode Island to see if they could do our IT job better than we were doing it. The classic remark that opened the discussions from the CEO of Systematics (sans entourage) to the group of Yankee bankers was, "I'm from the dumbest state and you're the smallest state, so we should be able to do something good together to save ourselves." That was the true Walter Smiley straight-up man who never misled an audience in all the years I had known him, but the Rhode Island bankers were not moved one tiny bit.
Thirty-eight years later, in the fourth quarter of 2009, it was Citi that acquired the Systematics core system from FIS for its North America operations. There's a behind-the-scenes irony here that not many people living today know about. Industrial National Bank of Rhode Island established a holding company listed on the NYSE modeled after the Citicorp (as it was known then) strategy. We were the miniature version of Citicorp, located just 200 miles up the street from the money center of the world. Industrial National Bank of Rhode Island grew to become Fleet Bank after acquiring every big bank in Boston, and finally cashed out handsomely when Bank of America offered a 49% premium.
What a difference 38 years can make. While Wall Street has been on the hot seat for the past couple of years, taking the giant banks with it, there has been continued long term stability in the tech world. When a global bank like Citigroup commits to a 42-year-old core system like Systematics in 2009, you know FIS is not just romancing Wall Street or private equity firms. FIS has the proven goods, the experienced people in the implementation ranks, the management team that has done it all before, the global customer base (no other U.S. bank tech company earns 16% of its corporate revenue from outside North America), the energy to keep up the pace where no finish line exists, and the entrepreneurship to explore "anything's possible." I believe Mr. Foley [William Foley II, executive chairman] has a few more sparks for us in his pipeline, but I wouldn't know directly as I never talk to topside insiders.