Specialist
Former VP at Fiserv Inc
Agenda
- Fiserv’s (NASDAQ: FISV) operating environment, highlighting key payments ecosystem considerations
- Emerging broader trends in payments – real-time-payments, FedNow, digital wallets, plus Fiserv’s positioning
- FedNow’s cannibalisation potential across payments, commercial payments, ACH (automated clearing house) and wires
- Product development strategy, assessing puts and takes of buy vs build methods
- Competitive positioning against core processors such as FIS (NYSE: FIS) and Jack Henry (NASDAQ: JKHY) and second-generation players such as Marqeta (NASDAQ: MQ), I2C and Galileo (NASDAQ: SOFI)
Questions
1.
Can you give us your thoughts on Fiserv’s current operating environment, maybe highlighting 2-3 key trends or drivers you feel we should be monitoring?
2.
One common criticism I hear about Fiserv compared to these new fintech challengers in the context of platform modernisation is that the necessity of maintaining legacy platforms drags on innovation, R&D and expenses. This could be due to physical infrastructure or legacy software. How should we think about this? Do you think it’s a valid criticism? Can you quantify any of the impacts or add some nuance in terms of segments?
3.
You’ve mentioned the M&A route being more likely for Fiserv. How should we think about specific targets, geographies, or genres of business the company would be looking to acquire?
4.
What challenges associated with the integration of acquired companies did you see while you were at Fiserv? To what extent do you expect integrations moving forwards to be a little more challenged given that a lot of institutional knowledge has left the company over the past year or so with employee churn?
5.
How should we think about the way Fiserv is approaching the broader adoption of cloud banking services? How much could this transition cost the firm?
6.
What kinds of cost savings could be generated by Fiserv’s transition to offering cloud-based services over the medium and long term?
7.
We’re seeing a broader adoption of real-time payments networks, with FedNow also set to launch in mid-2023. How do you see Fiserv positioning itself? To what extent will the company be impacted by the FedNow launch and the general, broader adoption of real-time payments networks?
8.
Would you imagine any amount of Fiserv’s business – whether it’s on the payments side, the commercial payments side, ACH [automated clearing house] or wires – would in any way be cannibalised by the FedNow launch? Are you proposing that the company’s involvement in the FedNow network would be as the plumbing to facilitate these types of payments?
9.
How would you describe the evolving competition between Fiserv and the more modern players such as Marqeta, I2C or Galileo, which was acquired by SoFi in 2020? Do you see any clear winners or losers in terms of market share gains going forward within those three more modern players? What might that ultimately mean for Fiserv’s positioning?
10.
Comparing and contrasting Marqeta’s platform vs Fiserv’s, what’s missing from the Fiserv side and how should we think about the building blocks to address that? I understand that you’re saying the markets served by Marqueta might not be a primary focus of Fiserv management.
11.
Could you elaborate a little on tokenisation-as-a-service? What does it mean as an opportunity for Fiserv? How critical might it be for the company to meaningfully compete in the card-not-present transaction space, given the increasing adoption of digital wallets?
12.
How would you describe Fiserv’s positioning in supporting digital wallets and super apps more broadly? What does the increasing adoption of digital wallets mean for additional top-line growth from the payments segment?
13.
You mentioned Fiserv’s payments segment’s 10% CAGR, with the segment having the highest margins at Fiserv. What are your expectations for those figures and what assumptions are underlying that?
14.
Would you anticipate any margin pressure if we were to see more competitors emerge? The payments segment has experienced increasing competition with a number of new fintech entrants over the past two years.
15.
You mentioned Europe and APAC representing potential international expansion opportunities for Fiserv. What opportunities do you see across those markets? What additional risks might there be if the company were to pursue one over the other?
16.
Do you see incumbent government payment networks, as exist in LATAM and some parts of the APAC region, such as India, as a threat or an additional barrier to entry? Might an acquisition circumvent the potential barrier that UPI in India and the Pix network in LATAM represent?
17.
Is there anything else you feel is worth highlighting that we haven’t already discussed? Is there anywhere you perhaps hold a contrarian view as it relates to Fiserv?
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