And then there were four…Fiserv acquires Open Solutions

And then there were four…Fiserv acquires Open Solutions
On January 14 Fiserv announced that it closed the acquisition of the equity of Open Solutions for $55 million.  At this size the deal was not subject to regulatory review.  The result: there are now only four major U.S. based Core Solutions providers: Fiserv, FIS, Jack Henry and Harland. Fiserv touted three key strategic benefits to the transaction:
  1. An expanded base of account processing clients,
  2. The “high quality and innovative technology” of Open Solutions’ DNA platform, and
  3. The wise use of Fiserv’s capital.
Overall, Celent views this as a win-win transaction for the firms. Celent  sees two key benefits for Open Solutions customers, existing and potential.  First, questions about the company’s staying power are moot: under Fiserv’s umbrella, Open Solutions is now financially viable. Second, Open Solutions, at least theoretically, gains access to Fiserv’s proprietary  complementary products such as Corillian and Mobiliti.  If Fiserv executes to its historical standards, the implementation will go well. As for Fiserv, it gets access to a real-time relational database structured to be charter- and geography- agnostic, together with multi-currency capability.  This gives the company technology to accelerate its international expansion, particularly with smaller community-based banks (Fiserv estimates there to be 40,000 such institutions globally). Questions that we’re interested in:
  1. How much did defense factor into Fiserv’s strategic calculus – that is, did it pursue this acquisition to prevent a foreign entity from purchasing Open Solutions?
  2. How well will Fiserv be able to integrate DNA into its current Acumen offering, and will it meet its 24-month target?
  3. Fiserv spent a lot of time discussing the implications for Credit Unions; what should banks currently running on DNA expect to come out of this?
  4. What will happen with DNA vis a vis Fiserv Premier, Precision and Cleartouch?  Might DNA customers be encouraged to move to Premier or Precision?  And might Cleartouch users be migrated to DNA?
  5. What must Jack Henry and Harland be thinking?
Overall, this lifts a potential cloud for any potential Open Solutions customers worried about the firm’s long-term viability and creates new international opportunities for Fiserv.
Dan Latimore About Dan Latimore

Daniel W. Latimore, CFA, is the Senior Vice President of Celent’s Banking practice and is based in the firm’s Boston office. With a wide range of experience in industry and as a consultant, he brings examples from outside financial services to help banks improve their customer relationships, with a particular emphasis on the importance of technology and culture.

Dan's coverage areas include the banking ecosystem, digital and omnichannel banking, and innovation. He has a passionate interest in behavioral economics and exploring why consumers and humans make the decisions they make, and what the implications are for banks.

Dan has been widely quoted in the press, including the Wall Street Journal, American Banker, Boston Globe, CNBC, and CNBC Europe. He is also a frequent speaker at industry conferences and client gatherings, having addressed audiences ranging from intimate meetings with CEOs and central banks to keynote conference speeches in more than a dozen countries.

Prior to Celent, Dan led research groups at Deloitte and IBM, worked in industry at Merrill Lynch (where he lived in New York, Tokyo and London) and Liberty Mutual, and was a consultant at McKinsey & Co.

Dan received a Masters in Public Administration from the John F. Kennedy School of Government at Harvard, and an undergraduate degree from Dartmouth College. He holds the Chartered Financial Analyst designation from the CFA institute.

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