Fiserv has just released its figures for its third quarter results and it seems revenues are significantly down on last year: total revenue for the period was US$992 million compared with US$1.04 billion in 2008. However, although it has also been a quiet year for the vendor on the corporate actions solution side of the business, things are picking up, Geoff Harries, vice president, product strategy, Investment Services at Fiserv, tells Reference Data Review.
Total revenue for the first nine months of 2009 was also down on last year with US$3.02 billion compared with US$3.55 billion in 2008, according to the vendor’s figures. The vendor’s best performance for the quarter seems to have come from the payments side of its business, which is unsurprising given the slant towards payments offerings in comparison to its securities services portfolio. The vendor has also managed to achieve another year of cost savings as a result of the CheckFree acquisition, which was completed at the end of 2007.
In February this year, the vendor finally rebranded the CheckFree business under the Fiserv banner but has seemingly been very quiet about the impact the acquisition has had on its corporate actions solution offering, until now that is. During Sibos in September, Fiserv indicated that it had invested in its eVent corporate actions automation solution and released a new upgrade, which is aimed at improving the flexibility of election and instruction processing and the notifications process with more customisable options.
“We have been quiet about our corporate actions solutions because we have been busy working on the upgrade and there have not been a great deal of big logo solution wins over the last 12 months,” says Harries. “However, the corporate actions pipeline has become a lot healthier recently than it has been in a long time with the unwinding of a lot of overdue projects, which were put on hold as a result of the financial crisis.”
The upgraded solution has been tailored to meet the needs of the asset management community in particular, says Harries. “Suppliers have learnt that there is a distinct difference between the way that corporate actions data is used by the asset management market versus the custody market,” he continues. “Asset managers have also become much more interested in this space and a lot of our recent projects have been focused on the buy side.”
It is the larger end of the asset management community that Fiserv is focusing its attentions, the “top five category”, according to Harries. “Asset managers’ margins are slimmer in this current market environment and they are therefore less able to absorb losses in their P&L and this means they are more willing to invest in automation.” The current focus on improving risk management has added weight to this argument, as firms are more apt to conduct due diligence and implement risk mitigation projects.
There is a need for accurate and timely corporate actions information across an asset management firm’s operations, from the front office to the back, he explains. “The decision window for this data is much shorter for these users as they want the internal deadline to be as close to the market deadline as possible. Our upgrade of eVent has taken this into account and the decisioning can now be made by any user in the asset management firm.”
Harries contends that Fiserv has been investing more than other vendors in its solution to capture particular market nuances beyond the data capture cycle. The vendor has been working closely with its clients to this end to increase its functional capabilities, he adds.
Direct competitor Information Mosaic is more focused on the custody end of the market, he claims. SmartStream, on the other hand, has “stepped away from the market for a while and is only now coming back to the space”, he continues. Tata Consultancy Services (TCS) has a “completely different business model” that Harries reckons is more suited to the banking community because of the costs and timescales involved in building a custom solution.
As for the rising trend towards software as a service (SaaS) solutions, Harries reckons the market is not yet mature enough for such a model. “There needs to be wider adoption of market standards before a remote service centre approach to this data is appropriate,” he explains. “This kind of service cannot be offered beyond the area of data capture and cleansing.”
Harries contends that corporate actions processing should instead be tackled as a business problem related to risk management rather than data availability. “There needs to be process integration with internal and external systems, which means that a web-based solution is not appropriate either,” he says.
As for the future, Harries is confident the sales pipeline will prove fruitful over the next six to nine months. “The value of deals has changed recently and we have seen 100-200% growth in terms of projects coming back online. These are largely from asset managers, some of which are mid-tier and are being driven by concerns around risk management and headcount reduction.”
In order to support these new sales, the vendor has added a number of new recruits to its sales and marketing teams in the US and, in July, Tim Berrada was appointed as the business development director of Investment Services for the Asia Pacific region in Singapore. Fiserv is hoping that these investments in staff will pay off in the long term by bringing it closer to its potential client base.
The US asset management community is a particular customer group in the vendor’s sights over the next year or so. “The balance between UK and US sales is still there at the moment, although we are also increasing our focus in Asia,” Harries concludes.