Fiserv, Inc.'s (NASDAQ:FISV) long-term growth opportunities looks solid from increased backlog, driven by higher total contract value (up 38 percent in 2013 versus 2010) and ability to up-sell channel and payment solutions.
Fiserv plans to expand the PINless offerings and introduce Signature debit. Fiserv has been gaining market share (10 percent higher growth) in the debit market ($1 billion opportunity) driven by integrated solutions, Accel network and value added services including risk solutions.
In Bill payments, FISV has 40 percent market share and expects $500 million opportunity by expanding share in community banks (30 percent share) and mid-market (35 percent).
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Mobile bill payment usage doubled from 8 million U.S. online households in 2012 to 16 million in 2013, according to a recent survey by the financial technology company. This growth was driven primarily by smartphone owners, among whom mobile bill payments surged 150 percent.
It is essential for billers to have a mobile-optimized website for bill payment as mobile-optimized bank and biller websites are the most popular choice when paying bills with a smartphone, although apps for billers and banks were also popular and grew rapidly.
Fiserv provides the most comprehensive suite of billing and payment options to billers and financial institutions, enabling them to realize and unlock the new opportunities a shifting consumer, bill payment, landscape offers.
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Deutsche Bank analyst Bryan Keane said increased adoption and usage rate present $15 million and $20 million of annualized revenue opportunity. Demand for mobile solutions (including tablet solutions) appears strong with an increasing number of banking clients adopting Mobiliti. Mobiliti is a hosted solution that gives community banks and credit unions the tools and expertise to deliver ! powerful, world-class mobile banking and payment services.
In addition, the company tasted success in signing up issuers for PopMoney and achieved accelerated transaction growth (96 percent since the first quarter of 2011), although the revenue contribution remains elusive. PopMoney enables consumers to send money directly to anyone via an account number, an email address or a mobile phone number.
Highlighting the leading edge capabilities of DNA platform, Fiserv has been able to plug the attrition of Open clientele by offering financial stability and integrated solution with channel and payment capabilities and should help further enhance Fiserv's position.
The company is on target for the Integrated sales guidance of $950 million for period 2011 – 2015 which has improved the penetration rate for strategic solutions notably online banking and debit. Bill payment penetration was up from 44 percent, 29 percent, and 13 percent in 2006 to 75 percent, 58 percent, and 61 percent in 2013. Fiserv managed to increase win rates in the large bank markets, up from 1 out of 8 opportunities in 2011 to 5 out of the 7 in 2013.
The company's current business model could increase consistency of cash flow and EPS growth. Fiserv's earnings are projected to rise 17.3 percent this year and 11.3 percent in the next. Fiserv's average EPS growth over the next five years is estimated at 14.15 percent. Shares of FISV trade 16 times its forward earnings.
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