FIS Takes a Big Step Into Capital Markets With SunGard Deal

Archived Published: 17 August 2015 ID: G00291091


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FIS’s purchase of SunGard will create a behemoth in banking and securities software. To get the full potential of the acquisition, FIS must convince large clients that a vendor that spans both segments can serve them better.

News Analysis


On 12 August 2015, banking technology solutions provider FIS announced a definitive agreement to acquire financial software company SunGard for $9.1 billion. The transaction is subject to regulatory approvals and other customary closing conditions and is expected to close in 4Q15.


With its purchase of SunGard, FIS, which is strong in consumer banking, gets many complementary capabilities in capital markets. SunGard’s solutions in banking and securities span wealth management, risk and compliance, treasury, trading, securities, and asset management. It also has solutions in insurance and education.

The banking and securities vertical-specific software (VSS) market is highly fragmented, with the top 12 vendors claiming less than 20% market share in 2014 (see "Market Share Analysis: Banking and Securities Vertical-Specific Software, Worldwide, 2014" ). Revenue growth for mainstream products in mature markets is constrained by a lack of new clients, more standardization of platforms and already high levels of technology adoption. Demand for technology mostly comes from new business needs or possibilities provided by new technologies. These factors, and cheaper debt, have led to large vendors growing by acquisition.

The areas for cross-sales in the short run are in consulting, treasury, wealth management and risk solutions. FIS subsidiary Capco’s consulting expertise in capital markets matches well with SunGard’s offerings. FIS will be able to offer a larger roster of solutions in wealth management, treasury and risk management to small and midsize banks, where it has deeper relationships. In addition, FIS’s Clear2Pay forms a good tandem with SunGard’s treasury and liquidity solutions (see “FIS Global Takes a Big Step in Payments With Clear2Pay Acquisition” ). Cost savings in many support functions of these two large companies will be a key focus.

Large-scale growth in the long run will require FIS to change buying behavior at large banks. FIS will become the first provider to offer many VSS solutions in both banking and securities. FIS can use this broad portfolio to its advantage if it can convince large banks that there is value in consolidating vendors across those segments. This will require integration of multiple product sets and teams that both companies have acquired over time. Moreover, this integration needs to result in new value for the clients. Most VSS purchases are distinct for banking and securities. Firms are paring their list of providers, but only in horizontal solutions or for synergies within a segment. However, if FIS is able to make the case, it will have a new competitive advantage not easily matched by its competitors. The case will be easier to make to small and midsize banks where there are needs across the segments.

SunGard brings FIS a roster of new clients in areas such as private equity, asset management and insurance. FIS and SunGard each get more than 60% of revenue from North America and have distributed presence elsewhere, limiting any geographic impacts or opportunities. Also, since there is little overlap, product retirements and consolidations will be minimal.


Business unit leaders at banking VSS providers:

  • Test if FIS’s combined portfolio creates vulnerability for the segment you serve. Ensure you solve for them with the right marketing messages or partnerships as needed.

  • If you are open to being acquired, take steps to increase your visibility among industry leaders, as FIS’s acquisition will catalyze similar actions by competitors.

Business unit leaders at SunGard’s competitors:

  • Check if your focus on services, either directly or through partners, is strong enough to match the addition of Capco to SunGard’s offerings.

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