Stephens Inc. Analyst Brett Huff says he is observing a trend of bank tech and payment processing companies getting additional products and geographies via acquisition. As an example, he says Fidelity National Information Services (FIS) recently purchased Clear2Pay, a private company based in the U.K.
“We think they bought the company to get a payment hub technology,” Huff says. “This is a product technology in which banks will over time consolidate many silo-ed payments functions into a few, or maybe even one, payment system. This new consolidated system, or payments hub, can be configured to handle different payment types.”
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Huff says the consolidation of the back-office payments infrastructure reduces the cost for banks to serve these payments. And, he says the FIS/Clear2Pay deal also demonstrates the move by bank tech and payment processing companies to expand geographically.
“While FIS is the most internationally diversified bank tech company we cover, they continue to want to bolster their international operations,” he says. “With Clear2Pay they got addition to their European geography.”
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