Earlier this week, Fiserv announced its acquisition of Open Solutions, Inc. (OSI), adding a strong product and client suite to its business lines. With a client base of 3,300 community banks, credit unions, and thrift institutions, OSI will help Fiserv continue to strengthen its foothold in this market. Similar to its other recent acquisitions, Fiserv expects the OSI acquisition to be significantly accretive to earnings per share (EPS) with a projected adjusted rise of 12% in EPS over 2011. This indicates that Fiserv will largely be adding to its clientele and strengthening its lines of business rather than anticipating benefits through cost reduction (although cost reductions are also anticipated by the firms).
Key OSI products include “DNA,” a real-time fully-integrated, relational core banking platform noted for its open architecture and adaptability. The “DNACreator” tool enables OSI’s clients, partners and other developers to create integrated apps that leverage the DNA platform and provide enhanced and targeted capabilities to clients.
The firm further was the first of its kind to make these apps available in a business-to-business app store environment known as “DNAppstore.” (Note - For a different angle on the App Store concept, refer to Javelin's report, "Envisioning an App Store Inside Online Banking") Some of the developers and solutions that have leveraged the DNACreator and DNAppstore capabilities include Yodlee for PFM, mFoundry for mobile, and Vantiv for ATM/EFT capabilities.
OSI has an extensive list of partners that further enable the platform’s potential functionality. The DNA suite is well-received by OSI clients and the market alike and should help Fiserv to expand its services, its partner access, and its ability to deliver products with open architecture capacity. OSI is also noted for its Weiland-Account Analysis product which is used by both large and small FI clients.
In the recent tight fee and regulatory environment, this product has been well-received by the market and will provide another tool that Fiserv can offer to help banks identify ways to build revenue-generating alternatives in light of changes such as the Durbin Amendment and debit overdraft rules. Additionally, OSI is known for its advocacy related to credit union, community banking and small business issues. CEO Louis Hernandez Jr. is a frequent commentator and author, driving the firm’s thought leadership and advocating disruptive technology as key to the success of the traditional financial services business. Fiserv and its management team will, of course, also bring much to the table for OSI and its clients. In all, a good move to strengthen Fiserv’s competitive market position.