Call it a winter coincidence, or maybe it is a portent of deep meaning, but in the past couple of months Brookfield, Wis.-based Fiserv did a major deal to bring core system developer Open Solutions under its tent, whereas Jacksonville, Fla.-based arch-rival FIS plunked down its bet on leading mobile banking app develop mFoundry.
Talk about wildly different strategies.
Fiserv has gone on the record about the meaning of its gamble.
Now, in an exclusive Credit Union Times interview, Susan Hawkins, group executive and general manager, eBanking, Mobile and Commercial Treasury Solutions, at FIS, explained what the mFoundry acquisition means to FIS – and to its credit union customers.
“Mobile is a big part of banking’s future and our plan,” said Hawkins, “is to work to find ways for financial institutions to play major roles in mobile payments, person-to-person payments and the rest.”
The era of hesitation about mobile is over, said Hawkins. “No one wants to be the last CIO to implement mobile banking.”
She added: “Mobile banking is banking’s fastest growing channel and it also is the lowest-cost channel.”
The market potential for a mobile banking app developer is enormous. Best guesses are that perhaps around 4,000 banks and credit unions presently have some kind of mobile banking (however simple the implementation).
In round numbers, that would leave as many as 10,000 institutions in search of a mobile banking app. Even assuming significant attrition among the smaller institutions, there has to a market of at least 4000 currently in need of mobile banking, many more when the first round adopters accept their need to upgrade into a more robust app.
Before the mFoundry acquisition, FIS ranked fourth in mobile banking app installations with around 600. Fiserv was number 1 with around 1,100, mFoundry 2 with 900 and Intuit 3 with a tick over 600, according to well-informed sources. Post acquisition, FIS vaults into a big lead over second-place Fiserv.
Note, too, that the FIS installed base was essentially built on mFoundry under a different label because FIS some years ago had invested in mFoundry and had acquired some rights to resell its technologies.
mFoundry also has had success with retail point of sale apps – it is behind the Starbucks mobile app, which many experts point to as the biggest mobile wallet triumph around – and, suggested Hawkins, FIS will be looking for more retailers with whom it can partner on mobile wallet apps.
Hawkins in the interview was adamant that the acquisition of mFoundry was not a one-and-done deal, that FIS’s intent is to leverage the skills and expertise of the mFoundry core employee group – who will remain in Marin County, California, she said – and to nurture the team so that a “center of excellence” flourishes.
An mFoundry differentiator is that, at last fall’s BAI conference, company CEO Drew Sievers announced that mFoundry planned to open up its banking app, allowing financial institutions to insert (or not) third-party apps such as P2P tool Dwolla and gift card company BlackHawk Network.
Hawkins indicated that under FIS’s ownership, there was no intent to close the app, that the open architecture trumpeted by Sievers would remain.
She elaborated: “We see financial institutions getting a choice between Dwolla and the FIS P2P product,” the so-called People Pay tools unveiled by FIS a month ago.
As for mFoundry, industry observers said that what it got out of being acquired is that the deal let it pay off its early investors – Silicon Valley capital has never been known for its patience – and the arrival of FIS’s comparatively much-deeper pockets would allow the company to more aggressively invest in mobile app R&D and at least potentially to create products that will keep up with the ever-slicker apps coming out of money center banks.
That could position the FIS-owned mFoundry to grab a growing market leadership.
Hawkins did not disagree with the belief that FIS will fund R&D. “We plan to continue and accelerate what mFoundry has done.”
She added: “I believe FIS is in the lead in mobile banking today” – and she left little doubt that the intent is to hold onto that lead.