The better the question
How do you merge two financial services players?
Market consolidation brings scale and innovation by streamlining online payments.
Fintech companies specializing in online payment solutions have been essential support for banks, credit unions and businesses. But, they have tended to build dominance in one link of the financial payment transaction chain. Until a year ago, First Data, a global merchant acquiror, was operating in some 100 countries, providing point-of-sale and online payment solutions for large and small businesses. Fiserv was one of the leading US account processors for banks, with over 37% of US market share in the years prior to the merger.1 With combined revenues of US$13 billion, these companies had grown both organically and through acquisitions to develop their offerings across the payment processing chain. They’d built up capabilities in risk management and credit and debt issuing. The question was, could they be brought together to unlock additional value, provide a better service to customers and accelerate their growth as an integrated asset?
The leaders of both Fiserv and First Data were convinced that their companies would be stronger together, by providing their clients with a holistic payment solution. The underlying logic for the deal — a set of complementary capabilities and complementary clients — was compelling on paper. But grafting together two complex businesses in US$40 billion enterprise value acquisition with over 45,000 employees is a notoriously difficult undertaking. In addition to this, Fiserv made an external commitment to achieve US$900 million in cost synergies and $500 million in revenue synergies within the first five years following the close of the transaction. The achievement of these synergies would be integral to the success of the deal, as the company announced it would invest an additional US$500 million in an ambitious growth and innovation agenda.
The leadership and enablement of the synergy program largely fell upon Fiserv’s finance organization, who was charged with spearheading this effort. Documenting and rolling up dozens upon dozens of cost and revenue synergy initiatives into a structured, repeatable monthly rhythm, where progress could be tracked and measured, was no easy task. Chris Dichiara, Vice President and Head of Financial Planning and Analysis for Fiserv, was asked to lead this program for the company. So, how could these two companies leverage technology to realize the financial benefits and joint vision of this transformational merger?
The better the answer
A single goal, enabled by an advanced digital platform
Consolidating multiple data-points would have taken years without EY Capital Edge.
“Early on in the merger, I tried to use Excel,” recalls Chris Dichiara. “But piecing together hundreds of Excel files, figuring out what was happening in each of the hundreds of initiatives, getting visibility over the process — workstreams, financial data, roadmaps, milestones — it didn’t work out so well.”
The EY team who led the post-merger integration recommended their end-to-end digital platform, EY Capital Edge, to bring all this complexity into a streamlined solution. Fiserv was able to fully tailor the EY Capital Edge tool to best meet their needs. The tool provided a monthly package which provided all the reporting and insights necessary to keep the new organization on track to meet their synergy targets and execute upon the overall M&A strategy. The platform kept everyone — from the individual initiative owners to the Fiserv executive leadership team — aligned, provided instant visibility across the whole process, and ensured everyone was talking from the same numbers: it brought efficiency to chaos.
“EY Capital Edge was fluid, flexible, cloud-based and easy-to-access,” says Dichiara. “Bringing in EY and EY Capital Edge to help organize the process really accelerated the deal. We’ve got over 100 people on the platform today: all our teams use it. I see the same data being used in one of our business units as in Corporate where I sit.”
A merger of this size encompassing hundreds of solutions, millions of clients and billions of data points, requires “an entire organizational effort,” says Dichiara. The EY team were “there the next week,” putting together the process, instituting controls, and “being innovative in the way they were thinking,” he says. “They built connections internally with us and were extremely flexible…helping us take the Capital Edge tool and really integrate it into our existing financial planning and budgeting processes.” The EY organization did more than provide a flexible digital solution: they got under the skin of the company, bringing a broad range of experience in where it was needed, helping deliver on the strategy.
Critical to Dichiara personally was having absolute confidence in the financials. “We had no room for error,” he says, “and using EY Capital Edge… gave me 100% comfort in signing off on the numbers.”
The newly combined company, now called Fiserv, is already outperforming its initial targets. Within 8 months following deal close, the US$900 million cost synergy target was increased to US$1.2 billion and on the revenue side, “we’ve already upped that target to US$600 million,” says Dichiara. With the help of EY Capital Edge, Fiserv is well on its way to achieving all its external commitments and most importantly, as Dichiara reflects, “the integration has come together in a way that we're that we're winning in [our] clients’ offices.”
The merged Fiserv is efficiently cross-selling capabilities to its clients, providing a seamless, globally-integrated payment solution that is delivering additional value to its customers.
The better the world works
A holistic payment solution, backed by a single technology platform
EY Capital Edge helped accelerate this merger and it continues to support the strategy
Chris Dichiara is clear that EY Capital Edge accelerated and simplified the process of the merger between First Data and Fiserv: it was “certainly instrumental in helping us execute on the deal.” But even after the deal was done, the tool is an invaluable aid to running the new enterprise. “We took our financial hierarchies, our business structures, our functional structures, and put them into the tool,” he says. “We linked it in with our ERP system and ..., eighteen months after the deal, our execution plans are kind of just working. It's embedded within everything we do, from a finance side but also a business side and it really has become part of the financial architecture of the company.”
EY Capital Edge was fluid, flexible, cloud-based and easy-to-access. Bringing in EY teams and EY Capital Edge to help organize the process really accelerated the deal.
A leading platform that can flex to accommodate a company’s financial, business and ERP structures and systems can continue to provide value post-merger, not just for the company, but for their clients too. The story starts with a bold strategy, but it comes alive through successful execution.