Fiserv CEO Frank Bisignano said this week the payments processing giant is equipped to manage “tough times.”
When asked how Fiserv would adapt in the event of an economic downturn, Bisignano, speaking Monday at Citi’s 2022 FinTech Conference in New York, touted the “resilience and durability” of the company’s business. Brookfield, Wisconsin-based Fiserv offers payments, financial technology and merchant services.
Consumer spending remains strong, and Fiserv’s bank and merchant customers continue to show consistent demand for digital products, the CEO said, noting about 85% of the company’s revenue is recurring in nature.
“Yes, our merchant business will be affected by consumer spending, but recognize that we have a lot of what I would call staple-related products that we have very, very large market share in,” Bisignano said during a webcast of his appearance. “And I think our banking set of operating systems are of mission-critical nature for our financial institutions.”
The company has invested more in recent years and could slow the pace of investments if needed, Bisignano noted. Fiserv has “a bunch of discretionary spend,” he said, and executives “know how to manage expenses very, very well.”
“I like to believe that we’re maniacally focused where we need to be on what things to pull back and what things to continue,” Bisignano said.
He explained how the company has had to target cost control in the past, particularly after its 2019 merger with First Data.
“We know our levers and how to manage the expense line, and we’ve managed it through this whole merger in order to...be prepared for tough times, too,” Bisignano said.
This year, Fiserv expense management has included cutting employees and selling off business units. The company, like others in payments, is grappling with inflation and currency volatility, and those stressors are squeezing Fiserv’s profit margins.
Some analysts who follow the company have predicted Fiserv executives will cut costs if needed to achieve earnings-per-share growth. Still, others have noted Fiserv’s margin expectation for 2022 may prove difficult to achieve.
“We will generate expanding margins,” Bisignano asserted Monday.
Bisignano also was asked about the impact of a new Federal Reserve debit rule aimed at increasing competition in the industry. The change could present an opportunity for Fiserv, which owns debit networks Star and Accel. The rule clarification requires more than one debit network be available for routing transactions, including online.
“We have issuers, we have merchants, and we have the third-largest network,” Bisignano said. “So we’re going to talk to our clients, both on the issuing side and merchant side, and do exactly what they want. And that should be worth more than zero.”
He acknowledged the move creates “a bunch of opportunity, both on the issuing side and on the merchant side.”