Fiserv NASDAQ: FISV Chief Executive Officer Mike Lyons said the payments and financial technology company is focused on returning to a “constant compounder” profile by sharpening its business mix, improving execution and investing around two major markets: banking and commerce.
Speaking with J.P. Morgan Managing Director and Senior Analyst Tien-Tsin Huang at the firm’s conference, Lyons said Fiserv benefits from providing “mission-critical services” to large markets undergoing structural change, including digital payments, embedded finance, real-time money movement and AI-enabled services.
Lyons said the company’s financial model is supported by highly recurring revenue, positive operating leverage, strong free cash flow conversion and a capital allocation approach that remains centered on share repurchases while staying within a 2.5x to 3x leverage range.
He also pointed to recent portfolio actions as examples of Fiserv’s effort to sharpen capital intensity. The company discussed an ATM joint venture with Bridgeport at its Investor Day and sold its education business, a student loan processing operation, which Lyons described as a good business but not strategic to Fiserv’s broader direction.
Fiserv Reaffirms Outlook, Expects Second-Half Acceleration
Lyons said the company’s current-year guidance was maintained and acknowledged that it implies faster growth in the second half. He said Fiserv was down “a little” in the first quarter and expected the second quarter to be slightly worse, resulting in a first half down low single digits.
He outlined three drivers of expected second-half improvement: signed contracts coming online, planned activity ramps from existing enterprise clients and product ramps across Clover Capital, Clover Savings, Clover international, XD and CashFlow Central.
Lyons said those factors support a second-half growth range of 6% to 8% and a full-year range of 1% to 3%. He added that excluding approximately two points from new client contract ramps, the second-half rate aligns with the company’s 4% to 6% forward plan.
On the macro environment, Lyons said banks remain in good shape, with sound credit and a focus on improving technology capabilities. On the consumer side, he described the environment as “cautiously optimistic,” noting that consumers are employed and still spending, though Fiserv’s Small Business Index showed spending shifting toward fuel while some discretionary categories declined year over year. Clover data for April remained consistent with the first quarter, with growth of 12% excluding the gateway, he said.
Financial Segment Focuses on Service, Attrition and Product Delivery
Lyons said Fiserv’s financial services segment is expected to grow 2% to 4%, with banking at the lower end and issuing and payments at the higher end. He said customer service concerns have been concentrated in the banking segment and centered on three issues: day-to-day service, delayed product delivery and the prior decision to reduce the number of cores from 16 to five.
Fiserv has rebuilt its day-to-day service approach, added resources and re-engaged the consultant community, Lyons said. He also cited the acquisition of Smith Consulting as part of an effort to provide more value-added services to clients.
On product delivery, Lyons said Fiserv has hit every major milestone since its Forum event in September. XD and CashFlow Central are in implementation mode, core enhancements are being completed and Core Advanced remains on time, he said.
Lyons also said Fiserv has stopped forced conversions and is now emphasizing a “journey approach” to core conversions, using a more modular strategy to help clients modernize over time.
Gross attrition in the financial services business has roughly doubled, creating a 75 to 100 basis point headwind, Lyons said. He said Fiserv expects attrition to return to more normalized levels by the end of its medium-term plan in 2029, supported by better service, product delivery and offerings such as StoneCastle, agentOS and data center modernization.
Clover Growth Plan Includes Value-Added Services and International Expansion
Lyons said Clover’s 10% to 15% gross payment volume growth framework is built around a 10% organic growth base, with the potential to reach 15% if Fiserv succeeds in converting non-Clover customers to Clover or adding Clover value-added services to those customers.
He said Clover has consistently grown in the 8% to 12% range in recent years and identified several drivers to sustain growth, including horizontal and vertical value-added services, healthcare through PracticePay, professional services, restaurant offerings, international expansion and distribution through ISOs, ISVs, banks and a direct sales force.
Lyons said international markets now account for more than 20% of Clover volume, with Japan expected to come online later this year and into 2027. He also said the company sees room to improve customer retention and the back-end experience.
For non-Clover merchant customers, Lyons said the business has been stable for a long time. He said those customers are generally satisfied Fiserv clients, and the company will take a targeted approach to offering services such as Clover Savings and Clover Capital without forcing major hardware or platform changes.
Merchant Platform, STAR and Business Synergies
Lyons said Fiserv is building a unified gateway across enterprise clients, platform clients and Clover. Commerce Hub is live with $200 billion in volume across 40 countries, he said. He also highlighted Fiserv’s enterprise point-of-sale position, Finxact ledger capabilities, backend processing scale and data assets as advantages in competing across e-commerce and omnichannel payments.
Asked about STAR, Lyons described Fiserv’s debit networks, STAR and Accel, as a strong example of synergy between the merchant and financial services businesses. He said the combined networks represent the third-largest player and allow Fiserv to serve issuers while also routing transactions through its acquiring capabilities.
Lyons said STAR has “strategic optionality,” including potential relevance for on-us settlement, global opportunities and future payments use cases tied to demand deposit accounts and merchants.
Lyons also defended keeping Fiserv’s merchant and financial services businesses together following a strategic review. He cited existing synergies in bank distribution of Clover, acquiring networks, biller products and fraud data, as well as future opportunities in stablecoin, embedded finance and on-us settlement.
AI Push Centers on Agent OS
Lyons said Fiserv has received strong feedback on agentOS, which he described as an operating system for banks. He said banks want to use AI but face challenges because they operate in highly regulated environments involving compliant and personally identifiable information.
He said agentOS is intended to bridge the needs of banks and AI providers by allowing agents to be deployed in a safer, more controlled way. Lyons said Fiserv sees potential for agentOS to create value for customers and open addressable markets that previously were not on the company’s radar.
About Fiserv NASDAQ: FISV
Fiserv, Inc, founded in 1984 and headquartered in Brookfield, Wisconsin, is a global provider of financial services technology. The company develops and delivers integrated solutions for payments, processing, risk and compliance, customer and channel management, and business insights and optimization. Serving thousands of clients, Fiserv supports banks, credit unions, securities broker-dealers, leasing and finance companies, and retailers.
Fiserv’s core offerings include account processing systems that automate deposit, lending and transaction processing for financial institutions, as well as digital banking platforms that enable mobile and online banking services.
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