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Due Diligence

FIS Worldpay Acquisition Can Pose New Opportunities and Vendor Assessment Challenges

Mar 19, 2019 by Branan Cooper

On March 18, 2019, FIS announced the acquisition of Worldpay, a move that combines two very large payments systems. Not far behind January’s First Data Fiserv move, the FIS Worldpay acquisition was largely seen as a response to that January announcement.

Consolidation of power in the payments industry has been going on for many years. In fact, most of FIS growth of late has been through acquisition rather than simply organic growth. With all the change, organizations should both welcome the move and raise an eyebrow of concern about it.

Benefits of the FIS Worldplay Acquisition

On the positive side, there are some advantages to the acquisition:

  1. This can bring new opportunities for organizations to compete by allowing them to offer some of Worldpay’s newer – some say riskier, we’ll save that debate for another day – payments solutions.
  2. It also allows FIS to continue to be a market leader in new and emerging markets.

The Concern – Fully Understanding That Product Level Assessments Are Necessary

On the flip side, this is also a clarion call as to why you should manage and evaluate risk at the product/platform or service level, not just at the overall third party vendor level.

FIS has numerous products. Some of the products are low risk, such as their Compliance and Regulatory University arms. Some are of far greater risk, as the various acquired payment platforms don’t all align perfectly with one another – in fairness, they really don’t need to, but imagine driving a car with four different size tires because you bought them for different performance reasons at different times in their tread life. Due to this, you simply can’t risk assess the company only, but instead must break it down by the products/services being used by your organization.

With Time, It’s Becoming Easier to Evaluate Due Diligence

FIS has overcome its challenges of several years ago when they had a lengthy memorandum issued to them by the various regulators. In response, FIS has also become somewhat more forthcoming – key word being “somewhat” – with their due diligence. However, please don’t be fooled just by the marquis name. It’s always worth pursuing due diligence, regardless of whether they are a huge well-known name or a niche player in a business, as it’s critical to always be thorough in your vendor due diligence and risk assessment practices no matter the familiarity or size of the business.

I realize it can be difficult. I heard it loud and clear at an FDIC Community Banking conference that bankers feel like they’re being held to higher standards than the processing behemoths (they are!) and the bankers implored the regulators to help. I’m certain there has been a great deal of pressure applied to FIS, as well as others, and in the long run, things will continue to improve and in turn provide more clarity and product offerings.

On a final note, I have great respect for FIS and the delivery team there. I’ve visited several of their offices, including their headquarters in Jacksonville, FL. They have a well-managed operation and engaged and experienced management – but anyone would struggle to fully integrate so many different platforms.

Exciting times for all involved and look forward to the next headline!

For help on assessing vendors at the product level, download our infographic

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Branan Cooper

Written by Branan Cooper

Branan Cooper is the Chief Risk Officer at Venminder. Branan has nearly 30 years of experience in the financial services industry with a focus on the management of operational and regulatory processes and controls—most notably in the area of third party risk and operational compliance. Branan leads the Venminder delivery team as the third party risk management subject matter expert in residence. Branan also serves as an industry thought leader. He's a member of InfraGard and the Professional Risk Management Industry Association (PRMIA). And, he was selected in 2018 as an advisor to the Center for Financial Professionals (CEFPro) and board member for the Global Sourcing Resource Network (GSRN).

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