Afternoon, everyone. Thanks for joining us today. I am Harshita Rawat, the Senior Analyst covering U.S. payments at Bernstein, and I'm delighted to be here with me today, Mike Lyons, Fiserv's President and CEO.
Thank you for having us.
Mike, you recently completed your one-year anniversary as the CEO of Fiserv. Tell us both about your key learnings and also the key changes you've made in the organization?
Yeah. It's great to be here. Thank you. I know, the last year I'll start by saying we know the last year has been difficult for our investors, and we don't take that lightly. Take all of the context around this. Roughly a year ago, and shortly after I started as organic growth was slowing, we launched the franchise review that we did last fall to understand what the drivers of that slowdown were. We learned a lot as part of that process. Most importantly, at the top of it is if you take out the cyclical factors that were behind the growth post-COVID, a lot of the growth post-COVID, the company looked a lot like it had pre-COVID, with more in the mid-single-digit revenue growth range. The review also identified some areas where we needed to address some specific actions, mostly around client service, product delivery.
Steph, you and I have talked about product delivery, tech resilience, and capital allocation. We put a plan in place to address those. When you went through the whole thing, you take away the cyclical factors, you identify the areas you need to do some work. It also confirmed for us that the underlying strength of the core franchise was intact. Our strategy and purpose were sound, and we could operate from a position of strength as this infrastructure technology layer that banks and merchants rely on to run their businesses. Every business we went through, digital banking, core banking, issuer processing, payments, all number one p ositions. The number one and two positions in small business payments with non-Clover and then Clover, obviously number one in enterprise.
You had this great franchise, and to unlock that great franchise and to address the issues that we had identified, we launched what we call the One Fiserv Action Plan. That's got five distinct pillars to it. This underlying and overwhelming mantra to think and operate with a client-first mindset. Everything we're doing today is to execute on that, both to bring out and highlight the strength of the franchise, and then to address these issues that we identified. That means fully embracing AI. It meant some important cultural shifts within the company. It meant redoing parts of the leadership team. It meant increasing our execution-oriented focus and increasing accountability. It meant revitalizing our employee base, which we've been happy about, and we talked about at Investor Day.
As I outlined at Investor Day, all these steps we're taking is to try to reclaim what Fiserv always had, which is a very predictable, visible, mid-single-digit revenue growth profile and a constant compounder investment case, which we think ultimately will be good for both investors and our clients.
Let's talk about the inputs into that constant compounder profile, and I want to start with the leadership team.
Yeah
that you've built. Tell us more about it. Given all the change that has occurred within the past year, how has also your ability been to attract talent and retain people with institutional knowledge as well? I know at the Investor Day, you had noted that the attrition of top talent.
Yeah
is now at record low levels.
Hopefully if people didn't get a chance to see the Investor Day presentation, I encourage you to watch it. We love the team we've built, led by Dhivya on leading financial services and Takis leading merchant services. I thought they did a terrific job. I knew it but it was good to get the chance to highlight and spotlight them at Investor Day. Naturally, they've been great leaders, operators, visionaries, innovators, and naturally great people follow great leaders, so we've been able to attract a lot of talent into the company. I said at Investor Day, I've been shocked by the amount of talent that wants to join the company and help us execute on the plan. When it all shakes out, if you take our leadership team and expanded leadership team, call it 40, 50 people, it's going to be about half new and half existing.
We feel like it's a really good blend of bringing in some domain-specific talent around different areas, including AI, and very established, unbelievable talent at the company. We've also spent time, if you go into the base of the employees, I talked about revitalizing the base of employees. They're encouraged by a client-first focus. They want to lead with that. If you look, you're right. If you look at our best performing people, not just the top talent, but the best performing people, the exceeds and significantly exceeds people across all levels of the organization, that attrition is, we can't find a measurable period back where it's been as low as it is now. That's a good sign. It shows people are engaged and focused and believe in what we're trying to accomplish.
We've been very deliberate, either through acquihires, we call it, with Smith Consulting or more directly trying to get some of the subject matter experts who left the company, particularly in the financial services business over the last couple of years, to get them to come back to the company and rejoin it with this client-first mindset. Feel very good about where we are. There are a lot of new faces, as you recognize, but it starts with outstanding leaders in Dhivya and Takis.
Another big theme coming out from your recent Investor Day was AI-driven modernization at Fiserv. Tell us more about that. We know that the models have gotten better, and we discussed how you built this new leadership team. What are you able to do in terms of-accelerated product and modernization timelines with AI, which was not possible at Fiserv before.
Yeah. The pace of change is incredible even since the fall. We've been very encouraged about how AI can help us develop and as I talked about Investor Day, it's a three-pronged approach. Generate more revenues, reduce our own costs, and then enhance the client experience. Obviously those are somewhat interconnected. If the experience is better, it can generate more revenues. On the revenue side, the biggest thing AI's done is, if you remember what we are, we are an infrastructure company, a technology infrastructure company that two massive TAMs use to run their businesses, protect their data, move money with a level of reliability that can't be approximate or like. That's all fed off a series of systems of record. Those systems of record are sound, they're solid. They've been built over years of trust.
What AI is enabling us to do is turn those systems of record into systems of greater value, whether that's better data, which manifests itself in higher auth rates, lower fraud rates, better data products, more hyper-personalized offers, some of the stuff we profiled in the demos at Investor Day. It's also allowed us to go into completely new categories, whether it's agentic or agentOS, which is an operating system that Dhivya unveiled at Investor Day, where we've had incredible receptivity since Investor Day, which basically is connecting banks to agents and agents to banks.
Two constituents of ours that have a hard time totally meeting in the middle, because the agents don't want PII, they don't want to be regulated, they don't want to be overseen by state or federal regulators, and the banks don't know how to let an agent into their core systems without. They don't know how to manage or aren't prepared and ready to manage a kill switch to mask data to control where these agents go and not. All of those things are introduced new revenue TAMs for us. On the reduced cost side, it's servicing, it's operations and it's app dev. That's factored into the positive operating leverage we put forth in the plan, but we see significant opportunity to reduce costs there. On the client service side, getting products to market faster.
We showed you some of the measures around certain products, but 40%, 50%, 60% faster just in the last couple of months. The ability to take self-service client capabilities and make those much higher quality. We obviously run thousands of systems for millions of clients. If we can prevent a ticket from being created, it's got great efficiency attached to it and the efficacy they're showing in helping customers self-solve their needs. That's an important piece. Simply streamlining implementations. Data mapping is a big part of a conversion, a merger conversion, and cores just goes much faster with the technology out there today. We think there's great capabilities and great opportunity for us. We've been thrilled with the OpenAI partnership, which we announced at Investor Day.
This morning we thought it was an important announcement with Cognition, where we'll use Devin, which is their software engineer agent, to help modernize specifically on the cores in the financial services businesses. They've been a great partner, and it was great to get a formal agreement out with them this morning.
I want to follow up on agent OS. I know it's not part of your medium-term guidance. Tell us more about it. There are so many agents being created these days.
Why does Fiserv have the right to win here? How does this expand your market opportunity?
Yeah, agentOS, which I was just referring to, we launched it at Investor Day, came directly from feedback we were getting from both sides of the equation. The banks came to us and said, "Yes, we have lots of areas for inefficiency, and we don't know how to address them." How do we engage with the agents? Dhivya and I had one meeting where I talked about Investor Day, the bank said they had an agent who was going to help them in deposit reconciliation, they put the agent through procurement. The procurement department asked for seven years of audited financials, and the agent had been functional for 11 days. There's just a giant mismatch of, I'm going to let that agent into my core, into PII, into all the other stuff that comes with it.
How do I police it and the like? Part one of what we created is an operating system that allows banks to access and deploy agents in a way that we step in the middle. What we do every day is interact with PII and highly regulated systems. We allow that side of it to happen. On the flip side, we've created an agent marketplace rather than just doing one LLM with one use case and trying to sell it to a bunch of banks. We've created an open marketplace that a third-party agent can come, the bank can create its own agent, we could create an agent, our competitors could create an agent.
It's just a matching area where if the bank has a use case, it can get to an agent, and then goes through this operating system that we will manage to get into the banks and we will manage the kill switch, where it goes, masking of data, and all the other important compliance factors. We simply responded to two requests where become the last mile for agents to get into a massive TAM for them in the banking sector, and we become the enabler for the banks to access lots of agents who can help them run their businesses more efficiently. We co-developed it with six banks. We have two betas live.
Both were on demo at Investor Day, and we've been flooded with calls since Investor Day about every agent has an idea and every bank has an idea how to get more efficient and putting that together, we think it's a tremendous opportunity. For us, most importantly, we're listening to our clients' needs, and if you think about how do we reignite growth in that core banking business? Part of it is better service, part of it's hitting our product deliveries, part of it's stopping core conversion, but also part of it, a big part of it, is becoming a value-added provider to the bank. Now that we can enable AI for a lot of banks, does that change their opinion on whether they keep their core with us or not, regardless of whatever the history may have been?
It's a body of work around that piece of it. That was one advantage for us, and then the second advantage is it introduces us to some basic workflow automation TAMs that weren't part of the core offering of Fiserv, and probably weren't going to be part of the core offering, just acting as the middle person between the agents and the banks.
I want to come back to financial solutions, but let's spend some time on merchant solutions first.
Okay.
The path to the 6%-8% revenue growth, and Clover is a critical input here. You laid out targets for 10%-15% volume growth, 15%-20% revenue growth at Clover. The addressable market here is big, but the competition is also quite intense, both on the product and now somewhat on distribution. What gives you the confidence around the Clover growth targets you laid out?
Yeah. Hopefully, a lot at your requesting, we put a lot of incremental data out on Clover at Investor Day. Hopefully, you in particularly appreciate it. Hopefully, everyone appreciate it. Just as a reminder on the 10%-15% volume that you mentioned, 10% is the organic growth that we targeted, and I'll tell you how we got to that number. Going from 10%-15%, assuming a stable macro, that would all come from some type of success in converting the non-Clover, or what we call back book to Clover. That's the upside from the 10. On the 10 organic growth, that number is a number that you go back to 2022. Every quarter since 2022, we've done somewhere between eight and 12, and it's average 10.
It's what we're doing today and maybe you view the competitive market as different than it is today, but we've been chugging along at 10, assuming a constant environment. When we look at Clover, and talking to this team, we've gone through every aspect of it, we see upside in almost every part of what we do. We've been talking about those five aspects of it, greater horizontal capabilities, and that's Clover Capital, Clover Savings, ADP, Homebase, and all the other things we can push through it. It's vertical expansion. We just launched healthcare and professional services in March, two significant areas that we didn't have exposure to before. It's international.
Canada and Brazil, we've talked about growing very strongly, and we've got Japan coming online with a great partner and a massive GDP market that hasn't gone through the cash to card secular change that other developed markets have gone through. We've got the whole experience front. We're doing very well on the front door. We're unhappy with some of the early attrition. You and I have talked about it. First 90-day attrition on Clover, and we put a whole experience effort in there, which we think can reduce runoff, again, nets to positive GPV growth. Continuing to build distribution channels. Some people are talking about that they've got a bank or an ISO. We put the numbers out in detail for the first time, Investor Day, 3,000 ISOs, 1,000 banks. I mean, the distribution's incredible, and we still have room to take there.
Digital sign-on, it's been a big aspect of one of our competitor's growth. It's never been an aspect of ours, is now into 20 banks or so. In each aspect of Clover, we think there's room to take. What we said to investors, "You can take the 10% any way you want." You can say, "10%, I think it's too competitive. You can't do 10% anymore, but you got five different metrics to do it." You can say, "10% is a base level, and here's five areas of upside to 10%." Above that, it would be some type of effective conversion of non-Clover to Clover for volume growth. We said five points difference between volume growth and revenue growth, which has been consistent with historical average. You have some new VAS coming online.
Just continued progression of VAS penetration, which is in the mid to upper 20s now, obviously adds to the volume growth to get to the revenue growth.
Let's talk more about that, the volume growth to revenue growth, and that kind of higher revenue growth. What drives your conviction in the revenue growth opportunity? You talked about the Value-Added Services penetration. There is a little bit of working capital in there. There is other opportunities. Let's talk more about that.
Yeah. What I'd say is that historically, if you take out some of the cyclical factors and some of the Argentina activity, there's been a consistent difference that you run basically five, 10 percentage points of GPV and 15 percentage points of revenue growth. VAS penetration's been increasing. We think there's still room to go there. There are significant new VAS categories. Clover Capital is one where our penetration, we said it's 4.5% in Clover on the non-Clover book is bigger than the Clover book. You cut it more than in half, you're in low single digits. Hasn't been an organized focus for us. It is now. Clover Savings, which we came online through the acquisition of StoneCastle, where we can connect deposits that may be under earning at our merchants into banks that are willing to pay for them.
These are big, new VAS areas that are coming online that we think will continue to drive penetration. If you believe the 10 in historical growth plus some new online products, that's what drives that incremental.
Let's maybe also, Mike, zoom in on the new verticals point that you made earlier. Also international markets, because these are also big addressable markets for you to go after. How do you feel about those opportunities? What drives your conviction here?
Yeah, we tried to give you the data at Investor Day. Go back to the 10%, if 10% is reasonable growth or not, is it competitive or not? We still see prices rising in small SMB point of sale, and we said we have market share greater than 10% in retail and restaurant. Overall, it's mid to high single digits in the U.S. Outside the U.S., it's virtually nothing. There's tons of room to run still, in the U.S., an opportunity there. Outside, a big opportunity we showed is low market share in healthcare and low market share in professional services. Both areas that especially our banking and ISO partners are saying that they want an offering, and they think they can deliver on an offering there. We launched both of those.
Clover PracticePay is the healthcare offering that we did with Rectangle Health, think about it as an ISV partner. Professional Services is largely on the heels of CashFlow Central, which is a pay ins and payouts market, pay ins and payouts product for that vertical that uses that a lot. On the international side, we had talked about being most excited about Brazil. Everything's on track there. We launched last year, getting significant growth. International's now over 20% of total Clover, obviously growing at a much faster rate off a lower base. Canada's performed incredibly well, and we're coming online. We've never had a big distribution partner there, and we come online with TD in the second half of this year.
We found a great distribution partner with both Visa and SMCC to bring a modern point of sale product to the SMB base in Japan, which nobody's really done successfully before. Of all the major developed markets, that's the most cash-dominated market still. We see great secular growth opportunity and a great distribution partner there. From there, we have joint ventures in Germany, we've got Ireland, we've got Lloyds, we've got NatWest, we've got Deutsche, AIB, we've got Spain. We just went into Austria with UniCredit. All around the world, we've got great partnerships that we're excited about leveraging. What we've learned through this great partner, significant market, and we'd like to still benefit from some cash to card conversion efforts. We agree with you, huge growth upside in all those markets, all those opportunities.
I also want to follow up on the SMB back book ex Clover. You talked about the opportunity for Clover conversion, but this is also an opportunity for your competitors. How should we think about the back book and the stability from here?
Yep. Again, we put a lot of data out for you at Investor Day. Non-Clover back book is never a great term, but for the non-Clover SMB base, we have $4 billion of revenue. That's the largest SMB provider in the world. Clover's the second largest, then you get to the competition. 1.8 million SMBs in there, $700 billion or so GPV. We obviously see it as an important opportunity, and we identified at Investor Day from the pie chart, a little over 50% would be eligible or could benefit from Clover's offerings and its VAS. A portion of that naturally isn't going to be ever eligible for a whole bunch of reasons. The majority of it's eligible. It's a great base. Obviously, if we can increase revenue yield by converting those non-Clover customers to Clover, that would be great.
At the same time, I think it's important to note, and often misunderstood, that this is a very stable base of merchants. There isn't large churn in this merchant base, and we get good feedback, and they're generally happy with the services that they're using from us, which is mostly a payments type device. Obviously, generational change is there. Maybe they don't know what they can do with it and stuff. We want to do everything we can to increase the yield of that and make sure they have full access to our VAS. At the same time, there's no reason to force something because they're not an unhappy customer base that's looking for something different. If they are, we obviously address them very quickly. Takis' team have tested very carefully and thoughtfully here, given they're happily paying Fiserv customers today.
One of the things we talked about at Investor Day was a low-friction, non-physical conversion of the box, and offering VAS through the Clover Dashboard being specifically Clover Capital and Clover Savings as a way to entice it. We've run all the models and the like and have ongoing efforts. If you're a high-volume person, that's obvious you should be on Clover. We do everything we can, and we've got great data on that to get them over. Overall, we want to take a base that's generally happy and stable, maximize revenue yield by presenting them with a mutually beneficial value proposition, and you got to do that in a very thoughtful way. It's not like they're calling us and saying, "Hey, I got 13 appointments today with point of sale providers, and I haven't heard from you." It's a great opportunity for us.
You just have to be super thoughtful about it because it's a very profitable, good customer base today.
I also want to ask about enterprise. Your strength has historically been on card present and in-person commerce. You talked about it at the Investor Day. You have a very good market position, but these end markets are growing slower. What will make platforms and omnichannel the higher-end growth markets or higher growth markets an achievable opportunity for you?
Yeah. Your description of where we've been historically is spot on. We have been far and away the leader in card present, gas, grocery, retail. That's a great business and an important one for us to have. Very attractive business overall. What we showed at Investor Day was highlighted, it's been out there, but highlighted Commerce Hub as a modern omni-channel global platform, single gateway, single switch, single modern ledger at the back end, modern VAS. It's live today. We're doing $200 billion of volume on it annually, growing very rapidly. We're in 40 countries. We'll be fully live in full capabilities across the world by the middle of 2027.
The point Takis made and we feel great about is that gives us a platform that allows us to compete and compete very effectively for significant new TAMs with platforms in e-com, and puts us in a group of two or three modern platforms that can run omni-channel. Increasingly, the solution globally for large seekers of payment services is an omni-channel solution, single integration the like. Having point of sale as a VAS, if you want to call it that, along with the modern e-com platform, combine it with the data we have that's unmatched in the industry, which can drive higher auth rates, lower fraud rates. We see ourselves as being able to compete in the modern stack as well as anyone. We talked about e-com having the lowest barriers to entry. The major players in e-com want high auth rates and low fraud rates.
If you can do that, historical relationships don't matter as much as the data and the effectiveness of your algorithm.
I guess the foot in the door there is becoming the second processor and then scaling volume.
Yeah, everyone in e-com uses multiple processors, and they move volume to where the algorithm suits them best. Higher auth, lowest fraud, best price.
Mike, let's switch gears and talk about financial solutions, and we'll start with banking. Core stabilization has been a big focus area for you. We talked about it at the Investor Day. We discussed, at the Investor Day, improved service levels and client choice with modernization journeys. Do you think you're at the stage where client conversation can evolve from stabilize to the attach and grow piece on value-added services of your banking strategy?
Yeah. Well, obviously we addressed it directly at Investor Day and answered even a lot of questions today is core attrition on the core banking side, which is a couple of billion of our revenue. Attrition there has been higher than we would want it to be as a result of really three major things that were in the past, which is a depletion of client service. We missed some key product deadlines, especially around our digital product going back in 2023 and 2024, and then an effort that drove a series of forced conversions. All we've done is done the opposite over the last six months. We're supporting all cores, so the forced conversion's off the table. We've significantly invested in client-facing personnel, significant investments in modernizing our technology, significant investments in new technology around it, new value-added services, whether it's StoneCastle and now agentOS.
We've revitalized our relationships with the consultant community or acquired them in, like with Smith, and we've introduced what we talked about at Investor Day, a journey-based approach towards core modernization and core conversion, which puts the choice back into our 3,000 core customers' hands. They can modernize in any path. We showed five paths, but you could mix and match any of those. Dhivya went through them at Investor Day. Make it the client's choice and take the big bang approach out of core conversion modernization. What we've done is not only reverse some of the things that had caused outsized attrition, but we've added on new capabilities and new services on top of that.
We believe, based on our actions and based from feedback from clients, that we're doing the right things that will lead to an outcome in future years that looks like a more normal attrition than the gross attrition than the attrition we've had. Today, our results reflect actions. These are long-dated contracts, so today's results reflect yesterday's actions, and tomorrow's results will reflect today's actions, which we believe. What we laid out at Investor Day is not a miraculous comeback that we stop all attrition this year. It's a gradual path from 2026 to 2029 to return to normalized attrition. We hope to do better than that, and we hope all the actions we're taking will lead to a better outcome from that.
We know, given the long-dated nature of this, as well as we may be doing today, some of the seeds of today's attrition were planted years ago.
I also want to ask about digital payments. You have a number of money movement solutions for your clients. How healthy are these end markets in your view? Tell us about the growth opportunity, both with respect to a unified multi-rail solution, but also in terms of value-added services, and I'm thinking CashFlow Central, et cetera.
Yeah. Digital payments is a great business. Hopefully, you got a flavor for that at Investor Day. It's just under $4 billion in revenue, It's a big part of our story. We serve 41 of the 50 largest banks for payments in the U.S. We have number one market share positions, from Zelle to Treasury and all the key areas. It's been a great business for us. It has very healthy end markets. Volumes are growing, and there's strong secular change in payments, real-time, digital, embedded, all these things are transferring payments in. When you go to a bank meeting, The number one topic is payments. If you include stablecoin in that discussion, it is the dominant topic is payments, and we've got a great franchise.
The big investments we're making, as you've mentioned, is today we have a whole bunch of point solutions to effect a payment, both for a retail customer of a bank and a corporate customer of a bank, and putting those into a unified payment platforms on the individual side and the business side, and then putting an intelligence layer on it. I need to make a payment. What's the most intelligent way to make that payment on both ends of it? We've got every tool you need to compete there. In terms of VAS, CashFlow Central will be in digital payments. We think it's a transformative product for small businesses. You saw the ramp. We showed you some of the ramp that's going on there. Huge pipeline, to go live, huge pipeline to get sold.
The efficacy of the offering is being shown through the small businesses of our clients who are using the pay-ins and payouts on it. That's an important part of what we're doing in the business. We've got great, we think great strategic optionality and client optionality with the two debit networks. Then finally, if there is a negative in digital payments, it's traditional bank bill pay, which is going through a secular change to a more direct to biller. Some of that goes over to the merchant side, to our biller business there, and we pick it back up. Some of it goes to other forms, whether it's Zelle, bill pays through Zelle and the like. That is a drag on our thing. The account-to-account treasury management and Zelle are overpowering that, such that you get good underlying growth.
We guided growth for that segment on the $4 billion to be at the high end of the overall financial services guide, even with the bill pay where it is.
You talked about the optionality with STAR. In light of what has happened, right, like in the last couple of years, I guess, across the ecosystem, how do you view STAR optionality?
Yeah. Well, we own two debit networks, STAR and Accel. Obviously, U.S. debit networks, we've got thousands of issuing banks on both of those. It's a classic synergy between our merchant and bank business allows us to optimize routing, and it's been a tremendous tool for us. They're great business networks, as you know, are great businesses. Wish we had more of them. As payments modernize the optionality we have with their messaging networks, we can do more and more with them over time. Obviously, if there's a value of a debit network to somebody else in the world, I'm sure they'll call us and tell us that, so.
Let's talk about issuer processing. It has been a steadily growing segment for you. You're modernizing your two key platforms here. What does this unlock for you?
Like digital issuer has been a good business for a long time. It's $3.3 billion or so in revenue. Long track record of growth at the high end of our overall guide for FS. Again, we have, as I went through at the beginning, whether it's banking, we have number one positions, digital all number one positions, issuing you have number one positions. Again, we got 25 of the 50 largest issuers, eight of the top 10 private label issuers, dominant card processor in India, dominant card processor in the U.K. It's a long-established business, great base of VAS that we highlighted at Investor Day.
Our big efforts in there, as you mentioned in the question, Optis, which has been the stalwart that most of the large issuers use, we're going through a big modernization process there, but not forcing our issuers to do a conversion to a new platform. It's modernized as you go. That's been a significant investment. Runs through next year and allows us and our customers to get products to market faster and deploy more modern tools in that increased resiliency, increased security. On the side of that, we've launched Vision Next. Vision Next, think of that as the Finxact of the card business. If Finxact is the modern core to the core banking business, Vision Next is the modern card core, and we'll use that. That'll be the primary engine for embedded finance. It'll be the primary engine for international expansion.
I think even here domestically, any greenfield issuing, new issuing client would go to Vision Next versus going to Optis, cloud native, all of the modern aspects to it. The pipeline there is significant. We talked about it at Investor Day, it really gives us a value proposition for the international markets where we've had a number of issuing platforms over time.
I want to also talk about some of the emerging growth opportunities for you. Tell us about the Fiserv Deposit Network. You launched that after you completed the StoneCastle acquisition. What is it and why is Fiserv uniquely positioned here?
Yeah. As I said earlier, we like networks. We bought StoneCastle for two reasons, and they've been great partners. StoneCastle has one side of their business, or there's sort of three aspects of it. One side of the StoneCastle business calls on anybody who has cash. StoneCastle, what sits in the middle is a ledger, Finxact. All the cash comes into a single account. Then they have 1,300 banks on the other side of the ledger, designed to bid for those to give the highest return for that cash, all in $250,000, fully FDIC-insured accounts. Now you go to anybody with cash who never thought of an FDIC-insured deposit as a logical alternative investment vehicle for their cash, and there's a lot of idle cash, especially with our merchants, where they're not getting paid anything for it.
We allow them, through a simple modern technology solution, to route that cash to StoneCastle. StoneCastle breaks their cash up into fully insured and gets them a competitive rate on it. We love that network. On our merchant side, we are now going to our merchants and enabling our Clover customers through a button on the Clover Dashboard to sweep all of their idle cash to StoneCastle, get paid for it. It's liquid, it's FDIC guaranteed, and you get a competitive rate on it. On the other side of it, this is what I was saying, the whole body of work of helping fight off this core attrition is our banking customers, other than the very biggest banks in the country, number one priority for all of them is more deposits. Here we're now presenting them with FDIC-insured, qualified operating deposits.
We're fulfilling a big strategic priority of theirs, all with one network, so making the merchant clients happy and the bank clients happy. That's the Fiserv Cash Network, and we think we obviously capture vig in the middle of that and it's a great business for us, very easy to administer, but built on a modern technology stack that StoneCastle created. In terms of other emerging opportunities, just one second on stablecoin. The other aspect that StoneCastle came with was a stablecoin and cryptocurrency custody license. We're now a custodian of crypto and stablecoin. Why is that important? Our banking customers' biggest worries around stablecoin is that deposits leave the system. In this case, we created FIUSD stablecoin so the banks can meet the regulations of the GENIUS Act and offer their customers both a stablecoin wallet and a fiat wallet in the single DDA account.
If a customer of a bank decides to take deposits from their fiat account and move it to the stablecoin account, they would get that stablecoin, FIUSD, from us, and we would custody those deposits. We need to do something with the excess cash that we have, like any custodian would, and we would deposit it back through StoneCastle and FDIC to an insured account to that bank, thereby protecting the deposit balance of the bank and taking a big worry off the bank. Again, a value-added service to our banks, addressing either a competitive threat or a strategic priority they have on both these. Both these emerging opportunities, the cash network and the stablecoin, came from requests and discussions from our banks as to what they wanted, what was important to them.
I guess, you talked about stablecoins. I think it's been almost a year since you launched FIUSD. I guess more broadly, what role can stablecoins play for your clients? I know you talked about some of the services you can provide to your clients.
Yeah
I think for stablecoins.
Well, I think certainly on the banking side, they're going to have to comply by regulation. We want to be there for them to do that. FIUSD, anyone who's on our core, through a Finxact, but we're using Finxact again, just continued tools for Finxact to stand up FIUSD, and it can interact with any of our cores. All 3,000 banks are able to use our wallet and use our coin and our custody capabilities, where the revenue model isn't as much standing up the wallet for them. It's the pay-ins and payouts, the on-ramp and off-ramps, but we'll stand that up for them and we're working through pilots with our customers. FIUSD goes live in July. The first use case is what we had publicly announced in North Dakota for bank-to-bank movement.
The state mandated that any type of bank-to-bank movement of money has to be done through the Roughrider Coin, which is a white label of FIUSD. There are cross-border pilots and bank-to-bank, account-to-account pilots going on and whatever demand surfaces, we think that Stablecoin has got a lasting place in the world. It's low friction. It's borderless. You got great record keeping underneath of it. It's 24/7. It's instant. Go account to account. We think there's a lot of attractiveness of product. There isn't massive demand for it today. If you go to the other side of our business, merchants want to reduce acceptance costs, and if Stablecoin can do that, they'd be interested in it.
If customers ultimately want to buy and transact in stablecoin, which will probably first happen on e-com, they want to be able to keep moving products. They want the ability to do it. We talked a little bit in the emerging opportunities at Investor Day is maybe someday there can just be a stablecoin on- us settlement. If you got 300 million bank accounts and you got 6 million merchants, why do you have to go out into a multi-party system? All stuff for the future. We think there's great optionality from it. The development we put around FIUSD was to address an immediate need that came from our depository clients to meet the regulations of the GENIUS Act, or when it comes through, to protect their deposit bases.
Mike, at your scale, Fiserv has access to data across the life cycle of a transaction, across a lot of portions of the economy. You alluded to this a little bit earlier, but what is your opportunity in further monetizing the data, especially with AI?
Yeah, I go back to on the AI side. We have all this data, the ability of technology has accelerated. The company's been working on extracting that data, putting it in a single package across a customer, using that to increase auth rates, reduce fraud rates, create better data products. AI has just accelerated the pace at which we can do that, and we're also working with some outside partners who have some skills to help us come to that and put forth a much broader set of value-added either ideas, services, hyper-personalized offers. The most obvious area that we'll get paid for it is higher auth rates, lower fraud rates because We showed some of the data stats at Investor Day. It's a billion transactions today and then 1.8 billion cards on file. That's just stunning amounts of data.
The amount of work and effort that's gone into partially encapsulating it and then to see what we've done in the last few months with the ability of technology, it's transformative. If you have the most data, you should be able to monetize the most data, and obviously we're focused on doing that in a safe and responsible way that benefits our clients. Especially through agentOS, there's sort of what's emerging an insatiable demand for AI to help people extract value-added ideas and offers from their, what I talked about earlier, systems of record to systems of value.
You talked about Finxact earlier in our conversation. Visa has also recently talked about wins for Pismo. What are you seeing in terms of modern versus kind of other core dynamics in the market?
Finxact was built by Frank Sanchez, who's sort of the king of technology, of course. Fiserv had an investment in it and then acquired it in 2022 or 2023. Frank's been a great partner. Finxact has more accounts on it than all the other modern cores combined, generally acting and think of Finxact above anything else as the ultra-modern ledger capable of handling any type of asset that you want. I've just randomly referred to it as being the base for stablecoin, being the base for StoneCastle, being the single backend engine for Commerce Hub as a ledger. The use cases of Finxact are far and wide, and you can see some of our biggest customers on it. Running 40 million accounts today is just far and above what anybody else is doing.
There has been a revitalization among the large banks about starting the process of modernizing legacy cores, mostly off of the Hogan platform. Finxact and Pismo, and other modern cores, to the extent that they surface, can play a role in helping big banks do that. We're excited about that aspect of it. That's just one aspect of what a modern core can do. Finxact can go. We can deliver five nines. We're cloud agnostic. The capabilities and the power of Finxact, we'll definitely leverage it in our depository base. If you go back to the payments discussion, all the banks want to do is talk about building their place in payments, and all the payments companies want to do is talk about how they can do more banking services.
Finxact has an incredible position to sit in the middle of that embedded finance trend. The use cases of Finxact are almost unlimited as you think about the modernization of payments.
We have just a couple of minutes left, Mike. I was reflecting on some of our earlier discussion on AI and also some of the emerging opportunities for you. One thing that you had at one of the demos at the Investor Day was Clover Agents.
Yeah.
How do you think about, I guess, that opportunity over the long period of time? It's fascinating what you could do for your merchants.
All of it is, again, body of work, whether it's helping them maximize return on their cash, whether it's helping them manage their finances with Clover Capital, whether it's helping them manage their employee base with Homebase, whether it's enabling them to accept stablecoin payments, if they want to do that, crypto payments, if they want to do that. Providing all kinds of off of their system of record, providing value-added advice. You saw the cupcake maker and the croissant maker. That's all just, obviously, to the extent that we can build, everyone will try to build something to the extent ours is better than that, it can drive growth and obviously can drive deep retention.
The power of providing our merchants with horizontal, vertical, vast value-added ideas is again proliferated by AI, and we thought the example that we showed of the Clover Agents was a great use case. That doesn't even touch upon one big effort that Takis and team are working on is the democratization of agentic commerce for the 900,000 merchants in Clover is if you're a single location, we talked about in an earlier meeting, a single location boot maker in Wyoming and someone is on Gemini searching for cowboy boots. That merchant, they want to be shown in that agentic showroom. There's a whole another side of the Clover Agents, which is helping them deal with the modern world of shopping and increase their audience from people walking down the street in Wyoming to the broad agentic world.
It was a good demo at the Investor Day. Mike, we have under two minutes left. My last question for you. Over the past several years, investors have been on somewhat of a journey as it relates to Fiserv. At the same time, we've talked about a number of initiatives put in place over the past year since you became CEO. As you reflect on your investor conversations, what are the one or two things about Fiserv you believe are currently misunderstood by the investment community?
Interesting. Probably first and foremost, I go back to the opening statement, is there's a belief that something that we were doing double-digit growth and something happened that impaired the franchise and has led to mid-single digit growth when it's really the opposite. The last four years have been the anomaly, driven mostly by cyclical factors post-COVID. If you go back to the 42 years that Fiserv's been around, for 41, 42 years Fiserv's been around, it's been a mid-single digit growth company with very visible growth. It produces a lot of cash and generates double-digit EPS growth.
As I said earlier, a big part of the strategic plan, a big part of what we're doing is trying to reclaim the historical Fiserv identity, not try to deal with some type of fallout that went from double-digit growth to here because we lost some competitive position in one of the things. We just went through almost all of our businesses. In each case, we've got a number one market share position, and we're operating from a position of strength by continuing to be that intelligent technology infrastructure that powers these two big TAMs, two big TAMs that are going through massive structural change and opportunity. The second thing, obviously, and the market's going to wrestle with it for a while, we think AI brings us great opportunities. Others have different views.
Hopefully what we showed at Investor Day, in terms of generating revenues, both through data and the like, and value-added ideas, agentOS, reducing costs and streamlining customer service, it's a big part of what we can do. I think the third piece is, more people ask us about why don't you break the company up and less about the synergies that can come from those. We tried to put forth a case that at least it will always do the right thing by our shareholders. At least today, as everyone in payments wants to do more banking and everyone in banking wants to do more payments, there's nobody sitting in the position we have today and our mix of businesses has never been tried before.
The popular line is, "Well, this has been tried and failed." No one's ever had issuing banking, large merchant, small merchant, and no one certainly ever had the tailwinds of AI and the tailwinds of embedded. Those are probably three areas that we talked most about.
Great. Mike, thank you so much for your time today. I learned a lot.
No, thank you for having us. If you haven't seen the Investor Day, I encourage you to listen to it. We covered a lot there.
Okay