5 key takeaways from the FIS-Worldpay deal

As open development tools such as APIs usher in a new era of open banking, a company's relevance in the fintech space is tied directly to its ability to share its data — securely.

Europe's PSD2 regulation is one of the major catalysts, and FIS and Worldpay can play both sides of the open banking game — FIS by leveraging its relationships with banks and Worldpay by leveraging its technology and its familiarity with the European market.

Worldpay is already working with Mastercard to respond to PSD2. FIS says it's spending about 7.5 percent of its revenue on technology, while Worldpay pours about 10 percent of its revenue back into innovation.

"They're well down the path of payments integration," Gary Norcross, the chairman, president and chief executive of FIS, said during a Monday conference call, noting Worldpay's recent app rollout in the U.K. and a new data center slated for a midsummer launch.

"As open banking and faster payments grow, the ability to offer end-to-end solutions from merchants to account funding irrespective of payment rails will be increasingly important," said Zil Bareisis, a senior analyst at Celent.

The Fiserv-First Data deal, which was announced in January, is a tipping point, creating an obvious gap for financial services technology companies to bolster payments technology as e-commerce becomes a high-growth industry for both banking and payment companies. This gap is often best filled quickly through acquisition, portending more deals in the near future.

Executives from both FIS and Worldpay both stressed speed in touting their deal—contending their companies could respond to the changing marketplace faster by combining.

The ability to respond to rapidly changing consumer and merchant tastes for faster shopping and payments that are linked to banking is necessary in a market that’s not showing a lot of patience for incremental growth.

FIS and Worldpay executives did not name Fiserv and First Data during Monday's conference call, but the inference was clear. FIS and Worldpay acted fast to seize a short-term opportunity to join forces as well as to building a base of consumers, partners, technology and markets to support upselling in the future.

“It’s a fast-moving industry and you have to grab the growth and go where the growth is,” said Charles Drucker, executive chairman and CEO of Worldpay.

The FIS-Worldpay deal came so fast that Worldpay still hasn't finished consolidating its largest recent deal. Worldpay is actually the old Vantiv, which acquired Worldpay for $11.6 billion about a year ago and retained Worldpay's brand. That deal was designed to build a larger blend of integrated payments and omnichannel commerce, an obvious lure for FIS.

Worldpay insists the Vantiv conversion work is on pace, with the U.S. integration set to be compete by the end of the second quarter. "We're in a good spot because of all the hard work we did upfront," Drucker said.