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August 23, 2015

Insurance Impacts of FIS-Sungard Merger

Summary:

We will see more mergers, to strengthen offerings, broaden footprints, position for growth and ultimately seize the pot of gold in insurance.

Photo Courtesy of David Phillips

Here we go again: Out of the blue, FIS agreed to acquire SunGard. The joining of two more global technology firms creates another giant in the financial services space.

Why so many?

  • Power of scale. Size allows companies to consolidate overhead, with the merger of people, processes, infrastructure and product offerings, allowing for profitable growth.
  • Market dominance. Buying market share and client footprint across industries certainly is faster than organic growth, and it allows for performance balancing across industries as the market swings and shifts.
  • Diversification of offerings and clients. The broadening of offerings, rather than deepening capabilities, allows for an expanded footprint in customers across many industries.

What does this mean to us in insurance?

  • Fills the gap. Combining creates opportunities to bring together a suite of offerings that better align to the changing needs of insurers as they continue to transform and innovate toward becoming the Next-Gen insurer.
  • Reflects financial strength. Many M&As reflect the health and wealth of the financial services industry, especially in insurance. Insurance is a top target industry for many solution providers because of growing technology investments, expanding needs and demand and solutions providing more offerings.
  • Presents fewer options. As we see more solution providers consolidate, there are fewer company options. But on the flip side, the solution providers will bring together all these technologies and services.

So don’t blink, there will be more to come. We will see more consolidation – all with the goal to strengthen offerings, broaden footprints, position for growth and ultimately seize the pot of gold in insurance.

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About the Author

Deb Smallwood, the founder of Strategy Meets Action, is highly respected throughout the insurance industry for strategic thinking, thought-provoking research and advisory skills. Insurers and solution providers turn to Smallwood for insight and guidance on business and IT linkage, IT strategy, IT architecture and e-business.

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