Fidelity National at Goldman Sachs Conference: Strategic Focus on Growth

On Tuesday, 09 September 2025, Fidelity National Information Services Inc (NYSE:FIS) presented at the Goldman Sachs Communicopia + Technology Conference 2025. The company outlined its strategic initiatives, focusing on core strengths, capital allocation, and shareholder value. While optimistic about the macroeconomic environment, FIS also acknowledged challenges in maintaining high retention rates and navigating a competitive market.

Key Takeaways

• FIS is focusing on core strengths and capital allocation, with plans to increase share repurchases.
• The company is optimistic about the macroeconomic environment, citing favorable regulatory conditions.
• Strategic acquisitions like Dragonfly, Everlink, and Amount are enhancing FIS’s digital capabilities.
• FIS aims for a 90% free cash flow conversion next year, driven by reduced capital intensity.
• AI and blockchain technologies are key areas of focus for future growth.

Financial Results

• Banking Revenue Growth: Current guidance is 4% to 4.5% for the year, with Q3 expected at 3% to 3.5% due to the sale of a portion of the EBT business. Q4 growth is implied at 6.5%.
• Free Cash Flow Conversion: 2023 conversion is at 77%, with 2024 guidance at 82% to 85%. The target for next year is 90%.
• Capital Markets Revenue: Q3 guidance ranges from 5.5% to 6.5%, with recent performance showing a recovery to 25% growth after a Q2 decline.
• Capital Allocation: The total return target is 11% to 14%, with $1 billion allocated for M&A and increased buybacks from $1.2 billion to $1.3 billion.

Operational Updates

• Go-to-Market Initiatives: FIS is re-engaging with banks in the $1 billion to $20 billion asset range and focusing on strategic cores like Horizon and IBS.
• Digital Banking: The company is building a suite of capabilities for various customer segments, emphasizing automated onboarding and fraud prevention.
• M&A Activity: Recent acquisitions include Dragonfly, Everlink, and Amount, aimed at enhancing digital and payment capabilities.
• Cross-Selling Initiatives: A Chief Commercial Officer has been appointed to drive commercial excellence and cross-sell solutions.

Future Outlook

• Banking Revenue Growth: FIS expects growth within its long-term guide, focusing on commercial excellence and retention rates.
• Capital Markets Revenue: Continued investment in cloud and SaaS solutions is expected to maintain growth within the Q3 range.
• Free Cash Flow Conversion: A 90% target is set for next year, supported by optimized working capital management.
• AI and Blockchain: FIS is exploring opportunities in AI and stablecoins, partnering with Circle to integrate digital currency capabilities.

Q&A Highlights

• EBT Business Shift: The shift is impacting quarterly growth, with Q3 guidance at 3% to 3.5%.
• Pricing Strategies: FIS is focusing on net pricing and disciplined strategies to retain customers.
• Amount Acquisition: This acquisition will be incremental to the current banking guide.
• Capital Markets Lending: Lending has recovered to 25% growth in Q3, following a Q2 decline.

Readers are encouraged to refer to the full transcript for a more detailed account of the conference call.

Full transcript - Goldman Sachs Communicopia + Technology Conference 2025:

Will, Analyst: All right, we are going to jump right in here. Next up, we are delighted to have FIS CEO Stephanie Ferris and CFO James Kehoe with us today. Stephanie took on the new role as CEO in 2022, following roles in senior leadership at FIS and Worldpay. James has been CFO since 2023, following his position at Walgreens. Thank you both for being here. Just a matter of quick housekeeping, like Goldman did advise on the unclosed transaction with Thesys and GPN and Worldpay, and whoever else I’m forgetting. We are not rated on all of those entities. We are not going to talk about the Thesys deal today. We’re going to talk about everything else that’s going on at FIS, and we’re really excited to do that. Thanks for being here, guys.

Stephanie Ferris, CEO, FIS: Yeah, thanks, Will.

Will, Analyst: Okay, I wanted to kick it off with just a high-level strategy question. Stephanie, you’ve been in the role for a few years now. Just update us on what have you accomplished since then? Where do you see the kind of the biggest change in the organization since taking over?

Stephanie Ferris, CEO, FIS: Yeah, so it’s been a great opportunity. I tell my team all the time, it’s an honor and a privilege to run FIS because fundamentally, it serves financial services around the world. I think we’ve all seen through whether it’s the pandemic or even what’s happening now, the strength of the system is working as we want it to. For FIS in particular, I came into this role and really wanted to refocus the company on what its core strength was and get back to focusing on capital allocation, return on invested capital, and growing the business in what I would consider healthy ways. Focusing on financial institutions and financial services, focusing on recurring revenue, focusing on making sure we’re maximizing, delivering products in the places where growth is. Think about digital payments and lending. Over the last couple of years, we’ve done a lot of transformative things.

The first thing we did was separate the Worldpay business, and we think that’s a fantastic business. We did that in actually three steps. First announced a spin, then a sale of 45% of it to GTCR, and then most recently, the sale of the rest, the announcement of the rest of the sale to Global Payments Inc. I thought that was pretty important in terms of focusing our time, attention, and capital. Most recently, doing the final trade of the 45% of Worldpay and really getting an asset that not only was cash generating and really gives us the opportunity, once we close the transaction, to flip a non-cash earning stake into a cash earning stake. It increases our capacity very significantly to return capital to shareholders as we close that transaction.

Probably most importantly and strategically, it gives us a credit processing capability that FIS has frankly never had. We’ve had credit card processing, but it’s been in smaller financial institutions. We generally play in the larger financial institution market. Having that credit card capability and that product set has been very important to us, and we’re very excited about that. I might say finally, now thinking about what’s happening broadly around the world with respect to agentic commerce and AI, getting very excited about having debit card core banking and credit card information coming together and what we could possibly do with that for our clients.

Will, Analyst: Yeah, that sounds exciting. If we can maybe touch on the macro environment, you know, FIS is mostly a recurring revenue business, but you are exposed to the general sentiment among financial institutions around IT spending, as well as whatever the particular flavor of investment is at the time. Have you seen any meaningful shifts in sentiment or in the focus of your FI clients over the last 6 to 12 months?

Stephanie Ferris, CEO, FIS: Yeah, I think it’s very positive. For financial services firms, lots of good things are happening. Obviously, the yield curve not being flat is always good for financial services firms. More importantly, the regulatory environment, in particular in the U.S., is coming down. Bank M&A is coming back. All of those things are viewed very positively. I think everybody’s jury’s out on the consumer. Everything that we’re seeing from a payments perspective is consistent with what the likes of Visa and MasterCard are showing you. There’s still some consumer transaction and volume growth. TBD in terms of what happens with the consumer, but FIS isn’t overly exposed to the consumer. I would say the broad economic environment for our end customers is actually very positive.

Will, Analyst: Great. Let’s get James in here. You talked about a number of moving pieces in the banking revenue growth guidance in the second half of the year. You have some moving pieces in the government benefits program, an acquisition, several positive grow overs in the fourth quarter of this year, and also FX. Hopefully I’m not forgetting anything there. It’s a lot of things driving some swing factors. Could you just help level set on what the underlying drivers are and just what you’re expecting next year?

James Kehoe, CFO, FIS: Yeah. I’d say up front, I’d bring people back to investor day. We said 3.5 to 4.5, and our current guide for the year is 4 to 4.5. We’re pretty happy about it because we’re operating at the high end of the long-term guide. Both the investor day and the current are at about a point of M&A in it, so it’s like for like reviewing what we said we would do. I think that’s a little bit lost as we did in a cycle in the individual quarters. We had the shift of the EBT business. A large proportion was sold in the third quarter of last year, second quarter of this year. This is just noise between the quarters. We’ve guided now to a 3, 3.5 on banking in the third quarter. That’s with the one-point shift. Part of the quarter is a 4.5.

Yes, there is some acquisition in it, but that 4 or 4.5 is remarkably consistent with the full year. We feel good about the growth. What we’re seeing so far in the third quarter is now two months post. Banking is stronger than we anticipated. It is performing really well right now. We’re very happy and ultra confident about the 3 to 3.5. In fact, it’s probably a little on the conservative side. We did it at Q4. The implied growth was by the 6.5% growth. It did a 2.4 over. You hit this earlier all the time coming back to this. This is a business that this year is growing 4%. It’s on range of 4 to 4.5 in line with the business model. On top, the return will always be outpacing. We’re outpacing the adjusted flow. Let me take you back.

Last year, we did a team last year, and this is going to a 4. The performance is clearly sailing up and it’s accelerating. Most of this is commercial. It is far higher retention, and we’re in the 90s. We weren’t able to say that even a month ago. Retention is really, really strong. The relationship of new sales contribution coming from a record year in 2012 on core sales, we’re seeing a higher contribution from new sales than the average banking year. I think we’re going into next year with a position that’s strength. Our guide from next year will be solidly within the long-term guide that we set out for the business sector investor day. I’m going to proceed ahead on that.

Will, Analyst: That’s great. It sounds very constructive. Maybe if we can shift to some of the go-to-market initiatives that you’ve had. You recently talked about re-engaging with lows into the market, where you’ve always been a player, but obviously historically a bigger player out there into the market. Can you talk about how that journey is going and what goals you can share?

Stephanie Ferris, CEO, FIS: Yeah, I think we generally serve banks that are $20 billion and above, but we also have a set of financial institutions that are about $1 billion to $20 billion. Prior to coming into this role, we had lost a bit of focus on the banking business. As James mentioned, we really focused on commercial excellence, but also making sure that our product set, which had always been best in class, was continuing to be best in class. We have doubled down on our strategic cores in the smaller end of the market. You think about Horizon and have really seen Horizon. As you move up market, IBS, those continue to be market share gainers. James mentioned selling a record amount of new cores. That was a lot of our smaller cores.

Really focusing again, we have a great product set and making sure that we were just re-engaging on the commercial side of things, not letting people take our customers, but also selling more of them. It’s a game of you sell the core and then you get all of the surrounds, including payments and digital. We’re very excited about the traction we’re making there. Most recently, we acquired a couple of digital assets, so we’re excited about selling those into those spaces as well.

Will, Analyst: Great. Now you touched on, you know, the strategy of going after the core to get all the surrounds. I know that’s been a big focus about kind of moving beyond the big core sales and deepening the wallet share with your clients. Could you talk about just at a high level how the FIS’s approach to the core changed in the selling process?

Stephanie Ferris, CEO, FIS: No, I don’t think it’s changed. I think it’s a matter of the core continues to be important, but there’s only so many core opportunities in the market. We’ve been really focused on making sure that anything that we buy, that we sell, we add onto our distribution is core-agnostic. If you think about the Dragonfly acquisition that we did or the Everlink acquisition that expanded our opportunities in Canada, we have the opportunity to sell that through our global distribution channel. It doesn’t have to be attached to our core. It is attached to our core, which creates more value, but it opens up TAM as we look at being able to sell into our competitors’ core. We think that’s important for us.

You’ll continue to see us strategically make sure that we have products that we’ve built as well as bought and partnered around being core-agnostic and that we’re really using the competitive strengths of FIS, which is scale, global distribution, and a marquee client set, to make sure that we’re selling not only the products that we’ve built, but also that we’ve bought and that we’re strategically partnering with others to deliver into the bay.

Will, Analyst: Maybe a related question is just how you price deals. It’s always a competitive market in the bank tech space. I think you’ve talked about consistently pricing on net being relatively neutral to the overall growth rate.

Stephanie Ferris, CEO, FIS: Yeah.

Will, Analyst: Has there been any shifts in how you price individual products in the sales process in order to kind of incentivize the wallet share that you’re seeking?

Stephanie Ferris, CEO, FIS: I think from our standpoint, net price is how we price new business net of compression. I think you’ve heard us talk about we think there’s more opportunity there for us to take a bit more share in price. We’ve been more price aggressive there. I think capital markets does a better job at net pricing because of the way they deliver their SaaS solutions. Banking has been a little bit slower. We’re working on that. We’ve been putting pricing escalators and items back in contracts as inflation comes. We’re really more focused around net pricing and making sure that on a net basis, we’re retaining our customers and providing fair value, adding more product set for that, as well as thinking about net new pricing. We’ve been more disciplined, I would say.

Obviously, we’re winning more market share because the sales teams have a great set of products and we give them a lot of pricing opportunity. We haven’t changed it, I wouldn’t say. It hasn’t, I know there’s been a lot of noise in the marketplace, but we’re not seeing, from our standpoint, it’s not impacting us.

Will, Analyst: Great. That’s good to hear. Maybe let’s talk a little bit about digital banking. I mean, you’ve emphasized the need for a modern digital offering to really add value for financial institution clients. What are the core pillars of FIS’s digital suite? Where are you seeing the most success in selling these solutions?

Stephanie Ferris, CEO, FIS: Yeah, so if you think about a financial institution, they all work with us, whether we’re a consumer, a small business, or a commercial customer digitally. Their channels, they deliver to us, they sell to us, and they service us through digital channels. Having robust capabilities for everybody from the smallest financial institution or credit union all the way up to large financial institutions is very important. Having that capability for us as consumers, as well as small businesses and commercial customers, is very important. They’re very unique needs, though. Us as a consumer is very different, what we need and need out of our mobile app from a very sophisticated commercial customer who’s looking for a much more sophisticated wire and treasury business.

Because we serve the landscape there, we have a set of solutions that serve both consumers and small business, as well as commercial customers, and have that sophistication that is needed. Digital is really becoming an ecosystem now as we think about what you need, how banks think about providers, because it’s not just a digital capability, but they need automated onboarding. As we go on and we want to open up accounts, whether it’s a credit card account, a deposit account, debit card account, et cetera, you’re not going in the branch to do that as much as you were. They also need sophisticated types of fraud capabilities because there’s a lot of fraud going through financial services. It starts online. It’s an ecosystem that we are looking to build, both in terms of investing and building out our own product, partnering, and ultimately buying different acquisitions as well.

It’s a full suite of capabilities. It’s a lot of where we see financial institutions spending a lot of their technology dollars because it’s the way they ultimately get to their customers.

Will, Analyst: Yeah. I know M&A has been a core part of the capital allocation policy. Could you talk about the deals you’ve done over the last 12 months, Dragonfly and Everlink? Maybe you could speak to your current M&A pipeline and where you think that could materialize.

Stephanie Ferris, CEO, FIS: Yeah. I think we said at Investor Day we were going to be focused on about $1 billion worth of capital every year around M&A. We would do that in concert with share repurchase and our dividends, really being focused on capital allocation. We’re staying very true and consistent to that. We also talked about keeping that M&A in places where we thought it delivered the most growth for us. If you think about digital payments and lending, we have been very true to that in terms of where we’ve done our acquisitions. As you mentioned, we bought Dragonfly, which gave us very clear commercial digital capabilities up market. That acquisition has been going very well. We bought Everlink, which is in payments and allowing us to do the payment capabilities in Canada that we didn’t previously have.

I’m very excited to announce we just recently closed an acquisition in September called Amount. That is providing digital account opening across the board for credit card deposit taking and lending. That is going to add into our suite of products as well. Very focused on where we’re doing that M&A. Again, it’s typically bring it in, put it on top of our global scale. We drive it out through incremental distribution, out through our customer base. The majority of these we know very well because either we’ve already been in partnership selling them together or they’re in the financial institutions that are our client sets. We’re very excited about that.

Will, Analyst: That’s great. Just to bring James into that conversation around the Amount acquisition, any color on, you know, was this baked into the guide or any color on how this might impact the back half of the year?

James Kehoe, CFO, FIS: It wasn’t in the previous slide. It’s not going to be a huge number because you got three and a half, four months. I just want to be clear, it will be incremental to the current banking guide.

Will, Analyst: Awesome.

James Kehoe, CFO, FIS: We will guide for that when we announce it.

Will, Analyst: Perfect. That’s helpful. Okay, I guess beyond M&A, you’ve had a pretty balanced capital allocation philosophy between dividend increases, buybacks, managing leverage. Could you give us a quick reminder on these commitments and any updates as we close out 2025?

James Kehoe, CFO, FIS: Yeah, you know, the total return is the target is 11 to 14%, including the 2% dividend. Stephanie covered the M&A. It’s $1 billion a year. Investor day, we said $800 million to $1.2 billion in the first two years on buybacks. We’re currently tracking at $1.2 billion, but in the last quarter, we’ve actually scaled up our repurchases. We originally had a target of $200 million repurchases in the quarter. We expect to do $300 million. You know, looking at it as we sit here now, probably we are raising the target from $1.2 billion to $1.3 billion. The share price is just too low. We see it as a value. We’ve started buying back this stock earlier. As of the first half, we purchased $700 million. We’ll do $300 million in the current quarter and another $300 million. The biggest quality is $1.3 billion on the year.

Dividend, you know, we increased 11% earlier this year. Dividends will grow in line with EPS. That will be, you know, when the transaction closes, we will temporarily call share repurchases. The dividend policy is not a change.

Will, Analyst: Yep.

James Kehoe, CFO, FIS: The important point is looking at the host transaction as a new, achieve 2.8 times leverage. We will be back in the market with a double the amount of M&A and the combined M&A plus share repurchases. We’ll be significantly higher in our capability to repurchase shares.

Will, Analyst: Great. Maybe you’re touching on the free cash flow outlook right now. We’ve been talking about cash flow conversion for the last year. You’ve been absorbing some elevated CapEx and working capital headwinds over the past 12 months or so. I know that you, James, have been very focused on finding efficiencies there. What are the biggest to-dos around free cash flow conversion, and how do you think about the potential for that to improve over the next several years?

James Kehoe, CFO, FIS: Yeah, I think we did a 77% last year in the guide for conversion. The guide for this year is 82% to 85%. I’m very comfortable about it. The first half of the year, we’re at a 61% conversion. There’s a natural seasonality in the business. We explained it on the prior call. Most of your annual bonus and commissions to the sales force are all paid out in the first half, not in the second half. This year, we have a big timing shift on hashtag famous between the first half and second half. If I don’t do anything, there’s an automatic improvement in first half versus second half, about close on $600 million. That being said, I think there’s a couple of to-dos, and I’ll answer a different question. I think we’ve been communicating, we haven’t been communicating effectively enough.

We’re going to start focusing more on that cash flow and underlying at the same time. We will finish the year with both GAAP and underlying cash flow growing 14% to 15% year on year, outpacing the free growth in EPS. That’s really, really important for the quality of earnings because people have drawn attention to it with a fairly high one-time expense. It doesn’t matter. Year on year, the GAAP cash flow is up 15%. The building block to get to a 90% conversion is less capital intensity. We’re currently running at 9% of revenue. The target longer term is 8% all along. That would add four to five points of conversion just by itself. This is a year that is held back by higher tax savings. That will abate next year. We’re super comfortable on the 90% next year.

The thesis business will bring in half a billion next year. They will be operating at a, they’re currently operating at 90% conversion. What we have to make sure for the market is the sustainability of an 85% this year, sliding to a 90% next year, which will basically, it is not highly dependent on working capital. You did have power to working capital programs going. We probably have, we made a target this year on accounts payable, $100 million. We’re currently tracking over 80% of that already received. We will probably raise the overall target as we get into next year. This is a company that pays suppliers at 30 to 45 days. We’re raising it for 90 days. Tougher with the bigger suppliers, easier with middle size. We’ve migrated all of our consultants with the same terms already. Some of them are in the audience.

I see that’s why I raised it. We are squeezing the tables. We put in place new processes around expansion of payment terms to suppliers. Finance is in the process much earlier than a logical call. We’ve stopped any of the unnecessary cash outflows. We are going off those times table and optimizing that. Our 90% next year is not reliant on improving working capital terms. It’s purely on capital intensity and a change in the timing of cash payments.

Will, Analyst: That’s great. No, that’s very clear, very helpful. All right, Stephanie, I think one of the focuses at the investor day was around the increasing overlap between the two segments, between banking and capital markets, and the opportunity to drive cross-sell, as well as large share expansion within the banking segment through payments. Can you update us on some of these initiatives?

Stephanie Ferris, CEO, FIS: Yeah, so, I think then bringing the issuer business in, given where it sits, makes it even more opportunistic. We continue, so I recently named Nasser Khodri our Chief Commercial Officer, who is our former, also still runs capital markets. He’s taking this in particular to make sure we have commercial excellence from the top of the house all the way through, in particular making sure that we are really taking advantage of the unique opportunity that we have with these clients. We sit in the very large financial institution and financial services stack, and we have very material relationships across both banking and capital markets. When you think about bringing the issuer payments business in, it solidifies it. We’re very excited about it. We have been, I would say, moderately successful.

The reason why I say that is I think bringing Nasser in and then as he and his team really focus on those clients in particular with a new growth model and a growth mindset, we should start to see even more uptake of that as we go into 2026 and 2027. I think we’ve done a good job. I’m pretty tough on us. I think we could always do better. I think we could move faster. I think we could sell more. I think we could develop more. High sense of urgency. I still think there’s more juice to squeeze here as we think about being a very important partner to a lot of these financial institutions. Given the regulatory backdrop, they are typically looking to see fewer vendors in their ecosystem.

A lot of the reasons why M&A folks come to us as well is because we have these relationships. It’s easier for us to cross-sell than it is for brand new outside fintech providers to come in. With all of that being said, I think we’re doing pretty good, but I’m a tough grader, and I think there’s still a lot of juice to squeeze here.

Will, Analyst: Oh, that’s great. I mean, no tougher audience than the one in the audience.

Stephanie Ferris, CEO, FIS: Oh yeah, I know. Tell me about it.

Will, Analyst: Okay, that’s a good pivot to the capital market side. It’s remained very strong this year. Maybe just where are you seeing momentum in the business?

Stephanie Ferris, CEO, FIS: Yeah, it has. I think the good news is, I think James and I talked a little bit about on the second quarter that we saw some slowdown in the loan syndication parts of our business. We’re happy to report that is back on track as we looked at closing July and August. That little bit of blip on whatever happened there with the tariffs, et cetera, is back and is normalized. We don’t expect to see that. We’re feeling really good about where capital markets is going to end Q3 and Q4. I think the business, look, it continues to take share. It continues to have a lot of nice growth. We continue to push it to sell more recurring and less licensed. It continues to take a lot of share.

There’s a lot of opportunity on the trading and asset services front, whether it’s front, middle, or back office. They continue to sell a lot of their SaaS-enabled solutions. Lending continues to be a very high growth area for us, given everybody’s interest in doing private credit lending and that expanding outside the traditional financial institutions. We see a lot of growth there. Our treasury business, which is also included there in the office of the CFO, has a nice growth market associated with it. We’re seeing demand across the universe there. We continue to focus the team and focus capital to make sure we’re driving the outsized returns.

Will, Analyst: Switching gears to numbers, James, I know there was a range of outcomes in the near term in capital markets based on the volatility of some of the syndication volumes. It sounds like those have been going well. Could you just remind us of your thinking on the range of outcomes and what will put you at the higher or the lower end of the capital markets range?

James Kehoe, CFO, FIS: Yeah, I think in Q3, we said 5.5 to 6.5. On the 5.5, basically assumed no recovery in the lending. You know, and as a reminder, this is a business that in Q1 was up maybe 15%. Q2 was down 35%. The first two months of the third quarter is up 25%. It did pull down our Q1/Q2 result by 100 basis points. That’s why we had the wide range in Q3. We’re feeling pretty good about being solidly within the range in Q3 on capital markets. Same on the full year. This is a business that’s consistently over multi-year periods of a 6 or a 7. You know, you can have slight moves up or down. We’re not that exposed to economics. It was a small movement on a small business in the portfolio. $6 million on a $3 billion business. It wasn’t a major thing.

You know, looking forward, as Stephanie said, all the businesses are in great shape. We’ve invested heavily in the past to get them on cloud, SaaS enabled. We’re in a strong product position entering into next year.

Will, Analyst: Very good. Okay. One topic that’s been highly topical over the summer has been stablecoins and the regulatory clarity that has emerged and allowed banks to begin to participate in that. What are you seeing from FI clients in terms of willingness or interest in adopting the technology? What are their concerns around it? What roles can FIS play to support it?

Stephanie Ferris, CEO, FIS: Yeah, I think they are all very interested in adopting it. I think TBD in terms of where and what use case it takes on in the market. I think every financial institution is very keen to make sure they have it in their capability set. The way we deliver it is through a product we call Money Movement Hub. In that Money Movement Hub, you have, so it’s a piece of software, you have the ability to provide real-time payments, ACH, wire, and then digital currencies. We partnered with Circle, who will be integrated into our Money Movement Hub, such that financial institutions that buy our Money Movement Hub then have the ability to offer out digital currency out to their customers.

I’m hearing from most of them, again, they want to have it in their tool set in terms of capabilities, TBD in terms of where the use cases are for it as they see their commercial customers come in and utilize it. It’s a great thing for us. It validates the Money Movement Hub and ultimately more sales of that, which helps our payments business and the banking space, TBD in terms of uptake.

Will, Analyst: Right. I guess sort of if you build it, it will come on the stablecoin side. Anything on the blockchain side, maybe particularly around the capital markets business? Are you seeing opportunities to engage in things like tokenized assets?

Stephanie Ferris, CEO, FIS: Yeah, I think that’s kind of also gone in and out, tokenized assets. We’ve been, again, there working with partners because, as you know, you have to invest quite a bit in terms of new technologies. I do think tokenized deposits and tokenized assets have high demand, especially in terms of going across from bank to bank. We’ll enable those through a partnership as well. Let’s see how much activity gets going. Our job as the ultimate financial technology provider is to make it available and then, as fast as possible, make sure that we can get it out to our banks so they can be as innovative as they want to be. TBD on where it ends up.

Will, Analyst: Fair enough.

Stephanie Ferris, CEO, FIS: I will say broadly, again, just kind of going back to question one, I think all of this is good for financial services. I think putting these capabilities inside the financial services realm where they can be regulated and not outside the regulatory system is a good thing broadly for the financial services industry and gives them an opportunity to also take advantage of some of the innovations, either with a disruptor or without a disruptor. I think it’s good for the overall industry.

Will, Analyst: Great. It wouldn’t be at that conference without asking about your latest thoughts on AI. I got a chance to hear some of them earlier, and it sounds like the industry is moving. I’ll turn the floor over to you. What do you think is the most exciting thing banks are doing with AI, and what’s FIS’s role to help facilitate it?

Stephanie Ferris, CEO, FIS: Yeah, first of all, I will say that I’ve been in and around fintech now for over 20 years. This is the fastest I’ve ever seen financial services firms adopt a technology ever. Now, when you talk to the likes of probably a Sara or something like that from the hyperscalers, they would say, yeah, but they’re still slow. Yes, but they’re fast for them. It is really significant because it’s opening up an opportunity for the financial services industry to materially move their cost structure, which really there hasn’t been a big enough technology to allow them to do that. When you think about banks in particular and how do they drive more their efficiency ratios, which are really important to their returns on capital, they are adopting it at a very serious pace.

They’re focused where it makes a lot of sense for them, not just yes in developing faster and higher levels of productivity, but also around big places in their back offices where they have a material amount of cost, but also a material amount of where they’ve already had machine learning. I’ll give an example. Yes, they’re looking at taking out, they’re having a better contact center experience, just like we all are, and taking out costs there. For a lot of financial institutions looking at fraud, fraud is a very big cost inside a bank. It costs them a ton of money. They’ve already had machine learning stacked against those fraud capabilities. Now thinking about AI and creating digital agents that can ultimately make decisions, I think is very interesting for banks. I think there’s a lot of unique opportunity there.

We as FIS, again, our job is to lean in and make sure that where we provide the fraud models, our fraud models are also AI-enabled and have those best-in-class capabilities. What we’re spending time on is how are we thinking about expanding the TAM. The other place that we’ve been leaning in very heavily across AI, and we just, I think, announced it today, is around a lot of our capital markets products who fundamentally provide workflow and modeling, whether it’s risk or climate or treasury, and creating AI-enabled capabilities off of those products to make ultimately banks and capital markets firms’ processes faster, more efficient, and better outcomes, whether you’re going to underwrite something faster, have less risk, etc. I think it’s a very exciting time. Again, like I’ve said, typically when technology comes out, you see a lot of the banks in particular are fast followers.

They’re generally leading in this case, which is exciting for us.

Will, Analyst: That’s great. In the last 20 seconds here, James, I wanted to squeeze one more in just on efficiency and cost actions. I know margins in the back half of the year were a big focus around earnings. There are some FX distortions in the guidance. Maybe you could just talk around your expectations for the back half of the year and any cost actions you’ve got planned.

James Kehoe, CFO, FIS: We think we’re bang on what we said at the beginning of the year. We said 40 to 45, and we’ve had an adverse currency impact, which has led to the revised guidance at 20 basis points. I think what’s lost on some of the participants is within this number, we’re offsetting the TSA impacts a little bit, and that’s about 60 to 70 basis points on the full year. That’s 70 on a constant currency basis, 40 add back 60 basis points of offset of TSA. We’re tracking that the cost reduction programs are driving 100 basis points of, call it, core normalized margin growth. Looking forward to next year, we will do at least 60 basis points of margin improvement next year. Why? Stephanie has been driving the, what we call, organizational health program, which essentially is delivering.

Finance has gone from 10 to 7 functions, like taking out, and we’re not focused on lower-level employees. It’s Director plus. This has gone in successive waves, and the biggest waves are in September, October, and November. It gives us a huge cost reduction tailwind going into next year. We’re ultra confident on the margin guide for next year.

Will, Analyst: Got it. Sounds good. Confident on a lot of things. Thank you guys for spending the time. I really appreciate it.

Stephanie Ferris, CEO, FIS: Thanks, Will.

James Kehoe, CFO, FIS: Thanks, Will.

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