Fiserv, Inc. ($FISV)

Good 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 1-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.

Yes. It's great to be here. Thank you. And I know the last year, I'll start by saying we know that last year, it has been difficult for our investors, and we don't take that lightly. And so take all 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 work. 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. So and I've talked about product delivery tech resilience and capital allocation and we put a plan in place to address those. And then we also -- but 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 in 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. And then every business we went through digital banking, core banking issuer in payments all #1 positions, the #1 and 2 positions in small business payments with non-Clover and then Clover and then obviously, #1 enterprise 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 5 distinct pillars to it, but this underlying underlying an overwhelming mantra to think and operate with the client-first mindset. And 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. And that means fully embracing AI. It meant some important cultural shifts the company. It meant redoing parts of the leadership team and then increasing our execution-oriented focus and increasing accountability, meant revitalizing our employee base, which we've been happy about when we talked about at Investor Day. And 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 compound or investment case, which we think ultimately will be good for both investors and our clients.

So let's talk about the inputs into the constant compounder profile. And I want to start with the leadership team that you've built. Tell us more about it, given all the change that has occurred within the past year, how is 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 is now at record low levels.

So hopefully, if people can get a chance to see the Investor Day presentation, I encourage you to watch it. We love the team we've built, led by Divia leading financial services and takes leading merchant services. I thought they did a terrific job. They've been -- I knew it, but it was good to get the chance to highlight and spotlight them at Investor Day. And naturally, they've been great leaders operator and naturally great people follow great leaders. So we've been able to attract a lot of talent into the company. I said Investa I've been shocked by the amount of talent that wants to join the company to 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. So 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. Our ability -- 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 focused. They want to lead with that. And if you look, you're right, if you look at our best-performing people, not just the top down, but the best performing people, the exceeds and significant case people across all levels of the organization that attrition is at a -- we can't find a measurable period back where it's been as low as it is now. So that's a good sign and shows people are engaged and focused and believe in what we're trying to accomplish. And then we've been very deliberate either through Aqua hire as 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. And so I feel very good about where we are there are a lot of new faces, as you recognize. But -- it starts with outstanding leaders in DiviandTakus.

And another big team 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 time lines with which was not possible at Fiserv before.

Yes. And it's more and more -- the pace of change is incredibly even since the fall. But we've been very encouraged about how AI can help us develop. And as I talked about at Investor Day, it's a 3-pronged approach, generate more revenues reduce our own costs and then enhance the client experience. And obviously, those are somewhat interconnected if the experience is better, can generate more revenues. On the revenue side, the biggest thing AI has done is, if you remember what we are, we are an infrastructure company, a technology infrastructure company that 2 massive TAMs used to run their businesses protect their data, move money with a level of reliability that can't be approximate or like. And that's all fed off a system of a series of systems of record. And those systems are record are sound. They're solid. They've been built over years of trust. But 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. And it's also allowed us to go into completely new categories, whether it's genic or an OS, which is an operating system that Divia unveiled at Investor Day, where we've had incredible receptivity since Investor Day, which basically is connecting banks to agents and agents to banks 2 sets of -- 2 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 state or federal rates and the banks don't know how to let an agent into their core systems without it they don't how to manage or aren't prepared and ready to manage a kill switch to mass data to control where these agents go not. So all of those things are introduced new revenue times for us. On the reduced cost side, it's servicing, it's operations and it's Aptiv that's factored into the positive operating leverage we put forth in the plan, but we see significant opportunity to reduce costs there. And 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. As long as we can prevent -- 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 and helping customers self-solve their needs. So that's an important piece. And then 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. So we think there's great capabilities and great opportunity for us. We've been thrilled with the open AI partnership, which we announced at Investor Day. And this morning, we made -- we thought it was an important announcement with cognition where we'll use Devon, which is their software engineering agent to help modernize specifically on the cores and the financial services businesses, and they've been a great partner, and it was great to get a formal agreement out with them this morning.

And I want to follow up on Agent OS. I know it's not part of your medium-term guidance. But tell us more about it. There are so many agents being created days, why does Fiserv have the right to win here? How does this expand your market opportunity?

Yes. So age and OS, which I was just referring to, what 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, and we Dave and I have 1 meeting where I talked about Investor Day, but the bank said they had an agent who is going to help them in deposit reconciliations. So they put the agent through procurement. And the procurement department asked for 7 years of audited financials and the agent had been functional for 11 days. So there's just a giant mismatch of, so I'm going to let that agent into my core, into PII, into all the other stuff that comes with it. But how do I police it and the like? And so part 1 of what we create 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. So we allow that side of it to happen. And on the flip side, we've created an agent marketplace rather than just doing 1 LLM with 1 use case and trying to sell it to a bunch of banks. We've created a 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'll manage to get it to get into the banks and will manage the kill-switch where it goes, masking data and all the other important compliance factors. So we've simply responded to 2 requests were 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 codeveloped it with 6 banks. We have 2 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 in putting that together, we think it's a tremendous opportunity. And 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 is hitting our product deliveries part of it stopping core conversion, but also part of it, a big part of it is becoming a value-added provider to the bank. So 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. So it's a body of work around that piece of it. So that was 1 advantage for us. And then the second advantage is that 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. And the path to the 6% to 8% revenue growth and Clover is a critical import here. You laid out targets for 10% to 15% volume growth, 15% to 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 in distribution. What gives you the confidence around the Clover growth targets you laid out?

Yes. Hopefully, a lot at your requesting, we put a lot of incremental data out on Clover at Investor Day. So hopefully, you and particularly appreciate it. Hopefully, everyone appreciate it. But just as a reminder, on the 10% to 15% volume that you mentioned, 10% is the organic growth that we targeted, and I'll tell you how we get to that number. And then from going from 10% to 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. So that's the upside from the -- on the 10% organic growth, that number is a number that you go back to 22% every quarter since '22, we've been done somewhere between 8 and 12 and it's average $10. So it's what we're doing today and maybe the competitive -- you view the competitive market is different than it is today, but we've been chugging along at 10, assuming a constant environment. And then when we look at Clover, and Todd and his team have gone through every aspect of it, we see upside in almost every part of what we do. And we've been talking about those 5 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 health care and professional services in March, 2 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. Then we've got the whole experience front. Our -- we're doing very well in the front door. We're unhappy with some of the early attrition and I've talked about it, first 90-day attrition in Clover, and we put a whole experience effort in there, which we think can reduce runoff again, net to positive GPV growth and then 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 in Investor Day, 3,000 ISOs, 1,000 banks. I mean the distribution is incredible. And we still have room to take there and then digital sign on, which has never been -- it's been a big aspect of 1 of our competitors' growth. It's never been an aspect of ours is now into 20 banks or so. So in each aspect of Clover, we think there's room to take. So you can -- what we said to investors, you can take the 10% anyway you want, you can say, 10%, I think it's not too competitive. You can't do 10% anymore, but you've got 5 different metrics to do it, or you can say 10% is a base level, and here's 5 areas of upside to 10%. And then above that, it would be some type of effective conversion of non-Clover to Clover for volume growth. And then we said 5 points difference between volume growth and revenue growth, which has been consistent with historical average, plus you have some new VAS coming online, but just continued progression of vast penetration, which is in the mid- to upper 20s now gets you -- it obviously adds to the volume growth to get to the revenue growth.

So let's talk more about the volume growth to revenue growth and that kind of higher revenue growth what drives your conviction in the revenue growth opportunity? And you talked about the value-added services penetration -- there is a little bit of working capital in there -- there is other opportunities. So let's talk more about that.

Yes. What I'd say is that historically, if you take out the cyclical factors in some of the Argentina activity, there's been a consistent difference that you run basically 510 points of 10 percentage points of GPV and 15 percentage points of revenue growth. Fast penetration has been increasing. We think there's still room to go there. And then there are significant new VAS categories. Clover Capital is 1 where our penetration. We said it's 4.5% in Clover -- on the non-Clover book is bigger than the Clover book. So you cut it more than in half, so you're in low single digits, hasn't been an organized focus for us. It is now. And then 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. So if you believe the 10% historical growth plus some new online products, that's what drives that incremental.

And let's maybe also my Zoom in on the new verticals point that you made earlier and also international markets because these are also big addressable markets for you to kind of go after. How do you feel about those opportunities? What drives your conviction here?

Yes. We showed -- we tried to give you the data at Investor Day that we think -- 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 see -- 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. So there's tons of room to run still in the U.S., an opportunity there. Outside and a big opportunity we showed is low market share in health care and low market share and professional services, both areas that our -- especially our banking and ISO partners are saying that they want an offering and they think they can deliver on an offering there. So we launched both of those practice Pay is the health care offering that we did with rectangle Health as I think about it as an ISV partner. And then professional services is largely on the heels of Cash Flow Central, which is a pay-ins and payouts market -- paying-out product for that vertical that uses that a lot -- on the international side, we're most -- we had talked about being most excited about Brazil. Everything is on track there. We launched last year, getting significant growth. International is now over 20% of total Clover obviously growing at a much faster rate off a lower base. Canada has 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. And then 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 has really done successfully before. And that's the -- of all the major developed markets, that's the most cash-dominated market still. So we see great secular growth opportunity and a great distribution partner there. From there, we -- I mean, we have joint ventures in Germany. We've got Ireland. We've got Lloyd's, we've got NatWest, -- we've got Deutsche, AIB, we had Spain -- so we just went into Austria with UniCredit. So all around the world, we got great partnerships that we're excited about leveraging. So what we've learned through this great partner significant market and we'd like to still benefit from some cash to card conversion efforts. So we get 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. So how should we think about the back book and the stability from here?

We said -- and again, we put a lot of data for you at Investor Day. So 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 GP I think -- and we obviously see it as an important -- 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 it's vast. A portion of that naturally isn't going to be ever eligible for a whole bunch of reasons. So the majority of it is 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 they're generally -- we get good feedback and they're generally happy with the services there that they're using from us, which is mostly a payments type device. Obviously, generational changes there, maybe they don't know what they can do with it and stuff. So we want to do everything we can to increase the yield of that and make sure they have full access to our VAS. But 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. So talk us his team have tested very carefully and thoughtfully here, given they're happily paying Fiserv customers today. And 1 of the things we talked about at Investor Day was a low-friction nonphysical 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 spend -- 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. But 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. But it's not like they're calling us and saying, "Hey, I got 13 appointments today with point-of-sale providers, I have a nerve from you. It's a -- so 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. So your strength has historically been uncard-present and in-person commerce. He 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 in omnichannel, the higher-end growth markets or higher growth markets and achievable opportunity for you?

Yes. 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. And that's a great business and an important 1 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 omnichannel 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 and full capabilities across the world by the middle of 2027. And point to has 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 2 or 3 modern platforms that can run omnichannel. And increasingly the solution globally for large payment seekers on payment services is an omnichannel solution, single integration and the like. So 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. And if you can do that, historical relationships don't matter as much as the data and the effectiveness of your algorithm.

And I guess the foot in the door there is becoming kind of the second processor and then scaling loss.

Yes, everyone in e-com uses multiple processes, and they move volume to where the algorithm suits them best higher off lowest fraud best price.

So my lead switch gears and talk about financial services, financial solutions, and we'll start with banking. So 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 for modernization journeys. Do you think you're at the stage where client conversation can evolve from stabilized to the attach and growth fees on valuated services of your banking strategy?

Yes. 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 couple of billion of our revenue attrition there has been higher than we would want it to be as a result of really 3 major things that were in the past, which is a depletion of client service. Some -- we missed some key product deadlines, especially around our digital product going back in '23 and '24 and then an effort that drove a series of force conversions. All we've done is done the opposite over the last 6 months. So we're supporting all cores. So the force conversions off the table. We've significantly invested in client-facing personnel, significant investments in modernizing our technology, significant investments in new technology around it in new value-added services, whether it's StoneCastle and now agent OS. 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 5 past, but you could mix and match any of those, Divi, went through them. At Investor Day, take make it the client's choice and take the big bang approach out of core conversion modernization. So 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. So 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 but 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 and what we laid out at Investor Day is not a miraculous come back that we stop all attrition this year. It's a gradual path from '26 to '29 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. But 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? And tell us about the growth opportunity, both with respect to a unified multi-legal solution, but also in terms of value-added services and I'm taking cash flow center.

Digital payments is a great business. Hopefully, you got a flavor for that at Investor Day. It's just under $4 billion in revenue. So it's a big part of our story. We serve 41 of the 50 largest banks for payments in the U.S. We have #1 market share positions from Zelle to treasury and all the key area. So 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. And when you go to a bank meeting, all the #1 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 the payment both for a retail customer of a bank and a corporate customer or a bank and putting those into a unified payment platforms in the individual side and the business side and then putting an intelligence layer on it. So I need to make a payment, what's the most intelligent way to make that payment on both ends of it. And so we've got every tool you need to compete there. In terms of VAS, cash flow central will be in digital payments. It's the -- we think it's a transformative product for small businesses. And you saw the ramp. We showed you some of the ramp that's going on there, huge pipeline to go live, huge pipeline gets sold. And 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. So 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 2 debit networks. And 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 Dell Bill Pay through Zelle and the like. But that is a drag on our thing, but the account-to-account treasury management and Zelle are overpowering that such a 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 is even with the bill pay where it is.

And you talked about the optionality with STAR. So 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?

Yes, we own 2 debit networks, Star in Excel, 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 networks, as you know, are great businesses, which we have more of them. And -- and as payments modernize the optionality we have with those -- their messaging networks, we can do more and more with them over time. And then obviously, there's a value -- 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.

So let's talk about issuer processing. PAUSE It has been a steadily growing segment for you. You're modernizing your 2 key platforms here. What does this unlock for you?

Yes. 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 and we -- again, we have -- as I went through at the beginning, if you -- whether it's banking, we are #1 positions, digital, all #1 positions, issuing, you have #1 positions. Again, we've got 25 of the 50 largest issuers, 8 of the top 10 private label issuers, dominant card processor in India, dominant card processor in the U.K. So it's a long established business, a great base of VAS that we highlighted at Investor Day. And our big efforts in there, as you mentioned in the question, Optus, 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. So it's modernized as you go. That's been a significant investment runs through next year. And allows us to get product and our customers get products to market faster and deploy more modern tools in that increased resiliency, increased security. And then on the side of it, which aside of that, we've launched Vision Next. Envision Next, Think of that as the Fnac of the card business. If FinzActis the modern core to the core banking business Vision -- next is the modern card core. And we'll use that. That will be the primary engine for embedded finance. It will be the primary engine for international expansion. And I think even here domestically, any greenfield issuing new issuing client would go to vision next versus going to Optus, cloud native, every -- all of the modern aspects to it. The pipeline there is significant. We talked about it at Investor Day, and it really gives us a value proposition for the international markets where we've had a number of issuing platforms over time.

So I wanted 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?

As I said earlier, we like networks. So when we saw StoneCastle has a -- we bought StoneCastle for 2 reasons, and they've been great partners. StoneCastle is 1 side of their business or there are sort of 3 aspects to it. One side of the StoneCastle business calls on anybody who has cash and stone case, what sits in the middle is a ledger, Finzec. -- single all the cash comes into a single account. And 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. So 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 to sort and get 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. Both these emerging opportunities, the cash network and the stable coin came from requests and discussions from our banks as to what they wanted and what was important to them.

And I guess you talked about stablecoins. I think it's been almost a year since you launched FI USD. I guess, like more broadly, what role can stablecoins play for your clients? And I know you talked about some of the services you can provide to your clients.

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. And FIUSD, anyone who's on our core through but we're using Fin Zac again, just continued tools for finza to stand up FIUSD, and it can interact with any of our cores. So all 3,000 banks will -- are able to use our wallet and use our coin and our custody capabilities. 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-ramp -- but we'll stand that up for them. And any -- we're working through pilots with our customers. FI USD goes live in July. The first use case is what we had publicly announced in North Dakota bank-to-bank movement, the state mandated that has to be done any type of bank-to-bank movement of money has to be done through the rough rider coin, which is a white label of USD -- and then 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 to a contra account. So we think there's a lot of attractiveness of product. There isn't massive demand for it today. And if you go to the other side of our business, merchants want to reduce acceptance cost. And if stablecoin can do that, they'd be interested in it. And 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, so they want the ability to do it. And we talked a little bit in the emerging opportunities at Investor Day is maybe someday, there can just be a stable point on a settlement. If you got 300 million bank accounts and you've got 6 million merchants and why do you have to go out into a multiparty system and so also for the future, but we think there's great optionality from it. But the development we put around FI USD was to address an immediate need that came from our depository clients to meet the regulations of the genius actor when it comes through and 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 the?

Yes. I go back to -- on the AI side. We have all this data the ability of technology has accelerated. We've been working on -- the company has been working on extracting that data, putting it in a single package across the customer and then using that to increase auth rates, reduce fraud rates, create better data products, but AI has just accelerated the pace at which we can do that. And we're also working with some outside partners to have some skills to help us come to that and put forth a much broader set of value-added, either ideas, services, hyperpersonalized offers -- but the most obvious area that we'll get paid for it is higher auth rates, lower fraud rates because the data -- we talked -- we showed some of the data stats that Investor Day, it's 1 billion transactions today and then 1.8 billion cards on file. So it's that's just stunning amount of data, but 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. And if you have the most data, you should be able to monetize the most data, and that's -- obviously, we're focused on doing that in a way, in a safe and responsible way that benefits our clients. But there is especially through agent OS, there's sort of what's emerging in 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 FINSA earlier in our conversation. Visa has also recently talked about wins for Basel -- what are you seeing in terms of kind of modern versus kind of other core dynamics in the market?

Yes. So FinTech is -- was built as by Frank Sanchez, as sort of the king of technology, of course. And Fiserv had an investment in it and then acquired it in '22 or '23. And Frank has been a great partner. Finsechas more accounts on it than all the other modern cores combined generally acting and it's a thing of finza above anything else is the ultra-modern ledger capable of handling any type of asset that you want. And just randomly referred to it as being the base for stablecoin being the base for Stonecastle being the single back-end engine for CommerceHub as a ledger. So the use cases of Finzacaforin wide, and you can see some of our biggest customers on it, but running 40 million accounts today is just far in 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 and Tina and Pismo and other modern cores to the extent that they surface can play a role in helping big banks do that. So we're excited about that aspect of it, but that's just 1 aspect of what a modern core can do fine can go across -- we can deliver Five9s. We're cloud agnostic. So the capabilities and the power of FINSA will definitely leverage it in our depository base, but we see -- 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. And Fintech has an incredible position to sit in the middle of that embedded finance trend. And the use cases of Finzacaralmost Unlimited is 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 1 of the demos at the Investor Day was Clover agents -- how do you think about, I guess, that opportunity over the long period of time because it's fascinating what you could do for your merchants.

Yes. And 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 to payments if they want to do that and then providing all kinds of off of their system of record, providing value-added advice. You saw the Cupcake maker and the Cresson maker that's all just obviously to the extent that we can build -- so everyone will try to build some of the tendon t can drive growth and obviously can drive deep retention but the power of providing our merchants with horizontal vertical vast value-added idea is, again, proliferated by AI, and we thought the example that we showed of the Clover agent was a great use case. And that doesn't even touch upon what we -- 1 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 an earlier meeting, a single location bootmaker in Wyoming and someone is on Gemini searching for cowboy boots, that merchant wants to be -- they want to be shown in that agenetic showroom. So there's a whole another side of the Clover agent, 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 eugenic world.

No, it was a good demo at the Investor Day. So Mike, we have under 2 minutes left. So my last question for you. Over the past several years, investors have been in somewhat of a journey as it relates to Fiserv at the same time, we have talked about a number of initiatives put in place over the past year since he became CEO. As you reflect on your investor conversations, what are the 1 or 2 things about Fiserv you believe are currently misunderstood by the investment community?

Interesting. So probably first and foremost, I go back to the opening 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 4 years have been the anomaly driven mostly by cyclical factors post COVID. And if you go back to the 42 years that Fiserv has been around for 41, 42 years, 5 sort of brand, 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 so as I said earlier, a big part of the strategic plan and 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 a -- 1 of the things we just went through almost all of our businesses in each case. We've got a #1 market share position, and we're operating from a position of strength by continuing to be that intelligent technology infrastructure that powers these 2 big TAMs that are going through massive structural change and opportunity. The second thing, obviously, in the market is going to wrestle with it for a while. We think AI brings us great opportunities. Others have different views. And hopefully, what we showed at Investor Day in terms of generating revenues both on -- through data and the like and value-added ideas, agent OS, reducing costs and streamlining customer service. It's a big part of what we can do. And 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. And we tried to put forth the case that at least it will always do the right thing by our shareholders. But 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 merchants, small merchants, and no 1 certainly ever had the tailwinds of AI and the tailwinds have embedded. So those are probably 3 areas that we talk most about.

Great. Mike, thank you so much for your time to.

Thank you for having us. And if you haven't seen the Investor Day, I encourage you to listen to what we covered a lot there.

Thank you.