Banks are still buying technology from Fidelity National Information Services (FIS), but some of its largest customers are making the company wait longer to put it to work.
FIS cut its 2026 pro forma Banking Solutions revenue growth forecast to 3.5-4% from 5-5.5%. Large clients moved conversion dates, bank consolidation affected the timing of revenue, and demand for traditional software licenses weakened as customers favored cloud products sold by subscription. Companywide, FIS now expects pro forma revenue growth of 3.1-3.6% in fiscal year 2026, down from 4.5-5%.
Shares fell 20% in early trading Wednesday after FIS released its results and lowered its outlook. The company separately announced that Chief Financial Officer James Kehoe would step down effective Thursday (Nov. 5) and that Alexandra Brooks, its chief accounting officer, would take over as interim CFO.
“Almost all of the delayed client conversions are contractually required, and almost all of them have already been planned in terms of the dates as they come into next year,” FIS CEO and President Stephanie Ferris told analysts on the Wednesday (Nov. 4) conference call. She said fewer than 10 clients were involved. Some projects have already restarted this quarter, while others are now scheduled as late as the third quarter of 2027. That leaves FIS with only a partial year of revenue from some of those launches.
Ferris said the move to subscriptions would be gradual. FIS historically sold on-premises licenses mainly in Capital Markets and its international banking business. The reset assumes less revenue from those sales while subscriptions build over time. Capital Markets revenue growth guidance fell to 2-2.5% from 3-3.5%.
Bank mergers work in two directions for FIS. Acquirers that choose its core banking systems bring accounts onto its platforms, while the timing of consolidations can slow recurring revenue and generate one-time termination fees. Ferris said FIS sold more than 875,000 new regional bank accounts through the third quarter year to date, with wins from mergers as well as product sales. Community banks and credit unions accounted for another 550,000 new accounts sold. FIS is also using its core banking technology to help launch newly chartered banks.
Issuer Volumes Hold Up
Banking Solutions revenue rose 3.9% on a pro forma basis in the third quarter, but recurring revenue grew just 2.4%. New distribution agreements helped offset weaker traditional license sales. Payments revenue grew 3% on a pro forma basis. Kehoe said debit and credit issuer volumes performed consistently with earlier quarters. The payments results reflected factors including the fading lift from the Everlink acquisition and fewer participants in government benefit programs such as SNAP, which weighed on electronic benefits transfer and prepaid activity. Kehoe expects that pressure to persist into the first half of 2027.
FIS brought the former TSYS issuer business into Banking Solutions in January, adding credit card processing to its existing debit processing, network and banking services. Ferris said the revised outlook left the company’s expectations for the benefits of combining the businesses intact. FIS said 72% of Total Issuing Solutions revenue is under contracts through 2029 or later.
FIS is using AI internally to find and fix software vulnerabilities. For customers, its first commercially available agent for anti-money laundering investigations has gone live at one of the financial institutions that helped design it. Ferris said large banks were reprioritizing security work, though the reasons for individual delays varied.
FIS’s preliminary 2027 framework calls for roughly 3% recurring revenue growth in Banking Solutions, with overall segment growth of flat to 1.5%. FIS expects fewer termination fees and is budgeting for the absence of large one-time distribution deals that lifted 2026 revenue.
“As these headwinds largely fade in 2028, we expect a return to more normalized growth,” Ferris said.
