FIS Deepens Its Banking Push With Payments and Issuing

FIS management spent much of Tuesday morning (Aug. 4) talking about banking, issuing and payments growth.

Although the company’s Banking Solutions business continued to outperform expectations, investors pushed the stock lower in early trading on Tuesday, down 7%, after management reduced its full-year outlook for Capital Markets, citing weaker-than-expected sales, slower implementation of existing backlog and softer professional services activity. On a second quarter earnings call, executives repeatedly described those issues as execution problems rather than weakening customer demand.

FIS lowered its full-year revenue outlook Tuesday after reducing expectations for its Capital Markets business, overshadowing another quarter of steady growth in Banking Solutions, where payments, issuing and recurring software revenue continued to expand.

The company now expects full-year revenue growth of 4.5% to 5%, down from its previous forecast of 5.1% to 5.7%. FIS maintained its Banking outlook while reducing expected Capital Markets growth to 3% to 3.5% from 5.5%, citing lower professional services sales, slower implementation of signed business and weaker recurring revenue growth than previously anticipated.

Banking Solutions remained the stronger of the company’s operating segments during the quarter. Banking revenue increased 5.6% on a pro forma basis, Payments grew 6.4% and total Banking Solutions revenue rose 6.1%. Recurring revenue increased 5%, while recurring sales were up 14%. The segment also expanded margins through product mix, cost savings and integration synergies.

“Our total issuing solutions acquisition thesis is playing out as expected with real client wins and revenue growth across the portfolio,” Chief Executive Officer and President Stephanie Ferris said during the conference call with analysts.

Issuing was a focus throughout both the prepared remarks and the analyst question-and-answer session. Management noted that since the beginning of 2025, FIS has renewed approximately one-third of its issuing revenue, with 72% of the portfolio now under contract through 2029 and beyond. Enterprise-wide annual contract value sold to joint FIS and Total Issuing Solutions customers increased 35% during the first half of the year, according to comments on the Tuesday call. Ferris later told analysts that FIS has converted approximately 30 million accounts during the past year, including one of the largest portfolio migrations she has seen in the industry.

“We are the only known processor that can convert accounts at scale and size. We’ve never had a failed … migration,” she said.

Analysts noted that Payments has become the company’s largest business. Ferris said Total Issuing Solutions is growing in line with the overall Payments segment, while Chief Financial Officer James Kehoe said FIS expects Payments to continue growing at roughly current mid-single-digit levels and to outpace the Banking software business over the longer term.

Management also described continued customer demand for payments modernization, fraud prevention, data management and lending technology.

Ferris said banks continue investing in payment capabilities for consumers, commercial customers and small businesses, while demand remains strong for fraud tools, data platforms and modernization projects. She added that FIS has not seen customers delay technology decisions in the areas where it competes.

The discussion with analysts also highlighted changes in how banks are approaching core modernization.

Rather than replacing core systems outright, Ferris said large financial institutions are increasingly looking at orchestration layers, ledgers and customer-master capabilities that can modernize existing infrastructures.

AI as Operating Tool

Artificial intelligence was presented on the call as an operating initiative rather than a standalone product announcement.

The company said it now has 10 AI products in market, more than 200 live customers and a pipeline of more than 500 opportunities. Internally, FIS reported AI engineering throughput has increased by 1.5 to two times while software defects have declined approximately 30%.

On cybersecurity, Ferris said AI is helping security teams identify and remediate vulnerabilities more quickly.

“Cyber is one of our biggest technology spends. It has been and it continues to be,” she told analysts, adding that AI is improving productivity within the company’s cyber operations.

Despite lowering its 2026 expectations, management said it expects recurring revenue growth in Capital Markets to improve as customer attrition moderates and delayed implementations move into production.