Tarun Bhatnagar, president of FIS enterprise platforms and products, introduces Atelio at FIS’s Investor Day on Tuesday, May 7.

Emily Massone

FIS Global of Jacksonville, Florida, a 56-year-old financial technology provider for banks, has launched a new platform called Atelio to help its regional banking customers offer modernized financial products such as deposit accounts and online invoicing to other businesses. For regional banks looking to survive in the digital age, an increasingly popular strategy is to partner with non-banks, allowing them to offer financial products, a trend that FIS is trying to ride with its new Atelio software.

“The threat banks face is that if they fail to offer fast and agile ways to onboard and open accounts, they will lose those customers,” says Tarun Bhatnagar, president of platform and enterprise products at FIS. “There is an existential threat and there is also an existential opportunity.”

Over the past two years, 250 banks in the United States have closed their doors, Bhatnagar noted in his presentation at FIS Investor Day on Tuesday. Consolidation in the U.S. banking sector has continued as the Federal Reserve’s aggressive interest rate hikes over the past two years have left smaller banks in a difficult position, facing unrealized losses on their bond portfolios. Additionally, deposits are abandoning regional banks as consumers turn to alternatives such as high-yield savings accounts, commercial deposits or money market funds. To retain deposits and remain competitive in an increasingly digital world, FIS bank customers say they need to modernize their product suites and offer elegant technology experiences that consumers will gravitate towards, Bhatnagar added.

Atelio’s public launch partners include Cleveland, Ohio-based KeyBank, student loan startup College Ave and healthcare payments company RoyalPay. KeyBank uses Atelio to offer an account management platform for commercial clients to track subaccounts they may have within their organization; College Ave uses the platform for its Ambition Card, a secured credit card for college students to build credit; and RoyalPay uses Atelio to offer pay-by-bank, a payment method in which a customer pays an invoice directly from their bank account to the merchant’s account. FIS plans to continue expanding the products available through Atelio to eventually include everything from mortgage loans to brokerage accounts to treasury accounts, Bhatnagar says.

As pressures on the banking sector have increased, regions have jumped at the opportunity to partner with fintechs as a way to acquire new customers and deposits through digital means, rather than relying on traditional physical branches. However, acting too quickly has landed some in trouble with regulators skeptical of the burgeoning industry. Blue Ridge Bank, Cross River Bank, Sutton Bank and Piermont Bank, among others, have all been subject to regulatory enforcement actions by the FDIC accusing them of poor oversight of their fintech partnerships over the past two years. FIS, a publicly traded company with a market capitalization of $46 billion, believes its long history as a technology provider to banks will allow it to avoid a similar fate. Since the beginning of the year, FIS Global’s NYSE-listed shares have risen 21% versus around 9% for the S&P 500 index.

“The reason why FIS is best positioned to win is because ultimately integrated finance is banking, and FIS has been in the business serving banks for fifty years,” Roy Ng, corporate director of platforms and enterprises at FIS, He says.

In addition to helping its regional banking clients offer digital-first products, FIS aims to enable non-banks, including retailers, software developers or neobanks such as Music box o Monzo to offer financial products to its end customers through Atelio. The tendency of non-bank companies to offer financial products is called embedded finance. It is often enabled by banking-as-a-service providers who help connect non-bank organizations to the technology and banking partners needed to offer products such as buy now, pay later loans, deposit accounts or debit cards.

The FIS platform will compete with that of competitor Fiserv
FISV
range of integrated financial products, including debit card issuing and point-of-sale lending. Sunhil Sachdev, head of integrated finance at Fiserv, says that in the digital age, financial institutions will need to move beyond reliance on their brand and community ties to acquire new customers.

“The next generation prefers to consume and be able to leverage the financial services of the brands they already work with today,” says Sachdev. “They don’t make much of a distinction between a brand that offers a debit card and a financial institution that offers that debit card.”

As one of the largest payment processors in the United States, Fiserv has direct relationships with merchants across the country, which it can use to cross-sell integrated financial features. Although the FIS sold its processing business, WorldPay, to private equity firm earlier this year, still plans to leverage its close relationship with the company to sell Atelio products to merchants.

FIS competition doesn’t end with Fiserv. It will also face banking-as-a-service startups like Unit or Synctera, as well as newer companies that provide these services and have banking charters, such as Lead Bank and Column. Further competition comes from payment processors expanding their services to help merchants launch financial products. TabaPay, for example, plans to help its merchants offer an expanded range of financial products, including buy now, pay later loans or secured credit cards. acquisition of lending and brokerage licenses of failed banking-as-a-service startup Synapse. Similarly, Marqeta offers card issuing services to companies for which it processes payments.

Despite a website that brandishes its proven credibility as a fintech, FIS, 56, doesn’t have the reputation for having the more flexible technology or refined design of its startup competitors. Atelio is the company’s attempt to match the technology experiences that both customers and consumers expect.

“Most enterprise software companies with our heritage were built more monolithically, which is exactly how this technology was built,” says FIS’ Ng. “With the launch of Atelio, we are offering speed and flexibility that have not previously been seen in this market.”

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