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Bank tech spending to increase as a result of Durbin Amendment

New debit card rules will likely boost bank technology spending later this year, according to a top executive at Fiserv Inc., a company that specializes in technological services in the financial industry.

Fiserv Inc. predicts that as a result of the Durbin Amendment, its clients will funnel more money toward software purchases, BankInvestmentConsultant.com reports.

"Although sales cycles continued to be longer than they have been historically, we believe that finalization of the Durbin rules will allow financial institutions to make decisions that could positively impact IT spending this year," Jeffery Yabuki, the president and chief executive of Fiserv, said, BankInvestmentConsultant.com reports.   

A provision in the Durbin Amendment requires that banks equip their debit cards to be able to process at least two networks that are not owned or operated by the same entity. Another provision bans the exclusive routing deals that banks have with payment networks under which they process all of their signature and PIN-based debit transactions, according to BankInvestmentConsultant.com.

Fiserv stands to benefit from both of these provisions as it owns the ACCEL/Exchange PIN debit network and could gain big business from banks who have to add an additional network.

Fiserv competitor Fidelity National Information Services, Inc., is also prepping for business as banks are beginning to act in order to comply with the new rules before the April 2012 deadline.

"We've had conversations with a large number of the institutions who have had exclusive relationships in the past," Neil Marcous, the senior vice president of network solutions at Fidelity National Information Services, said, BankInvestmentConsultant.com reports.

The new rules could redistribute 800 to 900 million debit card transactions, according to Marcous, who said that Fidelity National Information Services is testing its "telecommunications bandwidth" and expanding its "processing capacity" to make sure it can handle increased traffic.

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