Watered down in an effort to garner votes, the financial reform bill still poses headwinds for most of the financial industry. Nevertheless, one sector stands to benefit.

For months now, a pall has hung over financial services firms as Congress formulated new regulations that would reshape the fate of yet another industry in the US.

In the wake of the financial crisis and unprecedented federal bailout, many of the nation’s largest financial-services firms have come in for substantial public criticism and scorn.

Against this backdrop, bankers were justifiably concerned that Congress might put the screws to the industry. Impending midterm elections upped the ante.

Although lawmakers initially proposed a handful of radical changes—busting up the nation’s six largest banks, reinstating the Glass-Steagall Act and major restrictions on compensation were all on the table—negotiations have watered down or eliminated the provisions most odious to industry insiders. Though hardly a death blow, the financial reform bill does present challenges for the banking industry, including higher capital requirements, restrictions on the use of derivatives and proprietary trading, oversight from a new Consumer Financial Protection Agency, and a raft of disclosure requirements.

But niche information-technology firms that focus on the banking industry won’t be adversely affected by the increased regulatory burden—and some may even benefit.

Advent Software (NSDQ: ADVS) is in prime position to profit from financial reform.

Advent offers a full suite of software solutions covering front-, middle- and back-office functions ranging from research management and compliance functions to order management and portfolio accounting.

One component of the financial reform bill—as of this writing, the details were still under negotiation— would cap proprietary trading at just 3 percent of Tier 1 capital and force banks to spin off some of their riskier derivative-trading operations.

But proprietary trading is a hugely profitable endeavor, generating as much as a quarter of some big bank’s profits; these firms won’t let these business lines go without a fight.

Banks likely will spin out these operations as quasi-independent businesses, with the parent bank retaining a significant ownership stake and a chunk of the profits. If such a situation occurs, the market for Advent’s software and services would expand substantially.

The stringent reporting requirements faced by hedge funds and other derivative traders are another plus for Advent; to comply with these new rules, firms will need to upgrade their accounting and account-management software.

Sporting a client base that includes nine of the world’s top 10 prime brokers, 25 of the world’s largest hedge funds and 3,300 asset managers, Advent has generated surprisingly consistent revenue growth at every stage in the business cycle.

Advent also has aggressively pursued an international client base, tapping into the growing financial centers of Asia and the Middle East. About 14 percent of the company’s revenues come from outside the US.

As one of the few outfits set to reap rewards from beefed-up financial regulation, Advent Software rates a buy up to 53.

Although the credit crisis and epidemic of small bank failures have slowed Fiserv’s (NSDQ: FISV) organic client growth, the stock trades at valuations that price in Armageddon.

Fiserv provides productivity-enhancing solutions geared primarily toward small and midsize banks. The company is also a leader in the US market for account and ACH processing, electronic bill payment and online banking platforms.

Despite its market-leading position in many of its business lines, Fiserv hasn’t been immune to the ravages of the financial crisis and has lost clients. However, concerns about Fiserv’s fiscal health are greatly exaggerated given the company’s focus on recurring, transaction-oriented products and services.

The absolute number of clients served by Fiserv has contracted marginally, but revenues have remained fairly steady because the total number of transactions processed has held up. Transactions don’t just disappear. When a bank goes under, more often than not another bank—usually a Fiserv client—purchases these accounts.

Given the high cost of switching processors, in terms of both effort and expense, Fiserv has had great success retaining its clients even during the market turmoil.

The firm already holds more than a third of the processing market for small and midsize banks. And its low-cost solutions and track record of success are attracting a slow-but-steady stream of new clients.

Fiserv’s revenue has remained relatively flat over the past few quarters, largely because of declines in the processing of home-equity loans. Earnings growth has remained steady, however, as management continues to squeeze more efficiency from its operations.

Growth prospects look solid over the long term, as many smaller insurance and benefit- management outfits—another key client set—are outsourcing their processing functions. Fiserv is well-positioned to pick up a significant portion of that business.

Unaffected by reform and trading at a discount, Fiserv is a buy up to 51.

Benjamin Shepherd is editor of Louis Rukeyser’s Wall Street. He’s also coeditor of Global ETF Profits, an advisory focused on using exchange-traded funds to profit from key short- and long-term trends.