S1 Corp. calls the new version of its technology platform a major step toward delivering a single system that can run almost all of a bank's operations.
Industry observers say the suite of nine Enterprise 3.0 product modules, released today, could improve efficiency when used together. However, the observers also say that installing the entire suite would be a major project, and that it could be some time before any bank implements all of the tools.
"There is a real opportunity to begin consolidating applications and begin reducing costs," said Mike DeVico, the chief information officer of Zions Bancorp. The $30 billion-asset Salt Lake City banking company is installing S1's Enterprise Call Center application; after that project is complete, Zions plans to upgrade the four S1 products it already uses to new, Enterprise 3.0 versions.
In addition to improving internal efficiencies, the new tools could offer "significant benefits that occur on the customer side as well," Mr. DeVico said.
Jaime Ellertson, the chief executive officer of the Atlanta software vendor, said banks are increasingly interested in multifunction applications. "The cost issue is looming more and more on the horizon" and driving up interest in using the same software platform across several channels.
Ross McKay, S1's vice president of product management, said the new applications not only provide this cost benefit, but also enhance the ability of different channels to share customer data. The software can deliver "one view of the customer as well, which is critical."
Analysts were enthusiastic about the rollout. Brad Adrian, a senior analyst for financial services with Gartner Inc., called the platform "the holy grail of what banks have been looking for."
Jim Eckenrode, the vice president of consumer banking research at TowerGroup, the Needham, Mass., unit of MasterCard International, said banks are looking for multichannel applications focused on both customer interaction and cost reduction. The S1 applications are the first he has seen that fit the bill, though he predicts that competing vendors will deliver similar products.
"Most banks have not yet deployed a multichannel architecture in all of their phases, but they're building in that direction," he said. The new applications "address the need for multichannel delivery" and customer relationship management "as a combination."
The suite includes updated versions of Enterprise 1.0 and 2.0 applications, such as insurance and personal, business, and corporate banking software. The new version of the platform includes applications that support tellers, sales and service, call centers, voice recognition, and customer analytics software.
Mr. McKay said that historically, banks did not have a reason to buy all of their software from the same vendor, but he expects the 3.0 platform to change that. "The applications were written with the intent of communicating with each other."
The first three customers, including Zions, are banks that were already using other S1 products.
Mr. Adrian said that earlier attempts to deliver linked applications focused on integrating transaction data, to allow, for example, a call center to know about an ATM transaction initiated earlier that day.
That strategy failed in several ways, because it ignores other aspects of customer interaction, he said.
Mr. DeVico said he expects the new tools to go farther, because they allow different channels to see all the relevant details of transactions from other channels. For example, "in a branch, if somebody called the call center three times this month for three different reasons, they'll be able to see that."
Mr. Adrian said financial service providers will not embrace the applications all at once, even though they "are ready for this." Only 20% of U.S. banks are planning to replace an application for Internet banking, automated phone banking, or the contact center by the end of next year, he said. Approximately 40% are planning to replace their branch automation or automated teller machine software.
The banks that plan to replace an application by the end of next year might consider replacing a second application in 2006, but they will not be willing to replace a certain application every year, he said. "I'm not sure they're willing to forego what they've spent."
Mr. DeVico said Zions chose S1's call-center application as its first Enterprise 3.0 purchase because he is satisfied with the earlier generations of S1 applications that the bank is using elsewhere. "We didn't have any components of S1 in our call center."
Mr. Eckenrode called a full deployment of Enterprise 3.0 the "heart and lung transplant" of the banking world. The cost and complexity of installing software institutionwide may be a challenge for S1's marketing efforts, even if a bank wants consistency across all channels and silos, he said.
"I don't know that a lot of banks are going to have the big-bang appetite" to deploy all nine elements of Enterprise 3.0 at once, he said.
Mr. Adrian agreed that banks are unlikely to overhaul all their systems at once. "Usually the actual adoption of the different modules or channels is done piecemeal."
Copyright 2004 Thomson Media Inc. All Rights Reserved. http://www.thomsonmedia.com http://www.americanbanker.com
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