ISSC Enters Small-Bank Market With Outsourcing Deal in N.Y.

Integrated Systems Solutions Corp.'s has entered a five-year outsourcing deal with Long Island Savings Bank.

ISSC will operate and maintain the bank's core computer applications, including loan servicing, retail banking, and customer information systems.

The deal, whose financial terms were not disclosed, is the first new business to come out of a technology alliance that ISSC formed earlier this year with Jack Henry & Associates Inc., a core processing software provider.

Through the alliance, ISSC plans to provide banks of up to $10 billion in assets with outsourcing services based on a Jack Henry software package called Silverlake.

Silverlake runs on IBM's AS/400 midrange computer, a hardware platform that has become popular among community banks because it is in many cases more flexible and economical to run than a mainframe.

Historically, ISSC has focused its marketing efforts on large banks. In this arena, it vies with a number of other major outsourcing providers, including Electronic Data Systems Corp. and Alltel Financial Services Inc., for the handful of sizable accounts that come up in any given year.

The company's largest contract made in this market was with Bank of America-Illinois - the former Continental Bank Corp. - for $500 million over 10 years.

In entering the community bank outsourcing market, ISSC will compete more regularly with the likes of Fiserv Inc., AT&T Global Information Solutions, M&I Data Services, and Bisys Group Inc.

According to George Samenuk, vice president of finance and securities at White Plains, N.Y.-based ISSC, the partnership with Jack Henry is a natural extension of a long-standing relationship between the two companies.

The partnership gives both companies the ability to expand the number of institutions to which they can sell their wares.

Jack Henry has long been an AS/400 business partner, and the companies have made a total of over 1,000 installations.

Offering the system on an outsourcing basis allowed ISSC to expand the partnership, said Mr. Samenuk, and Long Island Savings is the first bank to take advantage of the relationship.

"Combining our system integration skills and Jack Henry's software, Long Island Savings can take advantage of technological advances that in the past were only available to its giant competitors," he asserted.

Long Island Savings, a subsidiary of $4.7 billion-asset Long Island Bancorp, will have its 36 full-service branches converted from a mainframe environment to the AS/400 and to client/server technology.

The move will allow the bank to differentiate itself in the market and shift to a more customer-oriented focus, said Dick O'Brien, first vice president for information technology at the bank.

He explained that, with the platform's integrated customer information data base, the bank will be able to view customer relationships across multiple product lines, in a consolidated fashion, and thus provide better service.

He added that a graphical user interface for front-end systems, such as platform automation and mortgage originations, will enable personnel to be trained quickly and will allow them to switch between applications more smoothly.

The bank also expects to see a decrease in operating expenses by migrating from a mainframe to the less costly AS/400 platform, said Mr. O'Brien.

Long Island Savings, based in Melville, N.Y., operates 36 branch offices in Queens, Nassau, and Suffolk counties in New York.

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