One of the nation's largest regional automated teller machine networks has teamed up with Electronic Data Systems Corp. to form a new electronic funds transfer processing company.
To form the company, called TransAlliance, EDS and Exchange System will merge their respective electronic transfer customers and operations in 13 western states and four Canadian provinces.
Denny Dumler, most recently head of Plus System Inc., Visa International's global ATM network, will become president and chief executive officer of TransAlliance.
"We believe Denny Dumler best brings to this new venture the leadership we want," said Mike Peters, the chairman of the Exchange board who is to become chairman of the new venture.
"Beyond point of sale, ATM terminal driving, and switching, which is what the Exchange offered in the past, the EDS venture makes us more competitive by allowing us to offer more services and more transaction sets," added Mr. Peters, who also is executive vice president of First Interstate Bank.
TransAlliance plans to offer home banking, bill payment, Internet access, multimedia products, and other EFT-related products and services.
"This partnership will address the world of consumer-initiated transactions, and will grow as the demand for these services grow," said Mr. Dumler.
"We will permit our member institutions to make any product and branding decisions they want to make and support those decisions," he added.
Ownership of TransAlliance, which will be based in Bellevue, Wash., will be evenly divided between EDS and the 26 financial institutions that currently own Exchange.
The joint venture, which has been approved by EDS and shareholders of Exchange, must have regulatory approval before a definitive agreement can be finalized.
TransAlliance expects to start business on Jan. 1, with 700 members, 9,000 ATMs, and 300 million annual transactions. The company will employ 200, including all current Exchange employees.
Tom Bass, current chief of the Exchange, has already announced that he would leave the company as soon as the deal with EDS was approved. Mr. Bass plans to spend some time sailing in the South Pacific before returning to the world of electronic funds transfers.
The TransAlliance board of directors will include the 10 current members of the Exchange board, as well as three EDS representatives: Neil Marcous, Fred Gumbel, and Coley Clarke.
"We believe entering into this venture deepens our resources - for research and development, for technology, and for marketing," said Mr. Marcous, who said the venture would start with more than $50 million in annual revenues.
For its technology platform, TransAlliance will install EDS' electronic on-line network. The network features various backup sites throughout the country, allowing for immediate and seamless recovery of data in case of power outage, natural disaster, or any other potential down time.
EDS will be building a network site in Bellevue during the next 12 to 18 months, replacing the Exchange's current technology.
Once the alliance agreement is finalized and approved by regulators, TransAlliance will outsource its processing operations to EDS. TransAlliance, in turn, will serve as the delivery vehicle for EDS' electronic transfer services within the region.
The region encompasses Alaska, Arizona, California, Colorado, Hawaii, Idaho, Montana, New Mexico, Nevada, Oregon, Utah, Washington, Wyoming, and the Canadian provinces of Alberta, British Columbia, Manitoba, and Saskatchewan.
