CoreStates to Buy Bisys' Check Processing Unit

QuestPoint, CoreStates Financial Corp.'s transaction processing unit, has agreed to acquire the check processing business of Bisys Group Inc.

The purchase, whose terms were not disclosed, would boost QuestPoint's standing among the top check processing service providers.

After the acquisition is completed, the company expects to be "the No. 3 player nationwide without a lot distance between ourselves and the other two," said Joseph M. Loughry 3d, president and chief executive officer of Philadelphia-based QuestPoint.

For Bisys, the sale is an exit from a scale-driven business that required more attention and effort than the company was willing to give, observers said.

"Being in the item-processing business for a company like Bisys was a mistake," said M. Arthur Gillis, president of Computer Based Solutions Inc.

By selling this business, Little Falls, N.J.-based Bisys is building a stronger and more profitable company around its core businesses of general bank outsourcing and investment products, Mr. Gillis said.

As part of the acquisition agreement, Bisys retains the right to sell check processing services provided by QuestPoint to its bank customers.

The agreement "gives us an expanded geography in other parts of the country where we market our traditional account processing services and don't have an item-processing solution," said Lynn J. Mangum, Bisys chairman and chief executive.

"The alliance complements our single-source strategy by delivering an item-processing solution to clients and prospects throughout the country," added Paul Bourke, Bisys' president and chief operating officer.

Bisys is a relatively small player in U.S. check processing, handling about 0.3% of the nation's prime pass check transactions, according to CoreStates.

The Bisys deal will boost QuestPoint's prime pass market share to about 2.8%. The leading private-sector check processor, Fiserv Inc., processes about 4.4% of the market, according to CoreStates.

"This is a very exciting development for QuestPoint because they clearly were interested in securing new customers," said Stanley E. Miltko, director of product sales for AFS/LSC, a commercial lending software vendor.

The company will also benefit from Bisys' technology, Mr. Miltko said. As part of the agreement, QuestPoint has signed on to use check-image software from Bisys' Document Solutions Inc. unit. The software will be installed initially at a Cherry Hill, N.J., processing site and may later be installed elsewhere.

QuestPoint is to acquire five Bisys check processing sites, bringing its total to 27. It is committed to some consolidation but did not project how many sites would be closed.

The Bisys facilities, though currently devoted exclusively to check processing, will handle remittance processing needs in the future, said Mr. Loughry, the QuestPoint CEO. "Our intent would be over time to co-locate both capabilities in as many sites as is practical so that we're providing extended product capability across a broader geography."

About 200 Bisys employees will transfer to QuestPoint, boosting the latter's payroll to more than 4,500.

Observers expect to see more merging and "partnering" in the item- processing industry.

"I think you're going to see a wave of alliances in six months to 12 months," said John E. Carreker 3d, senior principal at Dallas-based J.D. Carreker & Associates.

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