On-Line Banking: Sybase Leads Data Base Firms Into Internet Banking

Relational data base vendors are taking aim at the on-line banking market and the many start-up companies that populate it.

Sybase Inc. recently announced an alliance with Intuit Inc. to make its newly introduced server work with Intuit's Quicken and other software products that comply with financial data-exchange standards.

The Sybase Financial Server would take the middleman's role of retrieving account information from legacy systems and sending it to customers who connect via the Internet.

Smaller firms such as Beaverton, Ore.-based Corillian Corp. and Lenexa, Kansas-based Innovision have been targeting this niche.

They rely on standard protocols like Open Financial Exchange, or OFX, to make the exchange of information between banks and customers possible.

Sybase officials said its financial server will use a number of financial standards besides OFX, which was originally backed by Intuit, Checkfree Corp., and Microsoft Corp.

The server also accommodates Financial Information eXchange (FIX), for exchanging securities transactions instantaneously; Object Life, a Microsoft-supported protocol for the exchange of insurance information; and JLife, a implementation of Sun Microsystems Inc.'s Java-based protocol for passing insurance information.

The alliance with Intuit broadens Sybase's usual reach, extending it from the back end of financial processing to more of a gateway, or middle, position.

"For years we felt we understood financial institutions, but we never went beyond the firewall before the Internet came to pass," said Michon M. Schenck, Sybase vice president and general manager of worldwide financial services.

Analysts expect other data base and so-called "enterprise planning resource" vendors with experience in backend processing to follow Sybase, potentially altering the on-line banking software market.

"Financial service firms need to add more functionality, but at the same time, they need more reliability and security" in their on-line systems, said Dale Kutnick, chief executive officer and co-research director of Meta Group in Stamford, Conn.

"Now that the Internet is taking off, companies that have backend technology are linking these two together," Mr. Kutnick said.

The research firm Current Analysis Inc. said "there are many indications" that enterprise resource planning vendors such as SAP, Baan, Oracle, and PeopleSoft are moving into the electronic commerce market.

Officials at Oracle Corp. said they are working on a bill presentment product, code name Tribeca, to be unveiled later this year. Further details were not forthcoming.

"The perception of commerce applications as narrowly tailored software is transforming as they become more broadly recognized as central to the overall business operation, and a major part of the enterprise's business systems," said Current Analysis research analyst David Baltaxe.

With years of experience developing large-scale systems, these "enterprise-wide" software firms enjoy some distinct advantages, added Mr. Kutnick of Meta Group.

But smaller vendors that have been targeting this market would not agree.

"We are approximately a year ahead of where they (Sybase) are in terms of development," said William G. Cary, president of Innovision Corp., which launched its own financial server, which supports the OFX protocol, last summer.

Innovision has Discover Brokerage Direct, T. Rowe Price, and American Century Investments as customers, and this month released a version supporting Extensible Markup Languange (XML), a vendor-neutral Web standard.

Sybase believes that banks, brokerages, and insurance companies will go to outside vendors rather than develop their own systems.

"An application server is something you don't want to build yourself," said John L. Treadway, group product marketing manager at Sybase.

Analysts seemed favorably disposed toward Sybase's strategy and said it might help lift the company from its recent earnings difficulties.

"When a company has been struggling, it has to demonstrate it can meet the new requirements and build the new applications," said analyst Merv Adrian in the Santa Clara, Calif., office of the GIGA Information Group consulting firm.

"Sybase's opportunity is to present something incremental," Mr. Adrian said, "and that is very attractive for the financial institution."

For reprint and licensing requests for this article, click here.
MORE FROM AMERICAN BANKER