Actually, it is, but McNealy would be well served to have his "Java Man" image banished to the publicity hound archives, where he can proudly take his place alongside Public Sun Enemy #1: Microsoft chairman and CEO William Gates. Nobody can forget last year's image of Gates on a raft donning bathing trunks with smiley faces (What's with these guys, anyway?).

But McNealy's posing in ridiculous super-hero get-ups (no doubt to the shrieking delight of Microsoft employees) and Sun's lawsuit against the Redmond, WA-based software giant for breach-of-contract in its Java licensing agreement were mere footnotes to the real story brewing in the financial technology business in 1997. Telephones from California's Silicon Valley to New York's Silicon Alley were ringing off the hook, giving way to an unprecedented number of strategic technology deals-mergers, alliances and partnerships-leveraging the core competency of each participating company to the greater benefit of the newly formed group.

Indeed, the deals orchestrated by Microsoft, Sun and a host of other technology companies are pretty compelling, and all of them will have a profound affect on financial services players, especially banks, and how they interact with their customers. Not surprisingly, many of 1997's strategic alliances were struck to better position alliance partners at the forefront of the emerging, increasingly competitive world of electronic payments, giving many bankers reason for pause, and, in some cases, panic. No matter where individual sentiment lies, one thing is certain for bankers: These technology deals further cement the sweeping, and, at times, seemingly inexplicable change that the electronic financial services industry is undergoing.

For bankers, this pace of change can be staggering and the impact on an institution's business strategy monumental. Thus, their relationships with technology companies this year can have different, albeit not necessarily negative, implications next year. This evolution needs to be managed by the financial institutions. An even greater challenge: understanding how to prosper from these technology deals, tapping the inherent expertise of the multiple players involved to maximize the value to the financial organization's business. But most vital to financial services players today is the ability to gauge which technology companies possess the right solutions for tomorrow's market opportunities.

The "Top 25 Technology Deals of 1997" is FutureBanker's look back at the most riveting deals of the year and their significance-good and bad-to banks and financial services companies going forward (see chart).

Java, schmava. To the chagrin of the Anti-Bill crowd, Microsoft's Commander-in-Chief did have a few other things on his mind in 1997, not the least of which was the brilliantly crafted deal with First Data Corp.- brilliant that is, if you're not a banker. The electronic bill payment and presentment alliance, dubbed MSFDC, is an Internet-based payments venture that essentially could limit bank involvement and put Microsoft and First Data in control of billions of payments each year. Microsoft officials say bank elimination is not the goal of the alliance. Even so, bankers will have to work hard to define their space in the new electronic payments arena, and MSFDC will play a huge part.

It's hard to argue with excellence-well, at least, persistence. Where Microsoft falls short in innovation, it makes up for with staying power. This spells trouble for IBM Corp.'s Lou Gerstner. Thanks to Tandem Computer Corp.'s endorsement of Windows NT, Microsoft could very well be on its way to enterprise computing nirvana-giving Big Blue a run for the market share its mainframes dominate.

And then there was Microsoft's acquisition of WebTV but Bill Gates does not a financial technology industry make. Integrion Financial Network finally nailed down its raison d'etre with an acquisition of Visa Interactive, followed shortly thereafter by an outsourcing/equity stake in CheckFree Corp. The upshot: The industry will finally see a "bank-centric" electronic payments system-for what that's worth.

Other players such as Hewlett-Packard Co. and VeriFone, Inc., self- proclaimed architects of electronic commerce, set about their own deal- making this year. In a stock swap, HP acquired VeriFone (no surprise) and began its official push in financial services as Master of EC ceremonies. The acquisition is good news for banks and financial services companies in that it fosters an end-to-end EC package, integrating the physical world of processing with Internet payments. The sticking point? Who will actually absorb the costs associated with merchant adoption of the new technology. Time will tell.

This year also saw a number of technology companies joining forces to "push" the envelope in financial services. In 1997, deals involving push technology were consummated between KPMG Peat Marwick and PointCast and Marimba and Meca Software. Both deals make a compelling case for the largely untapped benefits of push technology in banking. If bankers aren't talking to these players, they aren't counting on being serious Internet players, and, by extension, could very well see erosion of some of their customer base as more and more customers-retail and corporate alike-search for added value in their electronic financial relationships.

And so it goes. If the technology deal-making activity in 1997 is any indication of where the financial services industry is headed in the next year or so, then bankers had better pick up their telephones and start dialing. Striking up new conversation with these players now could mean the difference between success and failure. H.Sraeel

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