Are big outsourcers like Electronic Data Services and Fiserv getting

ROBERT E. MOLL Director Arthur D. Little Inc. Cambridge, Mass.

I DON'T THINK SO. I think there is sufficient competition to keep everyone reacting to the demands and needs of the marketplace. The companies mentioned and a few others are large but they are not exclusive. I think as long as there are alternative suppliers that issue won't be a problem.

There are also many in-house alternatives that people can use as a benchmark to compare how their present service is performing. The market is still sufficiently fragmented that it's really not a critical issue. *** PHIL K. LIVINGSTON Chief executive officer Citizens National Bancshares Hammond, La.

IT'S IMPORTANT THAT the industry itself really drive the development of the delivery of the services and what the needs are. Banks do a tremendous amount of research and they are face to face with their customers. I think they understand what the consumers want and need, and how best to deliver the services.

I think it's important that these companies continue to develop products and, certainly, have some initiative and some creativity, if you will, but it has to work in conjunction with the industry and the consumer and the customers' needs.

Banks should be the dominant player in determining what the requirments are. The outsource companies should be trying to meet the needs of their clients, which are the banks. Without the industry, their products would have nowhere to go. These companies need to be careful and retain the good will of the banks. *** M. ARTHUR GILLIS President Computer Based Solutions Inc. New Orleans

OUTSOURCERS GOT BE BIG by listening to their customers and setting technology priorities that catered to what banks wanted. The best outsourcing relationships develop in situations where the bank sets priorities and the outsourcer delivers. Any concern regarding too much power on the part of the oursourcer is unwarranted, in my opinion. The best outsourcers don't dictate and don't overpower. It's a working relationship of equals. Often when I'm in a bank, I can't tell the vendor staff from the bank staff.

The typical healthy relationship is built on two basic responsibilities. Banks determine what kind of functionality they want and how they want to run the bank. Outsourcers then determine how to provide the technology and in what order. In my experience, most bankers do not feel any overpowering from their outsourcer. Instead, most bankers encourage their outsourcer to take initiatives to provide expanded technology.

There are five major outsourcing companies today. The last thing I would call any of them is too powerful. In a contest of power in expressing priorities, I believe I'd put my money on the banker. *** Marilyn McQuaide Senior vice president Vermont Financial Corp. Brattleboro

MY EXPERIENCE HASN'T INDICATED THAT. I don't get a sense from the vendors that I deal with that the products I feel we need to do our business are not available because of outsourcers like DES.

That could primarily be because we are a relatively small community bank - we're an in-house shop and we're happy that way.

I do think outsourcers will be more involved as more and more retail customers become interested in doing banking from home or work and not going into the branch. I think that those types of services are more apt to be provided by an outsourcer because there are huge economies of scale in developing and designing those networks. I do think that they'll play a major role in those types of products.

My sense is that right now there is enough competition. In fact, it seems to be growing with what Visa and Intuit are maybe going to do, and Microsoft getting into the works. *** SERGE BEAUREGARD Software entrepreneur Winter Park, Fla.

IT'S A TWO-PART ANSWER. With respect to the traditional ways outsourcers have been doing business, I don't see them as being too powerful because there are lots and lots of choices; it's a very competitive marketplace. I see them as a very valuable way to shed costs and do commodity processing at a lower cost and really get economies of scale.

But I see another major agenda that's being imposed on banks. The idea is everybody's very concerned about what is happening with Microsoft and Intuit and Quicken. That's just an example.

The customer information file is moving from the control of the bank to the user. I see the CIF like a cloud that is traversing the network and will ultimately land in the user's machine at home. And ultimately, in an efficient economy, that is where the CIF belongs, letting the customer control all of his own relationships. And once that happens the traditional way of doing processing is probably wrong. And banks will probably miss out on that market.

I think banks have to have another strategy that says: How do we address that future development? Banks have pushed their products into the marketplace through advertising and various mass marketing strategies. Now you've got customers that are going to be pulling products out of banks.

Once a customer can go shop for a loan electronically - and tap 1,000 banks to find the best deal - how you compete in that world doesn't have much to do with the kind of outsourcing services available today.

Right now there are no real outsourcing solutions for that. There will be outsourcing providers. But the way you compete in that market is going to be very different. *** JUDGE FOWLER Senior vice president First Union Corp. Charlotte, N.C.

WE HAVE MAJOR ALLIANCE PARTNERSHIPS with EDS, as well as Systematics, and also CPI Corp. out of Florida, which is owned by Systematics, for mortgage servicing. I would tell you that our experience has been just the opposite. The contracts that we have with these large technology servicing companies are very, very specific in our control of the technology they use.

They are servicing companies that provide expertise for hire. We value their opinion; we value their input. But ultimately the responsibility for the enterprise architecture, the enterprise standards, the operating system platforms, and the direction that this company takes for information technology rests within the company.

To date, at least - and we've been involved in outsourcing activities for the last 10 years - it's been anything but a controlling influence. In fact, I would almost say it's the other way around - that the large banks, by making contractual demands, pretty much dictate what they do in their large servicing centers relative to technology.

The vendors that are outsourcers are required to build products that at the very least integrate into a technical platform that may not be their first choice as a software vendor.

Our experience has been they are very willing to adapt to our environment. They are very willing to assist us in any way they can. They have been very flexible and haven't done anything that I would consider to be unduly controlling of our environment or our strategy.

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