Bisys Group Inc. said it plans to take an equity position in Open Solutions Inc. and become the exclusive outsourcing provider of its client/server banking software.
Under the agreement an-nounced Tuesday, Glastonbury, Conn.-based Open Solutions also agreed to use Bisys products and resell them to banks.
Bisys said it struck the deal in response to rising bank demand for client/server-based systems.
"The current service providers have got to evolve to client/server over time," said Paul Bourke, president and chief operating officer of Little Falls, N.J.-based Bisys.
He said the ease with which client/server systems can integrate with banks' other technologies is fueling demand.
"If you look out over the next five years and want to maximize your position, the key is open systems," said Mr. Bourke.
Carl A. Faulkner, managing director at M One Inc. a Phoenix-based management consulting company, said the Open Solutions deal "opens up a whole different customer for Bisys and positions them with a state-of-the- art product to sell."
Bisys is hopeful the Open Solutions alliance will boost its 1.3% share of the bank service bureau market.
But competition will be tough. Several of the top outsourcing companies also are working up appetites for client/server business.
For instance, M&I Data Services, the Milwaukee-based unit of Marshall & Ilsley Corp., has purchased EastPoint Technology Inc., a maker of client/server-based core banking software. M&I, which offers EastPoint software as an in-house solution, has a 7% share of the bank service bureau business, according to Computer Based Solutions Inc. of Dallas.
In addition, Electronic Data Systems Corp., Fiserv Inc., and Alltel Information Services Inc. (with service bureau market shares of 22.8%, 21.6%, and 4.8%, respectively) each have client/server initiatives in various stages of implementation.
Though U.S. banks have been slower to commit to client/server technology than those overseas, the number of domestic institutions using the technology has been rising steadily and now exceeds 100.
"We are overwhelmed with interest, and the demand really does exceed the supply," said Doug Anderson, president and chief executive officer of Open Solutions.
Open Solutions has concentrated on providing software to banks that want to operate their own core systems. The deal will give Open Solutions a new avenue for selling its products.
"We haven't been able to do anything for the banks that have outsourced all their lives," said Mr. Anderson. "Bisys will offer our software in an outsourcing mode."
One of the reasons client/server technology appeals to a growing number of banks is that it can make efficient use of information stored in different data bases.
Unlike mainframe-based systems that use data stored in common information files, client/-server products are based mainly on relational data bases, said Bahram Yusefzedah, chief executive officer of Phoenix International Ltd. in Maitland, Fla.
"The new products capture all kind of information that was non-existent in the files of products written 30 years ago," said Mr. Yusefzedah. He cited signature files, photographic identifications, and customer-supplied financial information as examples.
Others noted that older midrange and mainframe computers also could benefit from the client/server model.
"All of the old core systems on (International Business Ma-chines') AS/400 and Unix are evolving to the point that they are servers," said Robert Landry, director of retail banking advisory services at Tower Group, Newton, Mass.
"If you build from scratch a brand new system, you will have a cleaner architecture, but you don't have the functionality and scalability that a more mature system would have," he said.
