CFI Proservices Inc. is known primarily as a maker of compliance software, but its top executives want that to change soon.

The Portland, Ore., company has been on an acquisition spree - bringing nine companies into its fold in the last two years.

"We think we now have all the pieces that we're looking for," said Matthew Chapman, chairman and chief executive.

CFI now markets software for telephone banking, mortgage lending, indirect auto lending, and small-business credit scoring to complement its homegrown line of compliance and home banking products. The goal, said Mr. Chapman, is to build a product line that addresses the key components of retail banking delivery.

What's more, two acquisitions - of Culverin Corp. last November and OnLine Financial Communications Systems Inc. this spring - have thrust CFI into the top ranks of the crowded and competitive field of branch automation.

"You have a lot fewer players and the market has grown by a third almost overnight," said Mr. Chapman. "We think that creates a tremendous opportunity for us."

CFI has vaulted into branch automation as the market is undergoing a shift.

Industrywide, spending on platform and teller systems, which had recently declined to about $400 million a year, is expected to reach $600 million annually during the next three years, according to the Tower Group.

Robert Landry, a technology analyst at the Wellesley, Mass., consulting firm, said many banks had held off making decisions on platform systems because they feared investing in technology with a short shelf life.

Those concerns have largely faded, he said, as the industry moves into a three-year period in which many banks will replace older PCs that run the DOS operating system, and even older "dumb" terminals.

A study by American Banker and Tower Group forecasts a three-year battle for supremacy between International Business Machine Corp.'s OS/2 and Microsoft Corp.'s Windows 95 and Windows NT operating systems, with a handful of banks choosing Unix.

The installed base of DOS operating systems is expected to decline from 35% last year to just 8% in 1997.

Mr. Chapman said CFI bought Culverin last year mainly because that company already offered a Windows version of its Encore branch automation software. Banks' growing interest in Windows also was a factor in CFI's acquisition of OnLine Financial, a subsidiary of Atlanta's Microbilt Corp. (At the same time, CFI also bought another Microbilt affiliate, Coin Banking Systems, which sells indirect lending software.) OnLine has 1,000 customers for its teller station and platform system, it at the time of the acquisition it had not developed a Windows-based application.

"The parent company just never allowed these guys to invest in the next generation," said Mr. Chapman.

"What we are going to do is to support what they've already got for quite a long period of time. And from there, as they want Windows solutions, we'll be ready for them."

Tower Group's Mr. Landry said he expects CFI will then move former OnLine Financial customers to the Encore system.

Of course, CFI is hardly alone in aggressively marketing Windows versions to its customers. In 1996, six other platform automation vendors - Argo Data Resources Corp., Broadway & Seymour Inc., Electronic Data Systems Corp., Olivetti North America Inc., Software Dynamics Inc., and Unisys Corp. - plan to introduce Windows versions of their software.

Mr. Landry noted, however, that all of these firms will face new competition from purveyors of core banking systems. Alltel Information Services Inc., Hogan Software, and M&I Data Services Inc. have all introduced branch automation systems that are linked to their core software.

While Mr. Landry said CFI made a solid string of acquisitions, they face the challenge of "trying to put them all together, keep their skill sets up, and sell that to the marketplace in an integrated way."

Mr. Chapman said, however, that the process of bringing the new applications into the fold is going well.

Later this year, CFI will release an update of its call center system that will tie into Encore. "Then the bank will have exactly the same underlying code with respect to the platform and call center," he said. And by early next year, he added, its loan documentation system, LaserPro, will be similarly compatible with the acquired consumer, commercial, indirect, and mortgage lending products. All products will be available in Windows- compatible formats.

While the acquired firms will not be centralized in Portland, advertising and marketing functions will be, said Mr. Chapman.

While the falling cost of Pentium-chip based personal computers and the pent-up demand for more sophisticated operating systems explains the burgeoning market for new platform systems, one other banking trend could dampen vendors' enthusiasm: the prediction that banks will be closing massive numbers of branches in the next few years.

But Mr. Chapman said he's not at all worried about that.

"We are big believers in the need for financial institutions to continue to have branches," he said. And products like Encore, he said, aid banks' efforts to make offices more focused on selling rather than handling transactions.

Nor is he bothered by the consolidation under way in the banking industry. He expects the number of branches - which has been rising steadily, if slowly - to at least remain at its current level. Further, the number of transactions continues to increase.

"The number of decision makers is not really the relevant criterion for us," said Mr. Chapman.

Analysts are pleased with CFI's strategy and performance. James R. Bradshaw of Pacific Crest Securities in Portland noted that until the buying spree, nearly all of CFI's revenue had come from its loan compliance and deposit-opening software. Today, he said those products represent 60% of earnings.

"The shift has been dramatic," said Mr. Bradshaw. The analyst projects 1996 earnings per share of $1.05, in line with consensus forecasts. That's 64% more than 1995 earnings, excluding merger-related charges. Mr. Bradshaw expects 34% earnings per share next year.

The analyst said another CFI strength, as it gears up to market its array of new products, is Mr. Chapman himself.

"He's got a great deal of zeal for the company and for the product line," said Mr. Bradshaw. "And he can articulate that as well as anybody else I've seen."

And Mr. Chapman said CFI is poised to take advantage of its expanded offerings.

"We not currently looking at any acquisitions," said Mr. Chapman. "Quite frankly, our plate is very full in terms of what we need to do. I don't want to risk blowing it in terms of the integration that we need to do by adding more stuff to the plate."

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