The German software company Brokat has entered the United States with a focus on the wholesale side that is unusual given its success with retail systems in Europe.

Though the company has a market capitalization of $1.2 billion, it approaches the United States with an Internet start-up mentality. And in contrast to the way in which Brokat has established itself as one of Europe's most dynamic vendors to the financial community, particularly on the retail side, it entered this country by focusing on corporate cash management.

"We don't play the card that we're a European vendor," said Stefan Roever, 34, co-founder and chief executive officer of Brokat Infosystems AG.

What counts is that "we have products, clients, and capital" that give Brokat firepower to buy American companies.

"For years it was always the other way around," Mr. Roever said of cross-border acquisitions. "We plan to grow through acquisitions."

Two weeks ago Brokat made its first U.S. deal, adding heft to Brokat Infosystems Inc., a 30-employee subsidiary established last year in Alpharetta, Ga.

The target was Transaction Software Technologies Inc. of Atlanta, a provider of cash management software to 17 of the 30 largest U.S. financial institutions.

The $18.7 million deal would help Brokat diversify from its base in retail banking and brokerage software. Its Twister middleware, which connects front-end applications to existing back-end systems, would unite retail, brokerage, and wholesale systems in a common infrastructure.

Brokat is marshaling forces to compete with Security First Technologies Inc., the largest U.S. provider of Internet banking systems. This Atlanta company, known as S1, said last week that it had agreed to buy Edify Corp. and FICS Group for a combined $1.4 billion.

Just as Brokat turned to TST-with which it had a working alliance-S1 sought out Brussels-based FICS with a wholesale-based rationale.

Brokat and TST pose "the only real competition" to the bulked-up Security First, said Octavio Marenzi, research director at Meridien Research in Newton, Mass. The two companies "in time will compete closely on the wholesale banking side around the world," Mr. Marenzi said.

Brokat intends to buy other U.S. companies and is planning a secondary stock offering to finance the deals. Brokat raised $50 million in an initial offering last September on the Neuer Markt, a subsidiary of the Frankfurt Stock Exchange that lists 100 technology companies.

In the next two or three years, Mr. Roever said, Brokat would like to be on the Nasdaq market. But that depends on developing "a significant U.S. revenue stream," he said.

Mr. Marenzi said Brokat's only chance of gaining a significant U.S. presence would be through acquiring a vendor of Internet banking software. Brokat "needs to go one step further and have a packaged solution," the analyst said. "It will feel pressed to buy something."

Twister software serves 1,600 financial institutions worldwide in 100 installations, some through shared arrangements. It serves more banks with its Internet banking software than any other company.

The middleware lets banks' back-office computers serve customers through alternative channels such as mobile phones, personal computers, smart cards, call centers, or branches.

"We'd like to be regarded as the SAP of the front office," Mr. Roever said, referring to the German company that leads the enterprise resource planning market, serving corporations' administrative needs.

The formation of Brokat began at the end of 1994, and five founders formally launched it in 1995. Its big breakthrough came in 1996 when AOL Bertelsmann, America Online Inc.'s joint venture with the German media giant Bertelsmann AG, hired Brokat to build a banking platform. The company also landed Deutsche Bank as a client.

These victories brought Brokat valuable press attention. It quickly grew to 420 employees in 12 offices. Just more than half of its 1,600 customers are German companies.

A main selling point was security. Data security on most Web browsers at the time was based on encryption with 40-bit keys, which industry experts say can be readily compromised with an off-the-shelf computer.

U.S. companies were ready to offer virtually unbreakable key lengths of 128 bits but were unable to export them.

"We were the only non-U.S. company that could build a Java application with 128 bits," Mr. Roever said.

For that reason, Netscape Communications, now an AOL subsidiary, lost the Deutsche Bank contract-a point made by Netscape CEO James Barksdale in congressional testimony arguing for a relaxation of U.S. export laws. (The rules have since been loosened to encourage 128-bit exporting, particularly for financial transactions.)

Though the encryption law gave Brokat an early advantage, Mr. Roever is a strong advocate of liberalization. "Long term, it is better if encryption is freely available to allow electronic commerce to take off," Mr. Roever said.

He and other Brokat managers have lobbied European Union representatives, and "we put enormous pressure on the German government to back our position," which in turn pressed other European Commission members.

He contended that Brokat "had an influence" on the recent European Union policy decision that encryption should be freely available.

Mr. Roever said Europe is ahead of the United States because of two payment-system technologies: the checkless, preauthorized bill payment approach known as giro and an extensive mobile telecommunications infrastructure.

European governments' deregulation of the telephone industry led local communications providers to cooperate on one standard, which became GSM, the Global System for Mobile communications.

"GSM is a better system" than the United States' patchwork of cellular standards, Mr. Roever said. "Europe is more advanced, and the United States has to catch up."

GSM is also a reason for Europe's greater receptivity to smart cards, because they are used to authenticate phone subscribers and can therefore be tied in with interactive financial services, electronic mail, stock quotes, and even horse-racing bets. Mr. Roever said he expects the telephone to be the main Internet access device of the future.

Brokat writes applications for smart cards and produces software that complies with the MasterCard-Visa Secure Electronic Transaction protocol for the Internet, another phenomenon that has been slower to catch on in North America.

"Europe is putting more effort into implementing SET," Mr. Roever said. "European banks take a long-term view to protect their technology investments," he said. "Some U.S. banks and companies take a short-term approach."

Mr. Roever understands the importance of overcoming cultural differences if Brokat is to succeed in the United States.

"We need strong local management, local marketing, a local sales force, and local customization," he said.

He does think Brokat, which was originated with the mission of connecting legacy-system data to new electronic channels, can help U.S. companies.

"In Europe, Internet banking is an electronic front-end to electronic back-end," Mr. Roever said. "In the U.S., it's an electronic front-end to a manual back-end, which is harder to integrate and doesn't leverage the power of the Internet."

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