Fidelity Investments and Broadway & Seymour Inc. say their new marketing and technical alliance is meant to help banks streamline their trust and brokerage operations
The agreement between the Boston-based mutual fund giant and Broadway & Seymour, a leading provider of trust accounting software, was announced last week. It is directed at financial institutions looking for a more unified approach to marketing and managing investment products and trust services for their clients, executives at both firms said.
"It provides the total bank, not just the trust department, a solution," said Paul Hondros, president of Fidelity Investments Institutional Services Co. "This alliance enables us to be the processor for the brokerage and trust sides of the house, and bring the two systems together so that a bank can provide the client with a single view of their financial well-being."
For Broadway & Seymour, the alliance allows their technology to be closely linked with Fidelity's massive product distribution network, creating a turnkey system that could be attractive to banks seeking to keep a lid on a range of costs related to investment services.
"We're a leading processor in the high-end bank marketplace, and we are evolving our system to create a service offering which will take us into a broader segment" of financial institutions, said James R. Spencer 3d, senior vice president at Broadway & Seymour.
"Being able to link with Fidelity's brokerage and mutual fund clearing activities, as well as delivering their investment product offerings, will be a powerful solution to this market."
Mr. Spencer said the alliance should help banks control costs in their brokerage and investment-clearing operations. "Part of what we'll be introducing here will be electronic linkages (to Fidelity's clearing operations), making it a much more efficient process," he said.
Fidelity will run Broadway & Seymour's Amtrust software out of its Dallas data center, officials said, while providing bankers with networked personal computer-based workstations to access the system remotely.
The alliance is the latest attempt by a number of firms seeking to link investment product support services and technology outsourcing.
Other companies that are employing this strategy include Wayne, Pa.- based SEI Corp., another major trust systems vendor that has expanded into mutual fund administration; and Bisys Inc., a bank systems outsourcer that earlier this year acquired mutual administrator Concord Holdings Inc.
Mr. Hondros said the distinctions between the investment products sold by Fidelity and the systems that support them is becoming increasingly blurry. "We are as much of a technology-services company as we are a mutual fund company," he noted. "We view technology driving order flow - this alliance is kind of a banking Internet."
Mr. Hondros was also quick to point out that banks signing up for the service would not be limited to reselling Fidelity's mutual funds. "The whole idea is to give a bank's customers a single statement that combines a brokerage account with a trust account," he said.
Fidelity already manages about $37 billion in assets for about 950 banks, but by beefing up its trust capabilities, "We think this is a $100 billion business for us," Mr. Hondros said.
In a separate announcement, officials at Charlotte, N.C.-based Broadway & Seymour said Thursday that Alan C. Stanford had been appointed president and chief operating officer.
Mr. Stanford, 54, a management consultant to the technology industry, has served on Broadway & Seymour's board of directors since January. He was previously national director of information technology consulting at Ernst & Young.
"Our rapid growth and success have created the need for a president and chief operating officer," said William W. Neal, Broadway & Seymour's chairman and chief executive. "As a member of our board of directors, Alan has been a major contributor to business issues and our strategic planning process."
Broadway & Seymour's common stock closed at $28.25 per share Friday, down TK for the week.
In other news affecting bank systems stocks, Interstate/Johnson Lane analyst Sandra Barker said last week she had cut her rating of payment processor First Financial Management Corp. to "sell" from "hold."
Ms. Barker said she made the change after last week's rise in First Financial's common stock eliminated the discount to the merger price the Atlanta-based company had made with First Data Corp.
First Financial's stock climbed after Hackensack, N.J.-based First Data announced last week that it reached an agreement with Federal Trade Commission staff lawyers to sell part of either firms' consumer money transfer businesses in order to complete the merger.
First Financial's common stock closed at $89 per share Friday, up TK for the week.