Microsoft Corp. is pushing into core processing, bringing one of the biggest names in technology deeper into financial services.

Microsoft said Thursday that it is collaborating with Temenos AG, a Swiss core banking vendor that has a small presence in the United States but is one of the top names abroad.

Executives said the agreement would make Microsoft's products more appealing to large international banks, an important market where advanced core systems are in demand.

"We are extremely committed to the financial services industry," Joe Pagano, Microsoft's worldwide managing director for banking and capital markets, said in an interview. The deal with Temenos "opens up a lot of opportunity" to deliver Microsoft's business analytics and collaboration technology to financial companies.

Under the agreement, the companies are jointly selling a version of Temenos' popular T24 core banking application that has been integrated into Microsoft's SQL Server database — a combination that both technology providers said has been in increasing demand from prospective financial customers.

Marcelo Marquez, the industry solutions manager for Microsoft's worldwide financial services group, said that SQL Server provides better access to the data that banks use, and that the T24 software makes that data more useful. By combining them, "we are providing the capability to unlock that data and transform it into knowledge," Marquez said.

Mike Head, Temenos' global alliances director, said the T24 software has long worked with Microsoft's database, but until now the two companies had not worked together to modify the two applications to work together more efficiently.

He said that an acquisition last year, of the software provider Lydian Associates Ltd., expanded Temenos' data analytics capabilities, and "was a catalyst" that prompted it to link its product more tightly with Microsoft's database.

Moreover, a growing number of bank clients have been asking for a core application that works more efficiently with Microsoft's system, Head said.

Though Temenos felt it had a strong product with T24, to customers, "it's not about T24. It's about the complete solution," Head said.

By working with Microsoft, he said, Temenos is able to offer a "future-proof" product that plays nice with any other Microsoft software the banks choose to run.

"This is not something that you just put in and throw away after 12 months," Head said.

The companies have already had some success with their combined technology. North Shore Credit Union of North Vancouver, British Columbia, began using the combined system in November, and executives praised the technology for its flexibility in a Microsoft press release Thursday. (North Shore Credit Union Executives were not available for interviews Thursday.)

Temenos has made efforts in the past to gain a foothold in the United States. In 2007, Metavante Technologies Inc. agreed to modify a Temenos core processing product and market it to big U.S. banks, and last year it said it would market another Temenos application to the U.S. arms of international banking companies.

That partnership would have expanded Metavante's core product line, but the relationship fell apart after Metavante agreed in April to sell itself to Fidelity National Information Services Inc., which has an extensive suite of core banking applications. (That deal closed in October.)

Head said the Microsoft deal is not meant to replace the Metavante one, which focused on a different product and different markets. The Microsoft deal is more global in scope and centers on the T24 system; in contrast, the Metavante deal centered on a different core product, TCB, which it had wanted to position for large U.S banks.

Robert Hunt, the senior research director in the retail banking practice at TowerGroup, said T24 is designed to work with Windows or Unix systems, and though it has found only a small audience in the U.S., it is a runaway success worldwide.

"Clearly the leader is the Temenos T24 platform … outside the U.S.," Hunt said. "It's sort of the new standard for international banking."

Even so, he said, some banks demanded better integration with Microsoft's other technology, and this new collaboration addresses those concerns. "They're presenting a very strong offering."

But the combined product may not be enough to markedly enhance Temenos' appeal to U.S. banking companies, which are already well served by local rivals, Hunt said.

However, Temenos is more likely focused on how the technology can help it in territories where T24 already has strong appeal.

"On a global basis," the SQL Server integration "reinforces [banks'] capabilities and strengths," Hunt said.

The partnership is likely just as meaningful for Microsoft, he said.

"Microsoft has gotten more and more serious about getting into the core banking space," and its work with Temenos is a major step toward that end, he said.