The largest of the bank outsourcers is joining the throng of businesses looking to the Internet for new revenue.
But as is typical of the rush to commercialize the Internet, the outsourcers may not see any meaningful financial returns for some time, analysts said.
Despite banks' rising interest in the Internet, revenue from related services gathered by traditional third-party service providers has been "minimal," said Karl Keirstead, analyst at Lehman Brothers Inc. in New York. "Maybe five years from now, the actual revenue contributions will be more meaningful."
Mr. Keirstead said the outsourcers are providing services that help banks get on the Internet because doing so helps make the vendors look up- to-date. "It differentiates them," he said, and "helps them win large outsourcing and integration projects."
There is plenty of evidence suggesting that offering services for the Internet is the right long-term move. International Business Machines Corp. estimates that by 2000 the Internet will generate $380 billion of financial transactions. Banks want to play a central role in these financial exchanges, and their outsource supporters stand to benefit too.
IBM is one of the companies vying for a share of the Internet services market. It recently launched a $200 million marketing blitz to promote itself as an Internet leader.
IBM operates Global Network Services, a business network used by 30,000 corporations. The IBM network had a 29% share of last year's $664 million electronic data interchange market, according to International Data Corp., Framingham, Mass.
"For the last couple of years we have been hearing how huge the Internet is going to be," said Neeraj K. Vohra, analyst at Friedman Billings Ramsey & Co., Arlington, Va.
Although it will take a while before Internet commerce takes off, he added,"it is simply a matter of time before it is a commercial reality."
Because the large outsourcing providers tend to have deep pockets, they view Internet-based services as long-term investments they can afford to make.
The largest bank outsourcer, Electronic Data Systems Corp. of Plano, Tex., established an Internet and new media division two years ago. John A. Meyer, president of EDS' financial services group, said the unit "focuses on a specific technologies we believe will have a financial future.
"It will not take 10 years before people are comfortable doing their business over the Internet, but it will take five or six years to move from the hype stage," he said.
Mr. Keirstead estimated EDS' revenues from electronic commerce were about $200 million last year, or about 1.4% of the company's total.
Bisys Group Inc., Little Falls, N.J., recently launched a Web hosting service, which would help banks sell mortgages and other loans on the Internet. The service has several participating institutions, including Crestar Financial Corp., Richmond, Va., and Atlanta Internet Bank.
On the other hand, Fiserv Inc. of Brookfield, Wis., is taking a conservative approach. Its chairman, George Dalton, said, "I think there is a lot of money to be spent experimenting out there," but "I'd rather stand back until I see a real demand from the client base."