Buying the Birmingham, Ala., processor Brasfield Corp. would give Metavante Corp. a platform for offering a hosted version of the core processing software of a Metavante unit, Kirchman Corp.
However, the $15 million stock deal, announced Thursday and expected to close next quarter, could also position Metavante, itself a unit of Marshall & Ilsley Corp. of Milwaukee, as a competitor to its service bureau customers, which already offer Kirchman's software.
Brasfield uses Kirchman's Bankway software to provide core processing to 46 community banks, mostly in the Southeast.
Paul T. Danola, the president and chief operating officer of Metavante's financial solutions group, said Kirchman has historically not provided a hosted version of its software. Instead, it has let banks license its products and run them in third-party data centers.
"There's clearly a market out there of banks that like the Bankway solution and want to have it outsourced," he said, and buying Brasfield would be a way for Metavante to serve that market.
Robert Hunt, a senior analyst at TowerGroup, a Needham, Mass., market research unit of MasterCard International, said that the acquisition would be a strategic shift for Metavante. Historically, it has run its entire core processing outsourcing operation (which serves 17 million deposit accounts) on a single platform, the homegrown Integrated Deposit System. Its competitors offer a variety of core systems designed for institutions of different sizes and types.
The Brasfield deal would let Metavante offer another core system to its customers, Mr. Hunt said. "The name of the game is to offer multiple core products and then cross-sell the ancillary services."
However, he said the acquisition would also put Metavante into direct competition with other service bureaus that offer Kirchman software. (Kirchman's Web site lists nine, including Brasfield.) "It's a double-edged sword," he said.
Mr. Danola said Brasfield's licensing arrangements with Kirchman would not change, and that being owned by Metavante would not affect its ability to compete against other service bureaus.
Beth L. Basil, a senior vice president and the general manager of Intrieve Systems, a unit of the Atlanta check printer John H. Harland Co. and a service bureau that offers Kirchman software, said she is not concerned with the idea of competing against her software supplier, Metavante.
"I don't see that …[the Brasfield deal] will have any impact," she said. The core software providers "are all either competing or partnering on various products."
