With a single merger-related decision, BankAmerica Corp. is causing a huge amount of revenue to flow from one banking software provider to another.

M&I Data Services will lose its biggest customer next year when Alltel Information Services takes over the combined retail banking software business of NationsBank and the former Bank of America.

Alltel has provided the software underlying the former NationsBank's retail banking platform, known as Model Banking, since 1992.

The shift will cause M&I Data to lose 8% of its revenue at the end of this year, according to an official of the Marshall & Ilsley Corp. technology subsidiary.

"NationsBank had already standardized all of its processing in all states and had integrated the banking centers and telephone banking into that package," said Drew Lockhart, senior vice president of consumer and commercial services at $618 billion Bank of America, in Charlotte, N.C.

The old BankAmerica, by contrast, ran its retail processing on three systems. M&I's software supported Arizona, New Mexico, Nevada, Oregon, and Texas. Hogan Systems software was used in Oregon and Washington, and there was a proprietary system in California. Model Banking will take the place of all these.

"We believe standardization results in a common customer experience, lower costs in operating the infrastructure, and greater speed to market," Mr. Lockhart said.

NationsBank has invested $500 million in Model Banking since launching it, according to Mr. Lockhart. Alltel's contract with the new BankAmerica extends through 2001.

Alltel is rolling out Model Banking in New Mexico and Texas. Arizona and Nevada are scheduled to be operating by the second quarter, and Oregon will be converted next year. Bank of America runs the Alltel software from its data centers.

The bank will use Alltel's Impacs direct-deposit account system, its Savings Time system for certificates of deposit and individual retirement accounts, and its Advanced Loan System for consumer lending.

"It's not slick software," said M. Arthur Gillis, president of Computer Based Solutions Inc. "It's old architecture but rich in features and functions, and it drives the biggest banks."

Alltel officials said the company has progressively moved into the large-bank market as banks have grown and made acquisitions. Its software supports the $237 billion-asset First Union Corp., which has technologically unified all the banks it has acquired.

"We see consolidation as a real opportunity to grow our market share," said Alltel's Randy Watson, senior vice president and managing director. "We almost never lose when banks consolidate."

Between 1988 and 1998, Alltel's revenues have increased 489%. That is less than the 902% increase at Fiserv during that time, which has grown through several acquisitions, but more than the 252% growth of M&I Data and the 275% growth of Electronic Data Systems Corp.'s financial industry group.

Last year Alltel ranked third among the Big Four in revenue from financial services companies, with $1.16 billion. EDS' financial industry group was tops, with $3 billion, Fiserv was second, at $1.23 billion, and M&I Data fourth, at $317 million.

Edward Page, senior vice president at Alltel and account executive for the BankAmerica relationship, would not disclose that contract's size, but said the bank is Alltel's largest client. The contract includes a software license as well as professional services such as conversion and application management.

About 400 Alltel employees who are involved in designing, developing, testing, and installing systems worked at BankAmerica last year, Mr. Lockhart estimated. The bank expects to hire 200 to 300 more this year, he said.

Subscribe Now

Access to authoritative analysis and perspective and our data-driven report series.

14-Day Free Trial

No credit card required. Complete access to articles, breaking news and industry data.