Metavante Corp., whose desire to become a major provider of imaging services has led it to buy four companies in the past 18 months, is now at work on the next phase of that task: stitching the acquired technologies into a single coherent business.
The Milwaukee unit of Marshall & Ilsley Corp. said last week that it has created a check-imaging division, Metavante Image Solutions, and hired an executive who recently left a competitor to manage the division's sales. The moves come at a time when many banks are developing imaging strategies and preparing to make purchasing decisions.
"We are seeing a lot of activity on the imaging side," Paul Danola, the president and chief operating officer of Metavante's financial solutions group, said in an interview Friday. "I think the industry in general will see significant exchange growth in 2006."
Many large banking companies have bought imaging systems, and some are settling checks electronically through image exchange networks. However, Mr. Danola said there are still plenty of "midsize and second-tier" companies evaluating imaging products. "Not everybody has upgraded" to imaging.
Each of the four companies in the new division contribute a different piece of the imaging puzzle.
Advanced Financial Solutions Inc. of Oklahoma City, which Metavante acquired in July 2004, has software used for converting checks into images.
The Endpoint Exchange Network, which Metavante acquired when it bought AFS, has 5,000 members that transmitted about 10 million check images worth $5.5 billion over the network last month. (AFS and Endpoint had many of the same owners.)
VectorSGI of Addison, Tex., which was purchased in November 2004, has software that banks use to process exception items and returns, commonly known as day 2 items.
Treev LLC of Herndon, Va., which Metavante acquired in August, has software that companies use to handle noncheck document images.
Mr. Danola said creating the division would make it easier to offer a comprehensive software suite. "Before, we had separate sales teams going to market with separate solutions. This allows us to go to market with a complete, end-to-end solution."
Even companies that already have imaging technology are interested in expanding their capabilities, he said, to include remote capture, which lets companies convert checks into images and transmit them to a bank, and distributed capture, which banks use to convert checks at places like teller windows and remote branches and send the images to a central processing center.
Metavante expects "significant growth in the market" this year for remote and distributed capture software, Mr. Danola said. A top 10 banking company (which he would not name) tested Metavante's remote capture software last year and wants to install it in 6,000 to 9,000 customer sites, he said.
Gary L. Nelson, the co-founder and president of AFS and a member of Metavante's executive committee, was named the new division's president. He said it would give customers a coherent vision of what Metavante has to offer and a road map of where the technology is going.
"The marketplace is asking for that road map, and this division is going to provide that," he said.
Also Thursday, Metavante said it had hired Vijay Balakrishnan, a former executive vice president at the Atlanta check imaging software vendor Alogent Corp., as a vice president of strategic marketing to oversee the division's sales strategy. Brian Geisel, Alogent's chief executive, said Mr. Balakrishnan left in October when the company had to reduce its staff.
Mr. Geisel expects "significant movement" in remote and distributed capture systems this year as banking companies move from testing the technology to large-scale implementations.
Mr. Danola said that Mr. Balakrishnan's background would help him develop a comprehensive approach to marketing the various offerings. "We felt we needed someone with domain expertise, not just a traditional marketing" executive who may not have in-depth knowledge of the imaging market.
Sydney Smith Hicks, the president of VectorSGI, was named a senior vice president and corporate strategy manager for Metavante on Thursday.
Mr. Danola said that Metavante would use both the Metavante Image Solutions brand and the brands of the four companies used to form it. "We believe those brands have some value and name recognition."
Metavante Image Solutions would be promoted as the primary brand, he said.
Robert Hunt, a senior analyst at TowerGroup, a market research unit of MasterCard International, said that Metavante is reorganizing at "the perfect time."
Because many banking companies are already using image exchange, the number of paper checks being handled is declining, and their per-item costs are rising, Mr. Hunt said. Bankers that have not purchased imaging systems will soon be forced to do so to keep their costs under control (or outsource their check processing), he said.
"This year will be the beginning of the ramp up for image exchange," and by 2008 the "great majority of items will be presented in image form," Mr. Hunt said. That means banks have two or three years to become image-enabled, "and the clock started ticking on January 1 of this year."
