After a series of acquisitions in 2004 that made it a major operator of financial networks, Metavante Corp. capped the year with a deal much closer to its core business, the online outsourcing of financial processing.
The Milwaukee company announced Wednesday that it had agreed to buy Prime Associates Inc. of Clark, N.J., a vendor of anti-money-laundering compliance software, and to offer Prime's products as online services.
The price was not disclosed, but Metavante said the deal is not expected to have a material impact on the financial results of its parent company, the Milwaukee banking company Marshall & Ilsley Corp.
Metavante, which has closed seven acquisitions this year, said it expects to buy Prime in February. Prime, which began operations in 1982, is to retain its name and management.
Paul T. Danola, the group executive of Metavante's financial services group, said it plans to broaden the marketing of Prime's technology.
Prime has been developing a version of its software for outsourced hosting, said Mr. Danola, a senior executive vice president. Metavante will accelerate that development by using its own infrastructure for outsourced services.
Prime's software is meant to help customers comply with the USA Patriot Act, the Bank Secrecy Act, Office of Foreign Asset Control guidelines, and other regulations. Financial companies must run the software in-house; Prime says 140 customers in seven nations, including banks, brokerage houses, and insurance companies do so.
Prime also offers a database that includes information from the Office of Foreign Asset Control and other government agencies in the United States and other nations, and it provides consulting services.
Mr. Danola said Metavante will offer Prime's software and a hosted service based on it to its own outsourcing customers and to financial companies the use Metavante as a risk and compliance consultant.
Metavante began its consulting practice six years ago and added risk and compliance three years ago. Bundling in anti-laundering tools will add a tremendous amount of value, Mr. Danola said.
He said Prime may also open a new market, insurance providers, to Metavante, most of whose customers are banks.
Metavante will explore further acquisition opportunities in 2005 in "areas that are of interest to us," Mr. Danola said, but he would not discuss specifics.
Metavante's outsourced core processing business serves 17 million deposit accounts, mostly at smaller financial institutions. In 2004, however, the company diversified into financial network operations by buying NYCE Corp. of Montvale, N.J., the operator of a large electronic funds transfer network; and CheckClear LLC of Oklahoma City, which runs the Endpoint Exchange check-image exchange network.
Breffni McGuire, a senior analyst in the global payments practice at MasterCard International's TowerGroup Inc., said the outsourcing strategy could give Prime and Metavante a competitive edge as regulations tighten and vendors search for new markets.
Hosted services have a definite place "as you're going down-market among U.S. banks," Ms. McGuire said, but turning Prime's software into one will not be easy. The need for separate hosting of such services for each bank could have been a strong barrier, she said.
For Prime the deal also means access to more customers, Ms. McGuire said.
