Open Solutions Inc. is considering going public, though it does not seem to need the money.
The developer of core banking software called Complete Banking Solution, Open Solutions said it expects to double its revenue this year, to $12 million.
It also said it has amassed more than $9 million in cash.
"We are not cash-poor, we can operate without going public," said Douglas K. Anderson, chairman and chief executive officer of the Glastonbury, Conn., company. "However, if we don't (go public) it will limit us in the long run."
Open Solutions, which is five years old and only recently became profitable, has sold its client/server software to more than 50 community banks. Savings Bank of Manchester, Conn., with $1.1 billion of assets, is the most recent convert.
Steven Williams, managing director at M One Inc., Phoenix, said Open Solutions is among a handful of vendors offering systems that can run banks entirely on client/server technologies.
Open Solutions touts its software as being end-to-end client/server, a distinction few vendors can make, said Michael Nicastro, vice president.
Running on the Microsoft Windows NT operating platform with an Oracle data base, the system processes banking transactions such as deposits and withdrawals in real time.
"This was started from square one, so there is no legacy or other system behind it," Mr. Nicastro said.
Apart from traditional outsourcers, Open Solutions' competitors include Jack Henry & Associates, M&I Data Services' Eastpoint division, Phoenix International Ltd., and Sanchez Computer Associates Inc.
Mr. Williams said there is room for more. He contended all U.S. banks must move to newer client/server technologies to effectively compete.
Roughly half currently rely on in-house software, which can provide lower costs and better control of their destiny, he said.
Open Solutions' pipeline of potential customers looks promising. Though there were 281 bank mergers last year, much of Open Solutions' business came from new banks. Last year, there were 221 newly chartered de novos, according to Stratus Technologies Inc.
Open Solutions is "very proud of the technical architecture and design of their system," Mr. Williams said. "They seem to be attracting a lot of interest."
Though the company has not decided for sure to go public, the business case is compelling, Mr. Anderson said. Such a move would raise its profile, enable it to retain employees with the promise of stock, and make acquisitions easier.
Going public would also mean a likely payoff to Menlo Ventures, the Menlo Park, Calif., venture capital firm that provided $6 million in seed money and owns 30% of Open Solutions.
Menlo general partner Douglas Carlisle spent six weeks researching Open Solutions and was surprised at the antiquated state of technology in banking.
"There was nobody out there doing anything similar to what they were doing," said Mr. Carlisle. "It has been 20 years since anyone has really written a banking application from scratch." u