of business beyond banking's traditional boundaries. Top providers of data processing are aggressively adding capabilities in the insurance and brokerage areas. These moves, they say, put them in position to accommodate banks' anticipated expansion into these areas during the much-heralded convergence of financial services. "Convergence is a big deal," said Craig Dees, spokesman for Electronic Data Systems Corp., the industry's largest provider of outsourcing services, measured by revenue. "EDS is very interested in adding products and services that are in line with convergence." But banks are hardly biting. EDS beefed up its insurance processing last year, buying Solcorp, a Canadian provider of insurance software and consulting. In Europe, where in the bancassurance framework it is common for a financial company to offer both banking and insurance services, EDS has made some sales. But despite active promotion in the United States and frequent speaking engagements by EDS executives at banking industry events, the product has yet to generate any domestic bank sales, Mr. Dees said. Three years ago, Plano, Tex.-based EDS bought FCI Inc., a New York securities processing firm, to form the basis of a division serving brokerages and investment banks. The global financial markets group has a handful of banks as customers, but most continue to be traditional brokerage houses, Mr. Dees said. Fiserv Inc., Brookfield, Wis., the second-largest bank outsourcer, bought three securities processing companies in 1997 and three insurance processors this year. The acquisitions have boosted revenue from brokerages and insurance companies to $136 million and $80 million, respectively, but Fiserv has not cross-sold insurance services to banks and has generated only a small amount of bank demand for its brokerage services. The No. 5 outsourcer, Bisys Group of Little Falls, N.J., has been more successful, signing up 12 banks for insurance services in the last eight months. Bisys executives attributed their success partly to an acquisition strategy. Two years ago, Bisys bought the Underwriter Group, or TUG, the largest U.S. broker of insurance-a role that entails cross-selling products from multiple insurance companies. Fifty-eight percent of products an insurance company sells comes from other insurance firms, according to Bisys. "We create an environment to allow participation in the largest" number of insurance products possible, said Neil Marcous, group president of marketing and information services at Bisys. Bisys also has expanded into brokerage services, acquiring Corelink Resources Inc. in July. Bisys had owned a minority equity stake in the company since 1995. It forms the hub of a division that offers software, processing, and marketing services to banks selling mutual funds. "These businesses have been bought with synergies between banking, insurance, and investment in mind," said Mr. Marcous. But fully achieving that goal will take "an investment of money and time."
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