Banks and their financial service rivals -- even big ones -- are turning to outsourcers as they flock to the Internet.

Among those recently opting to have outside parties run their Internet operations are American Express Co. and Bank One Corp. Both have started Internet banks that are independent of existing branch networks.

Though smaller institutions are seen as the most natural candidates for outsourcing -- and have been turning to it in droves to support their Internet efforts -- big institutions are generally more inclined to want to control their own technological destinies.

The tendency to outsource for the Internet has to do with speed -- the desire to minimize the "time to market." Banks are looking to emulate the success of the first round of Internet winners, such as Amazon.com or Yahoo, that epitomize what has come to be called "first-mover advantage" by establishing their brands first.

American Express picked Fiserv Inc. to support several aspects of Membership Banking, the direct bank it introduced in July. It is relying on Security First Technologies Corp.'s Internet banking platform, Virtual Bank Manager, by virtue of a deal Fiserv has with that Atlanta-based vendor.

Fiserv also will provide Membership Banking customers with bill payment services through an alliance with Checkfree Holdings Corp.

Fiserv is supporting account and check processing, connections to automated teller machine networks, plastic card issuance, and direct mail operations. American Express will run its own call center using Fiserv software.

American Express is the 30th customer of Fiserv's E-prime, its newly named set of Internet and direct banking products. Other users include Canadian Imperial Bank of Commerce, Sovereign Bank of Wyomissing, Pa., and the planned Nexitybank.com.

Bank One's First USA subsidiary turned to a variety of technology providers to support its Internet offshoot, WingspanBank.com. That bank, which operates under the FCC National Bank charter, came together in only six months.

Sanchez Computer Associates of Malvern, Pa., supports WingspanBank.com through its subsidiary, E-profile, which runs Sanchez's Profile/Anyware core data processing software. Sanchez bought Artech Financial Services Inc., a data processing company, in February, forming the basis for E-profile.

WingspanBank.com is also using software from Edify Corp., a Sanchez partner.

International Business Machines Corp. hosts WingspanBank.com's Web site and developed the process specifications and training materials for the call center.

For bill payment services, WingspanBank.com relies on M&I Data Services Inc., the Marshall & Ilsley Corp. subsidiary that acquired Moneyline Express, the bill payment arm of Traveler's Express, this year.

Data processing companies are feeding the trend toward Internet bank outsourcing.

Brookfield, Wis.-based Fiserv, for example, has just formed an e-products and services division. Besides E-prime, it includes Banklink, Fiserv's cash management systems company; its electronic funds transfer, automated teller machine, and debit card services division; the Fiserv Connect3 retail Internet services division; and Internet Lending, its on-line loan origination service.

Leslie M. Muma, president and chief executive officer of Fiserv, said the company is looking to expand E-prime to include on-line mortgage origination, brokerage, and insurance software. He also said Fiserv is in the early stages of creating an electronic commerce division that would add new products and services to its cash management, ATM, and electronic funds transfer operations for corporations.

M&I Data has just created an e-commerce division for consumer and corporate banking. It exists separately from M&I's new Origins unit, which focuses on helping nonbanks create Internet bank offerings. The targeting of nontraditional banks "raises the stakes" for service providers, said Michael E. Touhey, senior vice president and head of the M&I's e-commerce unit.

M&I is "investing heavily in research and development to beat those stakes," Mr. Touhey said. The 1999 investment is $120 million, he said.

M&I is supporting the Internet banking operations of more than 200 financial institutions, half of those through its Milwaukee service bureau, said Nancy Langer, general manager for consumer e-banking services division.

In February, M&I acquired the electronic banking services division of Automatic Data Processing Inc., enhancing its own corporate cash management offering. Out of that division, M&I created Business E-banking Services. With the acquisition, said general manager Todd Hutto, M&I serves 38 of the top 50 in corporate banking.

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