S1 Corp. has developed a feature aimed at resolving a longtime challenge for the Atlanta vendor: persuading customers to upgrade to newer versions of its products.

Its Enterprise unit offers big banking companies software that can run a broad range of systems, but the applications generally require some customization during the installation process.

This customization can be a selling point, because it enables bankers to fine-tune the products, but S1 has said it can also be a barrier when it tries to sell upgrades, because the changes may not be reflected in new versions, requiring the bankers to go through the customization process again.

Users of customized Enterprise software are "kind of stuck on an island with a one-off solution, and that's why many of these banks … wait so long to upgrade from one release to the next," W.A. Proctor, the general manager for S1's branch and call center division, said in an interview.

This week S1 is expected to announce that version 3.7 of its teller, call center, and sales and service applications, will be available early next year.

The new version of these products will include its Integrated Customization Environment feature, which Mr. Proctor said would "dramatically shorten" upgrade cycles for future versions of Enterprise products by preserving customized elements.

It will only work for upgrades after version 3.7, he said; it cannot help banks that want to apply previous tweaks.

S1 said the feature was developed partly in response to a request of Zions Bancorp., which wanted an easier and less expensive way to switch to newer products. Zions would not provide an executive to discuss its use of S1 software.

The vendor encourages its customers to use more than just one of Enterprise product at a time. They include numerous modules that can share customer information across multiple channels, and S1 has long said that the more modules a company uses, the greater the benefits.

Like other vendors, S1 pushes upgrades by touting new features. For example, in March 2006, when bankers faced a regulatory mandate to strengthen online authentication, S1 struck a deal with PassMark Security Inc. (now part of EMC Corp.) to offer its multi-factor authentication software, but it decided not to support the authentication feature for earlier versions of Enterprise products.

"Moving customers to the newest version of our software is the single most important thing we can do to improve customer satisfaction," James "Chip" Mahan 3rd, an S1 founder and its chairman and chief executive at the time, said during its fourth-quarter 2005 earnings call, which took place the day after the PassMark deal was announced. "The multifactor authentication initiative … will provide the catalyst for completing the bulk of these migrations" to newer versions.

(Mr. Mahan resigned in October 2006; Johann Dreyer has been the CEO since then.)

Tom Brogan, a research director for the retail banking practice at TowerGroup Inc., an independent research unit of MasterCard Inc., said the new feature is "very important" to S1, because the banks it targets "demand a lot of customization."

He agreed that this demand prevents many of them from making timely upgrades. "To have to go back every time there is a new release or update of the software and recode the customizations is one of the main reasons" many banks are using old software, he said. "Some of the biggest banks in the country are still running on core deposit applications that are 20 to 30 years old."

Even though banks would still have to recode their customizations to install version 3.7 of the software, "they will be much more prone to do it in order to be able to avoid the future pain," he said.

S1 also picked the right Enterprise products to start with, he said. "They're looking to do it in their branch applications, because that's an area in the large banks where there's an extreme amount of customization," and the customization feature will likely become a major selling point as S1 seeks new customers for these products.

Edward Woods, a senior analyst for Celent, the Boston market research arm of Marsh & McLennan Cos., said one reason S1 wants its customers to upgrade is customer support. It is likely obligated to support customers using older versions, but "the further out they are, the harder it is to support." With the new feature, banks will have "a little bit extra incentive" to move to a new version.

Also this week, S1 is expected to announce the development of its AccelAccount product, which is designed to make it easier for banks to develop online account-opening systems.

Vic Bayus, S1's senior director for product management and business development, said the software will give banks flexibility in designing new accounts, rather than forcing them to use cookie-cutter settings. "We're not coming into the financial institution and saying, 'Here's the account-opening process for a checking account.' "

Another benefit is pricing, he said; S1 charges an up-front license fee for the software, not a fee for each account opened, as some vendors charge.