S1 Corp. has officially lost its first client to the feeding frenzy that began when it revealed it was phasing out Edify, its Internet banking platform.

The client is $11.5 billion-asset First Citizens Bank of Raleigh, N.C., which announced Monday that it will use Financial Fusion Inc.'s platform to replace Edify by early next year.

First Citizens is the first major financial institution to announce an Edify replacement since Atlanta-based S1's announcement in November that it would phase out Edify in a companywide streamlining.

Jeff Ward, a group vice president at First Citizens, which began using Edify in August 1999, said: "We were disappointed that S1 sunsetted the Edify platform. We asked ourselves, What are we going to do? We have online customers, and online banking appears to be working pretty well and we want to keep those customers happy, so we started looking for other platforms."

S1 purchased the company Edify, then its main U.S. Internet banking software competitor, in 1999 during a spree in which it gobbled up seven companies in three years.

But integrating all those brands and products and maintaining its numerous Web sites and management teams proved too much for S1 to handle. Having racked up losses of more than $1 billion last year, it is tuning up its operations, and the phaseout of Edify in favor of a one-size-fits-all Internet banking software product is a key part of that effort.

The November announcement sent S1's competitors scrambling after Edify's 100-plus users.

Corillian Corp., of Beaverton, Ore, held a conference in Phoenix in March to persuade S1's Edify bank customers to switch to Corillian's Voyager system. So far none have bitten, but a Corillian spokesman said the company is in discussions with several prospects.

John Treadway, the senior vice president of marketing and business development at Boston-based Financial Fusion, said his company "crashed" the Corillian event to snag First Citizens.

Financial Fusion has on its payroll former Edify developers who are familiar with its customers and the technology's strengths and weaknesses.

"We have a pretty comprehensive plan in place to attack this base of customers that have basically been left standing with no forward migration plan by S1," Mr. Treadway said.

First Citizens' Mr. Ward said officials at the bank liked the functionality that Financial Fusion offers. Because the platform is based 100% on the Java programming language, First Citizens can easily incorporate check imaging and other enhancements.

"What we see in the platform is the ability to change as customer preferences change," Mr. Ward said.

First Citizens was also looking for stability. "We don't want another platform sunsetted," Mr. Ward said.

A spokesman at S1 said the company would not comment on the First Citizens defection. He said S1 has no set date for discontinuing Edify (originally it said the end of 2002) and that it will convert its customers on a case-by-case basis.

Craig A. Peckham, an analyst at Jefferies & Co., said, "The sunsetting of the Edify portfolio has been well advertised for several months now, and when that conversion process is under way, it forces its bank customers to evaluate lots of different opportunities.

"There are going to be pains associated with sunsetting of Edify portfolio, but management appears to have executed pretty well," Mr. Peckham said.

All in all, he said, S1 has added more customers than it has lost since the November announcement. For instance, he said, it has signed up users for Q Up product, its Internet software for community banks, at a "rapid clip."

Jeffery B. Baker, an analyst at W.R. Hambrecht & Co., said that, considering it had been more than half a year since the announcement of Edify's phaseout, it is surprising that only one client defection has been announced.

Mr. Baker has a "strong buy" rating on the company and said he expects it to post good second-quarter results July 31.

"All in all, relative to what they've done in the past, it should be a good quarter," he said.

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