A handful of regional banks this year are helping a small California technology company get off the ground by buying the vendor's software for managing assets and liabilities.
The vendor, Risk Management Technologies of Berkeley, Calif., was founded in 1989 by Dave LaCross, a former Bank-America Corp. senior vice president. "We have a tiger by the tail," said Mr. LaCross, referring to the company's recent sales spurt.
In its first three years, Risk Management sold its Radar asset-liability management software to five financial institutions, including Sears Mortgage Group, California Federal Bank, and Fidelity Bank of Los Angeles.
So far this year, the company has escalated the sales pace, reeling in big contracts with U.S. Bancorp of Portland, Ore., and Great Western Financial Corp. of Chatsworth, Calif. And the company is nearing a deal with Chemical Banking Corp., New York, according to knowledgeable sources.
Mr. Lacross said that Risk Management expects to sign up between eight and 12 additional customers this year, including a handful of the world's 10 largest' banks, before taking a break in sales to make sure the new customers have their software installed properly.
These sales are good news for a privately held vendor that employs only nine people and sells only the Radar package.
The banks that have bought Radar are also hoping for good news -- namely, that the software will help improve profits by minimizing exposure to fluctuating interest rates and other financial maelstroms.
"If we can [improve profits] by one basis point, that's big dollars," said Phill Rowley, senior vice president of U.S. Bancorp's asset liability management division.
"Can we do that?" he added. "I think so. But the proof s in the pudding."
U.S. Bancorp has plunked down about $200,000 to install Radar on a new Hewlett-Packard computer running the Unix operating system.
Five asset-liability managers will use high-powered personal computers that Mr. Rowley called "gorilla machines" to get Radar to analyze the bank's portfolio of loans and investments.
Radar will replace asset liability management software from Phoenix-based Sendero that U.S. Bancorp bought more than four years ago and which runs on personal computers.
Mr. Rowley said the new Radar software will be able to do in minutes analyses that took hours on its previous asset-liability software.
Radar will also handle much more detailed information than the Sendero software is capable of dealing with, and thus will provide a more accurate analysis of the bank's financial condition, Mr. Rowley said.
He added that although Sendero is upgrading its software to match the capabilities of Radar, the vendor said it won't be ready until the end of next year.
"If [Sendero] had come on stream within the next 12 months, we would have opted to stay with them," he said.
Mr. Lacross said that the sales spike is at least partly due to an alliance Risk Management struck in the spring with Software, Alliance Corp., of Berkeley, which is a unit of Teknekron corp., of Incline Village, Nev.
Under the deal, Software Alliance will help Risk Management sell and support Radar. Mr. LaCross said the deal has given Risk Management the resources it needed to sell Radar to a greater number of banks.