Sun Microsystems Inc., well known on Wall Street but a less prominent player in retail banking, aims to change that with a multifaceted marketing push to be unveiled today.
“We are shifting gears away from capital markets to focus on banking and insurance, but mainly on banking,” said Larry Singer, a senior vice president and Sun’s strategic insight officer.
Sun’s banking strategy until now has essentially been to partner with software vendors to optimize its systems for banks, Mr. Singer said. It would leave marketing to the vendors, which would tout their applications and Sun’s hardware at the same time. About six months ago it began having its own sales staff work in tandem with the software companies’ salespeople.
Companies like Sun frequently used to compete for business on their processing capabilities, Mr. Singer said. Now bank IT departments rarely have the budget authority to make big-ticket purchases, so with Sun pitching its hardware to bankers instead of technology experts, “we have to offer a true business advantage, not a technological advantage,” he said.
Mr. Singer said that Sun, of Menlo Park, Calif., identified three key markets for its 2006 fiscal year, which began July 1: banking, broadband media, and government. “This is a big deal for us,” he said.
Many companies have said the same thing — banking is always a major target for technology vendors. But Robert Landry, a vice president and the chief research officer for MasterCard International’s TowerGroup, called Sun’s initiative encouraging.
“They think, and I think, that they can do better than what they are doing in banking,” Mr. Landry said. “It’s really a sea change for them.”
Donna Rubin, a senior director for financial services strategy and marketing with Sun, said the company has three main bank-targeted programs that are built around its traditional network-to-terminal hardware and a new payments-oriented application of its Java software.
The first is a new version of its SunRay thin-client terminal designed for bank branches. The SunRay system has been available for years and is in use in several industries; it features a network of dumb terminals connected to a central server. Applications and employees’ work are all stored on the server, and people use a card to access the system from any terminal.
Ms. Rubin said the older SunRay’s lacked a standardized way for branch workers to plug in attachments such as check scanners and cash machines. “It was a huge problem.”
The new SunRay devices use Sun’s Java programming language to create a standardized connection format for “all of the devices that banks love,” Ms. Rubin said.
A large bank in India is testing the format with 1,800 desktops, and “a few” U.S. banks are evaluating it, she said.
Many bank tellers get by with a simple “green screen” terminal to handle customer transactions, and a SunRay system can be a good fit for branches, Mr. Landry said. “Banking applications are very straightforward and limited,” he said. “They don’t need a whole lot of stuff.”
SunRays cost 20% to 30% less than desktop computers, Mr. Landry said. But the bigger savings, he said, come from managing the system. The SunRay terminals are basically conduits to the server, so only the central server needs full maintenance; Mr. Landry pegged the cost of running a SunRay network at about 20% of the cost of maintaining a comparable network of PCs.
Sun is working with software vendors and customers to promote Java as a way to make different payments software applications communicate, Ms. Rubin said. “Payments is really a hot, hot topic for us right now,” she said.
Many payments applications were originally designed for proprietary systems, she noted. Now banks and customers want to link many different financial applications together.
For example, a corporate customer may want to combine its cash management and accounts payable systems with its bank’s online banking system. The results are not always pretty as programmers try to write software to connect applications that were not designed to interconnect.
Second, Sun has started a Java Payments Network to address this problem. Ms. Rubin said that software vendors and customers are using Sun’s programming language to ensure that “all their software works with Java with each other.”
Many banks have taken a “best-of-breed” approach to payments systems, Mr. Landry said. As more payments applications are connected to networks, he said, banks need a way to make them all work together.
“A lot of banks are looking at Java as a new way to develop new solutions,” he said.
The third element of Sun’s banking program is to more prominently promote its systems for core banking. The company has been working on this strategy for several years, and Ms. Rubin said it has been especially successful in small and midsize banks.
Allen Hodo, the chief financial officer and senior vice president for operations at the $300 million-asset First State Bank in Waynesboro, Miss., said First State shifted its core processing to a Sun system about 18 months ago. It retained its core banking software, from Kirchman Corp.
He said the Sun system is able to run First State’s nightly update in about two hours, instead of the six hours needed for the previous system, a mainframe from International Business Machines Corp.
The Sun system was “much more economical than other options we looked at,” Mr. Hodo said. He said lower maintenance expenses and other factors will help First State save about $400,000 in the five years after installing the system.
“We have been very pleased with the performance of the box,” he said. “It’s like picking money up off the ground.”
