Visa International has signed an agreement with software vendor Epiphany Inc. to create data mining programs for the bank card industry.

As Epiphany's first strategic investor, Visa will participate as an observer on the company's board of directors.

Epiphany of Palo Alto, Calif., develops Web-based software for enterprise relationship management, a system that extracts customer information from company data bases and analyzes it for marketing purposes.

Using a variety of data sources, the software tracks patterns in customer spending and demographics. Card issuers can use the information to attract customers and cross-sell to existing ones over the Internet.

"Our focus is on understanding and getting to the customer in the most effective way," said Roger Siboni, chief executive officer of Epiphany, "and clearly the Web is becoming increasingly important."

Visa will work with Epiphany to customize its software for credit card issuers.

Epiphany was founded in 1997 with $12 million of venture capital. A typical software package sells for $500,000, and users include Charles Schwab & Co., Wells Fargo Bank, and Fair, Isaac & Co.

"Visa's interest in Epiphany stems from their expertise in providing effective new tools that enable companies to build closer relationships with their customers," said Todd C. Chaffee, executive vice president of corporate development and alliances at Visa in San Francisco.

Last September, Mr. Chaffee's group identified Epiphany as a strategically interesting company and made an equity investment. Then the companies began to work cooperatively on data mining.

"Epiphany's enterprise relationship management solutions can ultimately help our member banks build more profitable bank card portfolios," he said.

At a time when many banks are working to establish their own data mining systems, and card issuers such as Capital One Financial Corp. and Providian Corp. are considered leaders in the field, Visa's alliance with Epiphany could ultimately benefit smaller member banks that could not build such capabilities themselves, said Stanley Anderson, president of Anderson and Associates in Arvada, Colo.

Mr. Siboni, a KPMG Peat Marwick executive who was tapped last June to head Epiphany, said, "The banking industry has gone through tremendous changes over the last few years and is getting more and more competitive in attracting and more importantly retaining customers.

"Visa and Epiphany share the vision that building and enhancing intimate customer relationships is crucial to financial institutions' ongoing success," he said.

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