To call the core banking market in the U.S. Entrenched is an understatement, with several blue-blood domestic technology vendors defending their turf against a handful of top-notch international players looking to make inroads. But that's not stopped VSoft, a company known mostly in the U.S. for its image solutions, from jumping into the fray with a new core banking product called CoreSoft. The March announcement from the Atlanta-based company might have been disregarded if not for the fact that Virginia-based Carter Bank & Trust, a $3.4 billion institution, concurrently announced its successful beta conversion to VSoft's core system.

Even in a crowded field —with the likes of Fiserv, FIS and Jack Henry — CoreSoft's technology is differentiating says Rajesh M R, an analyst at Celent. It's a browser-based system built from the ground up on Java technology that includes multiple delivery channel support, real-time transactions, 24/7 availability, regulatory compliance standards, and reporting capabilities, such as functional, informational, design and deployment perspectives. It integrates with third-party software solutions while providing a 360-degree view of customer relationships in a secure environment.

It's very much the system that Worth Harris Carter, Jr., the chairman and president of Carter Bank & Trust, wanted but couldn't find when he was looking for a core system in 2005. Back then Carter planned to combine his 10 banks and began researching new core systems. He learned that the core systems available had browser front ends but ran on old hardware and software that limited flexibility. At about this time the bank was working with VSoft to install and an image capture system. "We were extremely satisfied and we started discussing the core system and one thing led to another and we decided to help develop and beta test it."

The partners have taken a go-slow approach to deployment, going live one section at a time over a three-year period. Puneet Malhotra, vp of business development at VSoft, which is targeting banks of $2.5 billion or less, says the cost of implementing the CoreSoft platform is about one-third the cost of rival platforms. Bank executives can easily customize their own reports and develop new loans and deposit products without paying the vendor to customize or alter the system-all of which costs money.

Carter attests to the final product's flexibility. In the past, any change to a report took at least a week or two and required the IT department's involvement. "Now you can design your own reports and it doesn't take a programmer to do it and it takes just a few hours," Carter says.

But even with a robust solution and enthusiastic beta partner, analysts agree that VSoft faces a tough road in the U.S. Robert Hunt, a senior research director at TowerGroup, says: "It's great to see a new vendor but building market share will be difficult....Incumbent vendors have a tremendous advantage." To grow significantly VSoft will probably need to acquire a vendor or be acquired, he says.

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