IBM and Alltel have joined forces to market Corebank, a continuous real-time banking system, to European financial institutions. Developed by a groupof Danish banks, Corebank provides a platform for real-time transaction processing and alternative delivery channels.
Called Alltel Corebanking Solutions, the London-based joint venture combines IBM's established sales force and Alltel's software development and support expertise. In addition to developing and enhancing Corebank, Alltel will promote IBM's middleware, server platforms and complementary services.
Corebank was built between 1997 and 1999 by a consortium of over 70 Danish banks with assistance from IBM, which retained the rights to sell, market and maintain the software elsewhere in the world. IBM will continue to hold a significant minority stake in the joint venture with Alltel. "The joint venture will improve IBM's ability to assist European bankers with reengineering their retail banking systems," according to Jerry Cole, general manager of IBM Global Financial Services.
Corebank was designed to fill the need for a real-time banking system in a global economy. "One of the major concerns of those banks with customers across time zones and around the world is the amount of time and effort required for batch processing on a daily basis," said Jim Wilson, president of the financial services-international division of Little Rock, Ark.-based Alltel.
By feeding real-time customer information into other systems, such as marketing databases and analytical tools, Corebank allows banks to create and modify banking products on the fly, and to establish product or service relationships for both prospects and existing customers.
Combining marketing and core banking systems is an idea whose time has come, said Robert Hunt, senior research analyst at TowerGroup. "Banks have had to build entirely separate systems for marketing, and they haven't had tremendous success with it."
Corebank is superior to anything installed in the United States today, he said. Still, it will be two to three years before Alltel will be able to successfully introduce it into the U.S. market. "The European market is much more ready for real-time in that they don't have the heavy volumes of checks that have to be processed that we have," Hunt explained. "We're the only developed economy that still uses the check as the primary payment."
That's not the only hurdle. For banks with legacy batch processing systems, moving to a real-time system is comparable to replacing an engine while the car is still moving, Hunt said.
Top Corebank prospects are large German and French banks with in-house legacy systems deemed ripe for replacement-a lucrative market that's also being targeted by Germany's SAP (which has landed contracts with Deutsche Postbank and Union Bank of Switzerland) and others. "The global branch systems companies are attempting to move upstream into the headquarters banking market," said Hunt.
The venture is Alltel's latest major investment in the European marketplace. Last year, it launched Alltel Mortgage Solutions, which provides mortgage administration and IT solutions to the mortgage lending industry. Alltel services 400,000 residential loans and more than $25 billion of mortgage assets in Europe.