Subj: H-P moving
Date: 5/10/99 7:00:10 AM Eastern Daylight Time
Monday -- May 10, 1999
H-P takes online strategy to bank
Tech giant's goal: Big slice of Internet banking market
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Clifford Carlsen Business Times Staff Writer
Like the famous robber Willie Sutton, Hewlett-Packard is focusing much of its Internet strategy on banks -- because that's where the money is.
"We are helping to empower banks to stay in power," said Andy Hirst, director of electronic banking for the $40 billion technology company. "You are going to see a lot more services available than banks have traditionally offered, and we think there is going to be a breakthrough for banks to become big Internet portals themselves."
H-P has identified a $180 billion bank market for information technology and has targeted $47 billion of that for itself, said Olivier Trancart, financial services general manager. It is an ambitious goal, but as in all things online, the company knows that someone is going to get there quickly, and it might as well be them.
Grenoble, France-based Trancart took over as head of the division five months ago and set a goal for a leadership position in Internet banking. Cupertino-based Hirst is directing that strategy, and believes H-P has already made great strides.
Hirst said the company sees its future in promoting online banking systems that rely on H-P equipment as a standard. Unlike its chief competitor -- IBM -- the company is less focused on selling its own complete solutions than backing a standard that relies on its machines.
"Hewlett-Packard sees the Internet as a place that is going to produce rapid growth, and the banking segment is a niche where they can leverage their great reputation," said Bruce Raabe, a securities analyst with the San Francisco firm Collins & Co. "Banks are very conservative, and there is no advantage for them to go with some unknown company or do it themselves, so they will turn to companies like H-P or IBM."
To that end, Hirst said the company is placing a major emphasis on an alliance with Security First Technologies Corp. (S1), an Atlanta-based Internet banking software company. H-P, which last month invested $10 million in S1, will soon launch a major marketing campaign putting its imprimatur on the S1 system and will mobilize its 70,000-strong U.S. sales apparatus to sell it.
S1 will charge banks a monthly per-customer fee and maintain all the equipment, data and telecommunications infrastructure to manage accounts. H-P will receive some service revenue, but mostly will benefit from standardization on its computer systems.
The company pursued a similar strategy in the boom for enterprise software over the last decade, forming close alliances with PeopleSoft for human resources applications and SAP for manufacturing software.
Hirst said the company's strategy is aimed at banks of all sizes, but particularly the largest players. Its Internet systems are aimed at promoting online business in traditional financial institutions, to compete with challenges from new Internet-only financial applications.
"We have taken the position that S1 can be the category killer in this marketplace," said Hirst. "We gain by selling our equipment and improving our position in the marketplace with value-added services."
Some banks have met the Internet challenge by developing in-house programs, but Hirst believes that banks ultimately will turn to outside contractors to manage online services. Already, IBM and H-P are the leaders, but Hirst expects business to explode when everyday tasks, such as monthly bill paying, become standard over the Internet.
The company also last week made a $35 million equity investment in Redwood City-based BroadVision Inc., with which it will jointly develop and sell e-commerce products that could be incorporated into its bank portals with S1.
"What we want to do is line up with winners in the market," Hirst said. "We have identified some small companies and will back them to be major players in these areas."
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