<p>BEAVERTON, Ore. – Corillian is picking a fight with Digital Insight, and it's not shy about it. The two Internet services firms focusing on financial institutions may see more of each other in competitive situations as Corillian said it plans to go full-force after Digital Insight's market segment, primarily small to mid-sized community banks and credit unions. For years Corillian has catered to the very largest of banks and credit unions, avoiding the small to mid-sized institutions. No more. Some early barbs by Corillian indicate this could be an in-your-face battle. For example, set to debut in Credit Union Times next month is a Corillian ad that specifically calls on Digital Insight customers to give Corillian a look when its DI contract is up. The way the ad begins shows just how honed-in Corillian is on DI clients. It starts off like this: "Important Notice for Digital Insight Customers: Is your contract up for renewal? If yes ask yourself the following questions…" It then goes on to highlight what it sees as specific advantages Corillian has over Digital Insight and says it will do all that DI is doing for the credit union "at the price you are paying right now to Digital Insight." Corillian's strategy has been to get the biggest of the big financials as clients, and it's worked so far. It has 28% marketshare in terms of assets in the top 100 U.S. banks. It has four of top 10 banks as clients, and 17 of top 100. Its closest competitor is Financial Fusion, which has about 7% of assets in top 100 banks. Corillian has also had success with large CUs as well. Its large CU clients include United Airlines CU, Suncoast Schools FCU, HP Employees CU, The Golden 1 CU, Ent FCU, First Technology CU, Kinecta FCU, Mission FCU, and others. But of its 21 CU clients, there are few under $750 million in assets, so it's virtually an unknown to small and mid-sized CUs. Matt Cone, chief evangelist (that's not a misprint) for Corillian, said Corillian's core product, Voyager, was designed for larger clients. It is an in-house solution, which big banks gravitate towards because of control issues and customization features, he said. Late last year Corillian announced that it would be launching an ASP model of Voyager, known as Voyager SE. The product is specifically designed for small to mid-sized CUs says Cone. "Credit unions can contract with us. We'll host them in our data center and they have the flexibility to move to an in-house platform. The same software we're running in the data center, we are running in-house," said Cone. So what's behind Corillian's sudden interest in this market? Cone said penetration rates in these institutions are on the rise, making them more attractive. Also, Corillian has to look to broaden out its target market. "It's a growth area, a natural extension for us. We're at a place now where we can cost-effectively deliver this," said Cone. Digital Insight President/CEO John Dorman said his company is up to the challenge. "We welcome the competition. They're a good company. There's this conventional wisdom that if you're serving the large banks that it's easy to go down market. In my experience that's not true," said Dorman. Dorman said DI and Corillian have obviously positioned themselves differently to serve their target markets, and trying to jump into another segment isn't going to be easy for Corillian. "To serve the smaller credit unions you have to have the online interfaces with the core processors. It takes time and pretty substantial resources," said Dorman. Cone said Corillian already has key interfaces for credit union data processors, including for Summit, Symitar, ULTRADATA, Aftech and USERS. "Another key difference is when you architect the system to serve small and mid-sized institutions, you're doing it as a multi-institution platform so every time you add a credit union or bank you don't have to add a big server," said Dorman. Dorman said over the last six years DI has been investing in its data centers to be able to sustain growth. He said Corillian can do the same, but it takes certain economies of scale to reach profitability. Digital Insight doesn't get the large banking clients that Corillian does because it doesn't offer an in-house system, said Dorman. He said the investment needed to do that wouldn't be feasible from a business standpoint. "A few large credit unions have gone with Corillian. There hasn't been enough of that to cause us to want to make the investment and offer the in-house solution," said Dorman. Besides, said Dorman, the in-house advantages aren't as clear anymore. "The perception that in-house gives you more control is a myth. Once you have it in-house, you still face the same constraints. If you want to change something it costs money," said Dorman. Cone said DI's system doesn't allow for as much customization as Corillian's. "They've done a good job creating a one-size fits all kind of approach, a business model of adding financials as inexpensively as possible. The challenge is when you have that kind of approach, it's difficult to appease the different desires of individual financials," said Cone. Cone said as the Net becomes a more important delivery channel for credit unions, they are going to want more options in serving members online, meaning more control on the back-end. For example, said Cone, Voyager SE will give CUs access to members' bill pay information allowing the CU to answer member questions about specific EBP transactions. Dorman said DI has innovated over the years, adding online lending, aggregation and call solution support to give CUs more breadth in the online environment. There has been a trend of large CUs moving to ASP versus in-house on the DP side, and Dorman said that happens from time to time with Net banking. For example, American Airlines FCU left an in-house Net banking solution, to come to DI's ASP model. But Cone said that works both ways. The Golden 1 CU, for example, left DI to get more control of their Net banking platform with a Corillian in-house solution. Dorman said he's not concerned about Corillian, because DI still has yet to see them often in credit union competitive situations. He broke down DI's competition this way: Corillian with the very large CUs; core processors (specifically Fiserv units, Symitar and ULTRADATA), and Liberty Cavion for smaller CU clients. Dorman said DI's biggest competitor had been VIFI, which it is in the process of acquiring. Cone said for years S1, which also targets big banks, was its main competitor. DI is its main competitor this year. [email protected]</p>

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