PLANO, Texas and JACKSONVILLE, Fla. - With all the deals amongdata processing vendors, credit unions may soon need a PowerPointpresentation just to connect all the dots of who bought who and whois the parent company of which processors. The latest deal involvesAurum Technology. Aurum, based in Plano, Texas, is being acquiredby Jacksonville, Florida-based Fidelity National, a mammoth Fortune500 company that has transformed itself into one of the nation'slargest financial outsourcing providers of mortgage loan processingand bank core processing. Fidelity will pay $305 million in cashand stock for Aurum. Fidelity National made its name as thenation's largest title insurance company, but it has undergone afascinating transformation in recent years. "If you look at ourhistory dating back to 1983 we've been very, very focused on themortgage title insurance and mortgage related services. We made asignificant strategic change in 2003 with the acquisition of Alltelto diversity the business and focus on the retail and commercialbanking functions. Alltel gave us entry into the market," said GaryNorcross, president of Fidelity's Integrated Financial Solutions(IFS) division which is where Aurum will be folded into. Alltelalso gave IFS the world's largest CU as a client as Alltel was thecore processor for Navy FCU. Alltel was just one of the deals thathas helped transform Fidelity into an outsourcing player of techservices to financials. It also acquired Internet banking/cashmanagement software firm Hamilton and Sullivan, the DASH ATM/EFTNetwork, and CRM provider WebTone Technologies - all in 2003. Sofar this year it has moved to the core processing arena with theacquisitions of core processor Sanchez Computer Associates and nowAurum. Its 2003 revenues were $7.7 billion. Norcross said thestrength of the credit union industry was one of the reasons Aurumwas so attractive. "It's a flourishing market that tends to have apropensity to invest in technology. That's exciting for us. Whileon the other hand the traditional retail banking market has beendeclining three to five percent a year," said Norcross. Aurumbrings Fidelity into the CU market as well as the community bankand thrift markets. Aurum, founded in 1999, is an interesting storyin its own right. It was a spin-off of EDS' community bankingdivision. EDS for the last few years has been dumping businesses itdubbed non-core, including CUs (EDS' CU business -now IntegraSys -was sold to Fiserv last year). The leaders of Aurum decided thatits community banking roots would help it penetrate the CU marketand they were proven right on the upper asset scale. Aurum washaving success with large credit unions, especially because of itsbusiness banking capabilities, but it soon found that its productdidn't work well for smaller to mid-sized CUs. So just last MayAurum, in a deal that solidified its commitment to the CUmarketplace, Aurum acquired credit union data processor ComputerConsultants Corp. That deal brought it 600 credit union clients,mostly small CUs under $100 million in assets. The plan was to rampup CCCorp's Mercury system (a redesigned system built aroundMicrosoft's .net and SQL) to help move it up market to larger CUs.So why did Aurum do a deal now after making such a majoracquisition of its own? Aurum President Paul Bourke said thecompany needed more money to grow the way it wanted. "One of ourchallenges as a private company in adding more business was alwaysgoing to be our financials," said Bourke. He said leaders fromFidelity and Aurum started talking last fall and at the time Aurumstill had thoughts of staying independent, but the financialstrength Fidelity brought to Aurum was too beneficial to pass upsaid Bourke. When the deal is done the Aurum name will likely goaway said Norcross, but it will keep Aurum's product names alive,such as its Miser core system. Burke said Aurum brought togetherits nine largest clients recently and found the clients were a bitdisappointed in Aurum's marketing of the company. "They didn'tthink we were aggressive enough in building name recognition. Thegood news was our product names, such as Miser, were well known,"said Bourke. Unlike Fiserv, which takes a hands-off approach withcompanies it acquires, Norcross said Fidelity is very hands-on. "Welike to understand the businesses we're in. When we come into anindustry we want to compete. We bring significant amounts ofcapital. We're not going to enter into the credit union space andstop," said Norcross. Aurum may be best known among credit unionsfor its core processing, but it's also a force in item processing.It has 24 image-enabled item processing sites and processes eightmillion accounts for more than one billion items a year. Fidelityis also a large item processor, but Norcross said there wasn't muchoverlap between the two with item processing and solutions ingeneral. "If you look at the Aurum/Fidelity combination there isvery little overlap between our two companies. As we did more duediligence there was really very, very little overlap even where wehave common areas. Aurum has a national footprint on itemprocessing check solutions, which is a geographic business. When welaid their footprint over ours there was no redundancy, except forone center," said Norcross. Norcross said Fidelity plans to useAurum to deliver other products, such as CRM and others, to creditunions. "That's frankly one of the things well be evaluating; whatare the opportunities we can bring to the credit union space,whether it's ATM/EFT processing or CRM. There's a lot of stuff wecan bring just because of the size of Fidelity," said Norcross. Inthe community bank processing market at least it's looking more andmore like a three-way race. "The big three in that market areFiserv, Jack Henry and now Fidelity. Then you drop down to Harland,BISYS and Metavante. The big three are flexing muscles withacquisitions," said Robert Hunt, TowerGroup, Senior Analyst. Huntsaid he's been impressed with Fidelity's ability to round out itsproduct line. "I think the WebTone acquisition showed they wantedto really compete with Fiserv and Jack Henry," said Hunt. Forcredit unions the DP picture is a bit different. With theacquisition of the EDS division Fiserv has the most CU clientsbetween its seven data processing subsidiaries - USERS, IntegraSys,Summit, XP Systems, GalaxyPlus, CUSA Technologies and AFTECH. JackHenry is another major player as the parent company of SymitarSystems. Its other CU acquisitions include CU Solutions andPeerless Systems. With the Aurum deal, Fidelity moves into the CUmarket and given Aurum's 600-plus CU clients it is a major factorin the market. But there are other forces in the CU space. OpenSolutions has become a leader with large credit unions andcorporate credit unions, and it picked up more small and mid-sizedCUs when it acquired Liberty Online last year. Harland FinancialSolutions is also a powerhouse. Its ULTRADATA unit now has almost700 CU clients, and it added a service bureau system with theacquisition of Premier Systems Inc. last year. PSI's system isbasically the ULTRADATA system in a service bureau [email protected]