by James Van Dyke, Silicon Valley Editor

Silicon Valley Editor Jim Van Dyke traveled to the Silicon Hills area of Austin, TX, for a briefing from Q-UP Systems, a leading Net banking platform provider to the community bank market. The company is putting the finishing touches on a community-based ecommerce storefront to further differentiate its offering.

Q-UP continues to be one of the most innovative Internet banking platform vendors. While its competitors have been busy with mergers and IPOs, Q-UP has been adding features and products.

Whether they can compete with their better-capitalized, newly public competitors, remains to be seen.

History: R.H. “Hank” Seale III, formerly of Regency Data Systems, is the company founder and CEO. Seale credits current EVP Robert Buckner, a former Regency voice response customer, as being the inspiration for the product. President Dan Martin has also been involved since the company’s inception.

Product Features: Besides the usual suite of online banking features, online statements, transfers, and bill payment, the company offers several innovative features such as Q-Cards (OBR 3/99) which allow users to set upper and lower account balance parameters that trigger
e-mail notifications when exceeded. Customers can also set personal reminders for calendar events such as birthdays, anniversaries, and so on.

Q-Up gives its clients the choice of on-site server or service bureau installation. All but a few have gone the on-site route.

Partners: Key service and technology partners are summarized in the following table:

Service & Technology Providers

Source: company, 7/99

Distribution and marketing alliances are in place with Treev and several core processing vendors including Bankline, Computer Bank, Cardinal 400, EDS Miser, Kirchman Corporation, Morningside, McCoy Myers, and Precision Computer Systems.

The Latest Developments:

• On August 20, the company is expected to announce an electronic commerce storefront product similar to ecBuilder from Multiactive Technologies (OBR 10/98) and others from Yahoo!, Netscape, and others.
• The ecommerce storefront is designed to help banks put their merchant clients onto the Web and create local shopping centers of interest to retail customers. For an analysis of the storefront product, refer to OBR 10/98
• Q-UP believes that financial institutions can leverage the strength of their existing customer relationships to bring lots of eyeballs and shops online. According to CEO Hank Seale, “The bank has a position of trust with its customers that is better than the ISP’s or anyone else.”
• The Q-UP product will offer a trusted, secure environment. The pricing model is not final, but the company expects to collect a one-time hosting fee as well as variable transaction charges.
• Q-UP just announced a partnership with Fleet’s US Clearing to offer online brokerage services. (See OBR 5/95, for our Product of the Month feature on U.S Clearing.)

Contacts: Wade Sanders is Dir. Sales, wsanders@qup.com ; Robert Buckner is EVP, rbuckner@qup.com ; Dan Martin is President, dmartin@qup.com , (512) 342-9910, fax (512) 342-9921
Address: 8303 Mopac, Suite B-450, Austin, TX 78759

Q-UP has made great strides in the community banking market, going from zero to 186 clients in three years. Its integrated lineup of consumer, business, and voice response products makes Q-UP a one-stop shop for Web banking. Upcoming brokerage and ecommerce modules help round out the product line.

Although, the company does not have access to lower-cost capital currently available in the public markets, innovations such as Q-Cards and its ecommerce initiative, demonstrate that the company is willing to invest in R&D to build state-of-the product features. The privately held company has established a track record of profitability that is bound to come back into fashion soon.

In terms of operating environments, there is no shortage of strong opinions on Windows NT. New players like Q-UP love NT because it’s an easy environment to support and build on. The developer partnership program out of Redmond is not only strong, it’s the only one that pure-Microsoft shops are required to manage, compared to the arduous task of maintaining environments and associated relationships around a handful of UNIX platforms. Some UNIX fans have their own technology-based arguments about the mission-critical readiness of NT, but in the mid-market arena there is no slowing in the acceptance of NT’s easy-to-use, economical-to-buy platform.

We like the fact that Q-UP has packed three types of interfaces into one code engine and database: consumer banking, cash management, and voice response. In theory this makes for a more stable product with frequent releases, and a “look and feel” that is easier to support. The company is also the benefactor of good timing, not having to support a Windows or even a DOS set of products from the pre-web era.

Strategically, the company has showed that they can continue to expand its feature-set while implementing new banks at a quick pace. They have partnered with the right players to keep development expenses to a minimum.

The electronic commerce community initiative is a bold stroke that sounds good on paper, but we question whether the company can deliver a product that keeps pace with those from more well-heeled companies such as Yahoo!, AOL/Netscape and others. We’ll reserve final judgement until we’ve seen the final release.

While many of Q-UP’s competitors have been busy managing mergers and IPOs, it has focused on attracting new clients and building features into its platform. Right now, that gives Q-UP an edge on the product side, but long-term, it may be hard to keep up with its now better-capitalized peers such as Online Resources, nFront, and Edify/S1.8

Jim Van Dyke is a regular contributor to Online Banking Report. He consults with ebanking and ecommerce companies from his Silicon Valley office. He can be reached at (925) 462-6599, or rainmaker@aol.com