Banks Sign On At S1by
Some savvy pros have high hopes for Internet banking: They have been accumulating shares of S1 Corp. (SONE), the leading provider of technology solutions that enable financial institutions to offer online banking services. S1, formerly called Security First Technologies, has developed software systems that let companies create their own Internet financial portals, or to outsource them to S1's data center. "S1 dominates this niche business so well that we bought more shares when the stock slipped recently," says Jerry Apodaca of Apodaca Investment Group in San Francisco. The stock, trading at 25 last summer, rocketed to 129 on Feb. 11, then slumped to 96 on Feb. 28. "This pioneer has a lot more upside ahead of it," Apodaca argues. He thinks the stock will hit its intraday high of 145 again. It closed at 115 1/8 on Mar. 1.
Citigroup, Royal Bank of Canada, and Zurich Financial Services are among the banks that have signed up to adopt the S1 solution rather than develop in-house facilities for Web banking and related services. S1 also has strategic relationships with companies that have purchased equity stakes and that co-develop products and provide additional sales channel for S1's solutions. They include Andersen Consulting, BroadVision, Intuit, and Comdisco. S1 expects more strategic allies.
America Online may be one of them. "There is a good possibility that AOL will be the next one to sign up," says Richard Bove, an analyst at Raymond James & Associates, who has a "buy" rating on the stock. He thinks S1's VerticalOne unit--whose technology lets customers view all the information on their accounts with just one name and password--has already formed a relationship with AOL. "A deal with AOL would provide S1 with an enormous potential customer and revenue base," he adds. AOL declined comment.