Magazine article American Banker

Wall St. Warms to Bank Tech Stocks

Magazine article American Banker

Wall St. Warms to Bank Tech Stocks

Article excerpt

Wall Street appears to be renewing its passion for a number of bank technology stocks, particularly those that provide electronic commerce and alternative forms of payment systems to banks.

The reasoning, according to analysts, is this: The banking industry, which is currently reaping record profits, is expected to dramatically increase its investments in payment systems to keep pace with the rapid changes in the banking environment.

"You've had a recent general wave that has helped technology stocks," said Gary Craft, analyst at Robertson Stephens & Co., San Francisco. "The payment system is shifting incrementally from paper to electronics," he added.

"It has to because of the big push for electronic commerce in the economy."

Though Intel Corp. stock plunged Friday (the technology bellwether said its quarterly earnings will fall short of expectations), bank technology stocks including Sterling Commerce and Transaction Systems Architects Inc. have gotten a healthy boost in the past few weeks.

Stocks of these companies had been trending downward since October.

In a forthcoming report, Mr. Craft predicts that spending on third-party payments technology will exceed 35% for several years to come.

In 1996 banks invested about $750 million for this technology, which includes software for electronic funds transfers, check imaging, and financial electronic data interchange, Mr. Craft says.

He predicts they'll spend $2.5 billion on such technology in 2000. …

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