KeyBank is an example that Linux proponents wish there were more of. The Cleveland-based bank is in the midst of a multiyear upgrade to Linux and expects the open-source operating system to be running on almost 15 percent of its servers, many with mission-critical applications, by 2008.

But Union Bank of California NA in San Francisco is more typical: Apart from scattered file-and-print and Web servers, it runs only a few application-monitoring tools on Linux.

"We haven't launched any true business applications on Linux yet," said Rick Curry, vice president of infrastructure engineering at Union Bank. "Most of us [in the banking industry] are still kicking the tires."

In contrast with firms in the financial services sector, which was one of the first industries to embrace Linux and other open-source technologies, U.S. banks have been downright laggards. From branch-office systems to core financial databases, Linux has yet to prove -- to bank IT executives, anyway -- that in clustered configurations, it can scale up to match the performance of the mainframes they already have in place.

Even some Linux vendors concede that the retail banking market has been a disappointment for them thus far.

"There are not hundreds of banks using Linux, but we are seeing a larger chunk starting to ask the question," said Kim Lorusso, financial services marketing manager at Novell Inc., owner of SUSE Linux.

Mark Greene, vice president of financial services strategy at IBM, a major backer of Linux, said IBM is experiencing "explosive growth" in sales of systems running the operating system for branch offices. On the other hand, "the back office is still lagging," Greene said. "But banks generally aren't doing a lot around their core mainframe-based systems. It's just a difficult environment to move to anything new."

Curry said Union Bank does plan to port its internal credit-reporting and document management applications, both currently running on IBM Unix servers, over to Linux this year. But the bank expects to keep its primary transactional database on an IBM zSeries 890 mainframe for at least five more years, he said.

One roadblock for Linux is that despite its attractive projected cost of ownership, ripping out and replacing systems that are still working fine isn't an option for many banks, which tend to pinch pennies on IT compared with their cousins on Wall Street.

"The economics of banks are hard," said Alenka Grealish, an analyst at Celent Communications, a Boston-based consulting firm that focuses on financial services IT issues. "IT projects tend to hit a glass ceiling in terms of size and also extend out in their cycle time."

The heavy merger-and-acquisition activity among banks in recent years has also slowed adoption of Linux, Grealish said. Instead of taking mergers as an opportunity to switch IT systems, banks are generally preoccupied with ensuring that integration work goes smoothly, she said.

Moreover, banks are naturally risk-adverse because of the importance of maintaining consumer trust, according to Grealish. "Until it's tried and really true, banks are not going to go there," she said.

KeyBank is an exception. Dave Seager, vice president of Unix systems engineering at the KeyCorp unit, said KeyBank bought 100 Intel-based servers running Red Hat Enterprise Linux from Hewlett-Packard Co. last year. The servers are being used to replace Unix systems hosting, among other things, Oracle databases and IBM's WebSphere application server software.

"In the last year, Linux has gone from 'unapproved for use in the building' to our platform of choice," said Seager, who spoke about KeyBank's Linux plans at Red Hat Inc.'s user conference last spring.

The Linux deployment has helped KeyBank keep its own balance sheet healthy. It spent US$1 million on Linux servers last year, saving about 80 percent compared with what it had been spending on comparable systems, Seager said.

The savings have won over KeyBank executives who initially were hesitant about the move, Seager said. "Telling them Linux was cool or the new thing didn't translate very well," he said. "Saying it saved x percent of our budget translated very well."

Nonetheless, Seager said that KeyBank's core mainframe is under no immediate threat of being evicted by a Linux cluster.

The lack of plentiful banking applications for Linux systems also hurts the operating system's prospects, especially since banks tend to buy off-the-shelf software instead of building it themselves, said Brent Biernat, assistant vice president of networking services at COCC, an Avon, Conn.-based provider of IT services to community banks and credit unions.

The application shortage was cited by one bank IT executive as a reason why she remains "very cautious" about Linux despite potential cost savings. Sufficient availability of third-party applications and "robust operational monitoring support remains to be seen," said the executive, who asked not to be identified.