The Bankers Roundtable has launched an aggressive campaign to keep the banking industry in control of its technology and payment systems.
Citing concerns about the pace of change and the growing influence of high-tech forces like Microsoft Corp., the Roundtable issued a clarion call for "collaborative action" that even its sometime rivals at the American Bankers Association and Independent Bankers Association of America are heeding.
To coordinate the collaboration, a Banking Industry Technology Secretariat will be established at the Roundtable's Washington headquarters.
The Roundtable formally endorsed the plan last week as part of a sweeping set of recommendations by a technology task force headed by Frank Wobst, chairman of Huntington Bancshares in Columbus, Ohio. Over the last year, the task force organized behind-the-scenes discussions among some of the industry's most prominent executives. They came to agree that payment- system access, security, privacy, and risk management are matters of mutual interest.
"The objective is to ensure more efficient payments, protect the security and privacy of customers' financial data, and keep banks focused on serving their customers in an electronic environment," said Mr. Wobst, who will now be chairman of an expanded Bankers Roundtable technology committee.
The trade group, which represents the top executives of the 125 biggest banking companies, wants to ensure that banks have a hand in technical standards, promote development of secure payment mechanisms, and consider options for payment settlement. It expects to post an "acceptance mark" on electronic services to assure the public about security.
"The industry has a very important vehicle for building a strong foundation for electronic payments and services," said Edward D. Miller, task force vice chairman and senior vice chairman of Chase Manhattan Corp.
He said the conferees struck an "optimal" balance between group action and marketplace competition.
The Banking Industry Technology Secretariat, to be known as Bits, will have a full-time managing director and staff, overseen by a 12-member board of bank chief executive officers.
The ABA and IBAA each will appoint a board member, the rest coming from the Bankers Roundtable.
An ABA payment systems task force is due to issue a report at the association's convention next month. It will complement the Bankers Roundtable's message, said ABA spokesman John Hall. He said the ABA wants to be part of a united front and is not interested in duplicating efforts.
The IBAA's assent may be more surprising, given its small-bank orientation. But executive vice president Kenneth Guenther said IBAA leaders were fully briefed by Mr. Wobst, and the trade group's executive committee came away from a meeting in Minnesota this week supporting the initiative.
"My leadership is very much awake to this issue of control of and access to the payment system," Mr. Guenther said. "We are looking forward to having a seat on the board."
Anthony T. Cluff, executive director of the Bankers Roundtable, said the appointment of board members, recruiting of staff for the secretariat, and the carving out of office space are just beginning.
Roundtable members made what was said to be a substantial, "seven- figure" funding commitment, but the total was not disclosed.
Given the budget and the expectation that a "heavyweight" will run its secretariat, the Roundtable did "everything we could have hoped for," said William M. Randle, senior vice president of marketing and strategic planning at Huntington Bancshares, who was part of a cadre of second-level executives backing up CEOs and vice chairmen like Mr. Wobst and Mr. Miller on the task force.
"I can't think of any recent precedent for banks' getting together in this kind of precompetitive, collaborative mode in the best interest of customers, the payment system, safety and soundness, and privacy of information," Mr. Randle said.
With the announcement of the secretariat this week, Roger Fitzsimonds, chairman of both the Roundtable and Milwaukee-based Firstar Corp., said: "The idea is to apply the best thinking in the industry to create an environment where banks can serve their customers competitively and openly in the new age of electronic banking."
"It is extremely important for CEOs to be concerned," said Mr. Randle, adding that an "enlightened board of directors" will assure that the initiative "moves forward aggressively."
Such top-level banker involvement, let alone collaboration, is relatively new. Among the CEO "wake-up calls," according to insiders, were Microsoft chairman Bill Gates' oft-quoted 1994 remark that "banks are dinosaurs," and a panel discussion at the Roundtable's spring 1995 conference that starred Intuit Inc. chairman Scott Cook.
"That the Bankers Rountable is considering this is a powerful indicator of how important electronic commerce issues have become at the highest levels of the industry," Mr. Miller said.
Empaneled a year ago, the technology task force assessed the state of banking technology and what might be done to improve it. Members were concerned that their share of payments markets might erode, as had other parts of the banking business. They also considered the impact of Microsoft and Intuit, and other on-line advances including the Internet and the recently formed home banking venture Integrion Financial Network.
Said a document the Roundtable released this week: "In fulfilling its mission, the task force has developed a plan to achieve, through collaborative action on the part of Roundtable member companies, the evolution of a seamless electronic financial services delivery and payments environment that will have the capability of linking consumers - at their choice - with the marketplace through banks.
"In the process of managing this evolution, specific intiatives will be pursued that will have the effect of enhancing and supporting bank brands."
The task force laid out several "assignments" for the secretariat, including:
*Endorsing or promoting interoperable specifications that assure secure access and privacy in new delivery systems.
*Developing a certification process for software and services that encourage competition, enhance bank brands, and respect consumer privacy.
*Providing a common "acceptance mark" and studying feasibility of a certification authority for authentication of system participants.
In the interest of accelerating growth of electronic payments, the secretariat will also encourage coordination among initiatives at the Financial Services Technology Consortium, Electronic Check Clearing House Organization, MasterCard, Visa, and other groups.
