Patent Speaks Loudly For Online Resources

Matthew P. Lawlor complains he and his company have not gotten the respect or recognition they deserve for on-line banking innovations.

But the chief executive officer of Online Resources and Communications Corp. in McLean, Va., holds a trump card: U.S. patent 5,220,501.

The process patent covers a "method and system for remote delivery of retail banking services." It was controversial because it appeared to cover every home-initiated debiting of bank accounts via automated teller machine networks.

Mr. Lawlor insists that he and Online are intent on defending the patent, but that is not only basis of the company's achievements and growth.

"We are taking something that is extremely complex for an institution to do and making it simple," said Mr. Lawlor. The fact that virtually all banks have back-end connections to ATM networks makes his job all the easier.

By the end of 1996, 61 banks were using Online's system, up from 15 a year earlier.

Among them were multibillion-dollar regionals Central Fidelity of Richmond, First Commerce of New Orleans, Riggs National Bank of Washington, and United Carolina Bank in North Carolina.

Now offering banks the ability to connect to their customers through personal computers and the Internet, Online Resources also hopes to escape the screen-phone pigeonhole where it began in 1989, and by which its reputation may have suffered.

Online tries to set itself apart from competitors by delivering four distinct product sets: hardware, electronic communications through a customer gateway, "service integration," and other financial content. And it can fill any gaps through marketing alliances with Deluxe Data Systems, Microsoft Corp., America Online Inc., and the Honor ATM network.

"You need interdisciplinary experts coming together" to make home banking work, said Mr. Lawlor.

Company officials concede that no more than 50,000 consumers are banking via Online products - compared to hundreds of thousands using PC programs of Citibank, NationsBank, and other banking leaders.

Speaking of Wilber National Bank, Online's first customer to implement Internet home banking, Mr. Lawlor said, "The big user numbers that (bank CEO Robert W. Moyer) and we expect are still ahead of us."

Some analysts still pooh-pooh Online as a contender against Checkfree, Integrion Financial Network, Visa Interactive, and the like.

But ATM networks are treading gingerly around the patent. NYCE Corp. president Dennis Lynch said he is confident his network's home banking plans will not trigger an infringement case. It may also be that financial institutions can more easily find alternatives to ATM networks than in 1989 when the patent was filed. The application sounds dated in saying "PC-based home banking is not yet a practical reality for most consumers."

A former consumer banking executive at Chemical Bank in New York, Mr. Lawlor doesn't think bankers will bet against the ATM networks in which they've invested so much.

Even as he helps banks get up and running on the Internet, he feels that "it violates what we are trying to do and what financial institutions do."

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