Making good on a promise to move quickly, the owners of the bill-presentment venture Spectrum said they have begun testing their system and expect to be ready to roll it out before yearend.
Just over three months after announcing their joint venture, officials at Chase Manhattan Corp., Wells Fargo & Co., and First Union Corp. said in an interview at American Banker's Financial Services in Cyberspace conference that they have achieved the important first step of getting their respective systems to communicate with one another.
Billing departments at each institution are sending electronic bills to customers who also have accounts at one of the other banks. For example, First Union checking account customers who also have a Chase credit card could receive their credit card bill at First Union's Web site.
"When we announced Spectrum, we set an aggressive timetable for getting something running in the fourth quarter," said Kellie Scott, senior vice president at First Union. "We have been exceedingly focused on getting deliverables out in a short period."
Now the group is seeking other financial institution members. "We are looking to sign up as many as possible," said Ronald Braco, senior vice president at Chase. "We have talked to all the top 20 banks, and we are open to community banks too."
Members would pay a membership fee and nominal transaction fees to Spectrum.
Though it is a for-profit firm, Spectrum was organized more to guarantee that banks would retain a role in a payment system that was becoming increasingly open to third-party providers. "It was very clear to us that we needed to do something," said Sharon Osberg, executive vice president at Wells Fargo. "We all had had limited success in going at it alone."
Ms. Scott described Spectrum as an automated-teller-like "switch to protect the financial services franchise." Spectrum gets bills from financial institutions that are presenting them on behalf of their corporate customers or own internal departments, such as the credit card or mortgage groups. It then presents the bills to consumers through a financial institution's Web site or an Internet portal.
In the process it bypasses a lot of "spaghetti-like" bilateral arrangements that would otherwise crop up to achieve the wide variety of connections, Mr. Braco said. The setup also will encourage net settlements to streamline the flows of funds between banks, he said.
Mr. Braco emphasized that Spectrum will not sell presentment services directly to corporations. "Some of our competitors are competing for corporate cash management business," Mr. Braco said. "We believe that is a financial-institution business."
Spectrum uses the Open Financial Exchange, or OFX, technical specification and plans to move to its next iteration, known as IFX, when it becomes available.
The use of these open standards is encouraging to Bank of America Corp., said Jane S. Wallace, executive vice president of the Charlotte, N.C.-based company. She said Bank of America is open to becoming a Spectrum member "if it is right for our customers." She added that the group had "come a lot further than I expected."
Spectrum said it plans by April to offer payment services for presented bills. By the fourth quarter of 2000, it anticipates offering pay-anyone services.
