An American Bankers Association task force meets today to begin studying how the industry can preserve its prominent role in the payment system.
With the advent of new technology, "we want to stay in the business of being the centerpiece of the payment system," said task force chairman Murray D. Lull, who is president and chief executive of Smith County State Bank and Trust Co. in Smith Center, Kan.
Banks historically had a lock on settling credit card and check transactions. But aggressive nonbank competition, the introduction of debit and stored-value cards, and increasing use of home computers threaten banks' hold, said ABA president James M. Culberson Jr., the chairman of First National Bank and Trust Co. in Ashboro, N.C.
The industry must act now to secure its future in the payments market, he said.
"Changing technology is forcing us to consider confidentiality, what types of businesses will participate in the payment systems, who will regulate it, how nonbanks fit in, and the impact on the monetary system," Mr. Culberson said.
Today's meeting of the 15-member task force is intended to help map priorities for an interim report planned for release this summer. A final report is expected in October. That would be more than two years after the last Washington trade group "call to arms" on the payment system, prepared by Furash & Co. and published by the Bankers Roundtable.
Former Federal Reserve governor John P. LaWare, currently vice chairman of the Secura Group in Boston, will serve as chief consultant to the ABA task force.
Some task force members question whether banks will be prepared for new payment technologies, and whether they'll remain competitive with nonbank competitors.
Thomas J. Cirillo, a managing director at Citicorp, said he is concerned that the industry has traditionally been slow to adopt new technology, and therefore will not effectively develop home banking and other computer- based products.
"I'm very concerned about the future of banking in the next couple of decades," he said.
William G. McNinch, chairman and chief executive at Community Bank of Texas in Beaumont, said when banks go up against new competitors, customers will choose products they find easiest to use.
"Banking is a pretty boring part of your life. If you can do it more conveniently, you are going to take advantage," said Mr. McNinch.
Bank of Fayetteville (Ark.) president John M. Lewis said banks have a leg up on nonbank competitors. "We have a lot of trust from customers as far as reliability, safety, and security," he said. "It's an area we're good at and I'm not afraid to compete."