The three dominant bank computer makers have decided to join the Financial Services Technology ConSortium, adding weight and credibility to the potentially far-reaching bank research effort that Citicorp organized last year.
International Business Machines Corp. and Unisys Corp. have signed letters of intent and have been taking part in consortium meetings. AT&T Corp. has gone a step further and formally attained associate member status.
AT&T is participating initially through its Global Information Solutions unit, the former NCR Corp., but other parts of the telecommunications giant, including Bell Laboratories, are expected to get involved as the consortium's various projects progress.
Imaging Is the Draw
What has brought AT&T, IBM, and Unisys together in a rare partnership is the consortium's exploration of imaging technology and how it might be improved and applied to the check clearing system.
Dan Schutzer, the vice president in Citibank's corporate technology office who is chairman of the consortium, called it "very significant" that the three biggest bank technology vendors -- leaders in areas ranging from mainframe systems to check processing and imaging - are joining.
Mr. Schutzer views it as a sign of momentum for the consortium, which was incorporated about a year ago by Citibank and other money-center and superregional banks, including the flagship bank units of BankAmerica Corp., Chemical Banking Corp., and NationsBank Corp.
They jointly concluded they could accomplish more by cooperating than competing in areas where new information technologies - those sometimes described as "information superhighway" phenomena - are likely to affect banking.
A Say in Development
The bankers expect eventually to compete in their use of the emerging information infrastructure. But to make sense of it, and perhaps influence its development by talking to vendors and policymakers, they believed it was in their interest to join forces.
Similar motives drew the major vendors to the consortium, according to Rob Hilkes, imaging systems product manager at AT&T Global Information Solutions.
"Never have so many very large, influential banks collaborated like this," Mr. Hilkes said in a telephone interview from Waterloo, Ontario, where he is based.
"The fact that they arc collaborating indicates they all feel they cannot accomplish things like check-image exchange and electronic payments alone and in a vacuum," Mr. Hilkes said. "No one big bank acting alone would have attracted nearly as much attention."
Plan Comes Together
With the big vendors on board, Mr. Schutzer's plan for the consortium seems to be falling into place. Without them, there was a void between the eight member banks that are full voting members, and a group of more theoretically inclined advisory members. The latter include universities and government research laboratories seeking practical outlets for their research capabilities and computing power.
For example, the interbank check imaging project, which the consortium launched in March under Citibank's leadership, is looking into data compression algorithms, security methods, and. other advanced technologies honed at places like the Los Alamos National Laboratory in New Mexico.
Los Alamos, an associate member, was historically involved in weapons production but is under a mandate from the Department of Energy to find commercial applications for its technologies and expertise.
"As we define our projects and work with vendors on specific projects, they eventually feel compelled to join," Mr. Schutzer said. "Check imaging brought one wave" of new members, he added. "I think we'll see another wave as we get into electronic check."
Mr. Schutzer was referring to an effort within the consortium but at an earlier stage of development than the imaging project. Bank of Boston is project manager, exploring alternatives to paper payments and the technical and security considerations that must be addressed.
Likely to collaborate in the electronic check program is the Smart Card Forum, the result of a similar Citibank collaboration initiative, in which numerous industries discuss standards for products such as an "electronic purse" - a card with stored value that can replace cash and checks.
Also on the Financial Services Technology Consortium's agenda are electronic commerce, with NationsBank as project manager, and fraud detection and management, led by Bank of America.
An example of electronic commerce is CommerceNet, an application on the government-sponsored Internet that Citibank, Bank of America, and some other banks and nonfinancial companies are beginning to test for information and payment exchanges.
Common to many of these developments are the need for technical standards, a high level of data security, and basic understanding of a wide range of "critical technologies" coming down the pike, according to consortium member William Smart. The Bank of America vice president spoke at the American Bankers Association's recent national operations and automation conference.
Among the technologies he listed were real-time, parallel, and distributed transaction processing, data encryption and authentication, digital signatures and tamper-proofing and biometric identification.
Of special concern to the consortium is the likely proliferation of financial services over networks of personal computers and other remote devices, and the increasing difficulty of ensuring that a user is who he says he is.
Mr. Smart warned of "a great increase in threats to security and privacy," which only a collaborative effort could address. "Banks will need to interface with each other to deliver services," he said, "and they will need standardization, which means they can no longer do it alone."
But aside from agreeing on standards and protocols, Mr. Smart sees the consortium "making the banking industry more competitive against nonbank competition."
"I look at myself as someone supporting my bank and helping it understand the new tools becoming available. The promise of the national information infrastructure [a.k.a. information superhighway] is to make our services more accessible."
Mr. Hilkes of AT&T said the vendors, likewise, are in the consortium not just to help set technical definitions and standards but also to support their clients. While AT&T Global Information Solutions, IBM, and Unisys have routinely sent representatives to committees under the American National Standards Institute framework, they had not previously come together on anything so "implementation focused" as the bank technology consortium, Mr. Hilkes said. Invoking the word "coopetition" - coined by some management theorists to show the blurring together of cooperation and competition - Mr. Hilkes said the consortium-is shaping-up as in tune with the times.