Part of Washington's latest wrangling over Glass-Steagall reform, now more benignly tagged "financial modernization," is whether banks should give up some of their control over payment systems in ex-change for broader powers.

Financial institutions are realizing that rapid-fire changes in technology could have as big an impact on their viability as any government policymaking.

Last fall, the Bankers Roundtable, a Washington association for senior executives of the 125 largest U.S. banks, formed the Banking Industry Technology Secretariat. Officials said the group, known by its acronym Bits, seeks to "foster growth and development of electronic banking in an open environment."

While that goal seems high-minded enough, the formation of Bits also sends a not-so-subtle message to nonbanks eager to profit from the handling of electronic payments.

"Bits will ... confirm that banks remain trusted intermediaries for customer funds and financial information," the group's mission statement says.

Last month, Bits issued a "request for information" to more than 170 financial institutions, technology companies, consultants, and academics. The group wants input on how to design a real-time computer-based payment system, facilitating payments between consumers and merchants via the Internet or any other on-line mechanism.

Questions that Bits is posing include: What are the components of a real-time payment system? What existing payment clearing systems can be utilized? How will transaction security, payment finality, system access, and financial risk issues be addressed?

Companies responding to the Bits request will get to participate in future deliberations. The group also acts as "a major stake in the ground," as one banker put it, notifying technology companies like Microsoft, Oracle, and Netscape that banks are committed to protecting their positions atop the payment-system food chain.

Despite bankers' fears over loss of control, Anthony Cluff, executive director of the Bankers Roundtable, said Bits was formed to encourage the broadest possible participation in the process of designing a safe, efficient, and low-cost electronic payment mechanism.

"There seems to be great interest from technology companies in what we're doing, and we're pretty pleased with the initial response we've gotten back from this," said Mr. Cluff. He added that Bits extended the deadline a week, to March 17, "to get more thoughtful responses and more people to respond."

Bits hopes the information it receives will take the project into the systems-design phase, and Mr. Cluff said the group plans to issue a more detailed request for technology as early as the summer.

While Bits tries to ensure banks' future role in electronic payments, some observers remain skeptical.

"Banks have already lost a large part of their control and influence over the payment system," said James Marks, an analyst with CS First Boston in New York who covers electronic commerce. He pointed out that in credit cards, nonbank issuers like AT&T and Dean Witter Discover are major players, and in merchant processing, the leader First Data Corp. virtually calls the shots.

"In merchant processing, banks haven't had the entrepreneurial culture or the rapid adoption of technology in order to compete with more focused companies," Mr. Marks said. "That's what I expect to see repeated throughout all the different corners and eddies of the payments system."

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