The banking world is waking up to a payment-systems alarm.

After years of wavering between apathy and neglect, many bankers are suddenly in a cold sweat about their payment infrastructures. They fear new technologies and competition could lessen their control or influence over check collections or electronic funds transfers, and perhaps break their ties to customers.

The threat - often code-named "Bill Gates and Microsoft," if only for rhetorical effect - has bankers showing rare signs of willingness to respond in concert. But they are still searching for solutions and strategies, as well as unity.

Trade associations have put payment systems on their front burners; the American Bankers Association and the Bankers Roundtable have both empaneled high-level task forces.

They are being egged on by consultants and self-styled opinion leaders who had been raising red flags about payment systems all along. The message gained credibility two years ago when Mr. Gates, the outspoken chairman of the world's biggest software company, called banks "dinosaurs" and suggested his technology could bypass them.

Even regulators and legislators have gotten into the act.

Comptroller of the Currency Eugene Ludwig has spent the last few months boning up on such advances as smart cards and the Internet. And some of his recent speeches have sounded like open invitations for banks to try radical new things.

The Federal Reserve System has formed a Financial Services Research Group, assisted by ex-Fed governor John LaWare and headed by Cleveland Federal Reserve Bank economist James Thomson, to explore the business and public-policy implications of payment-system changes.

On Thursday, Rep. Michael N. Castle, chairman of the House Banking Committee's monetary affairs subcommittee, will hold the third in a series of hearings on "the future of money." The hearings have raised awareness in both government and industry circles about both competitive threats and opportunities.

Rep. Castle, a Republican from Delaware, has explicitly renounced any intent to slow or regulate the march of electronic innovation. But in providing an official platform for ideas like Digicash Inc.'s Ecash for the Internet and home banking via Intuit Inc.'s Quicken software, as it did last summer, the subcommittee has lent these subjects credibility and grabbed the attention of the very banking executives who used to pay them little heed.

To the delight of the payment-system cognoscenti, some of the high-tech thinking about banking in the next millennium is entering the industry mainstream. Now they are hoping to harness the energy.

"The level of consciousness has clearly changed," said Edward Furash, chairman of Furash & Co. in Washington and an activist voice that is coming in from the wilderness.

"We've been out talking about this issue, and now we have clients coming to us to help assess where they stand and make recommendations," he said. "Deep down everybody knew that they had to look at technology in the context of their distribution systems, and not just in the operational sense.

"But now they are responding to events in the marketplace - Bill Gates, (Intuit chairman) Scott Cook, the Internet, smart cards, the telecommunications bill, you name it."

Mr. Furash claims some credit for the raised awareness. Commissioned by the Bankers Roundtable, which represents the biggest U.S. banking organizations, Furash & Co. produced a two-volume report in 1994, "Banking's Role in Tomorrow's Payments System."

Its prose was dry, but its conclusion was stark: "There is a serious need to examine simplifying the payments-system structure and eliminating some competing entities. Nonbanks have proven that substantial profits and market share can be garnered by piggybacking on the payments system that banks provide. Banks would do well to learn from this."

In 1994 and 1995, the Bank Administration Institute and Boston Consulting Group put out another two-volume study, "The Information Highway and Retail Banking." It urged the industry to move boldly into electronic delivery systems before faster-moving technology companies forced them off the road.

David Van L. Taylor, the institute's executive vice president who oversaw the project, said recently: "The payment system just keeps moving out further and further, and banks could be left sitting with a little piece of it if they're not careful."

Mr. Furash, a student of banking history with more than three decades of personal involvement, said the industry is struggling to define itself around information technology the way it did in the industrial era when factoring evolved from a manufacturing-related service to full-fledged commercial lending.

"The edges of banking and commerce are frayed at the technology end," he said. And he fears that, despite the current flurry of activity and concern, "there has yet to emerge a common view, a consensus, a framework for making decisions across the industry."

To Mr. Furash, the trade groups remain fragmented, the Fed's and the Comptroller of the Currency's explorations still lack focus, and "there is no forum" where the industry and related constituencies could hash out a vision.

"Where can you go?" Mr. Furash asked. "The Fed or Congress would seem logical, but I think this issue is too important to be left to politicians. We don't want a big government role, but we want a traffic cop."

The Bankers Roundtable report called for measures to "overcome the internal fragmentation of bank payments system activities" and "a forum to bring banks together."

Elliott McEntee, president of the National Automated Clearing House Association, has floated the idea of a Payment Systems Oversight Board, with representation from all key trade associations and operating entities like credit card companies and automated teller networks.

But as Mr. McEntee is learning from the controversy that followed his group's formation of the Electronic Benefits Transfer Council, a coordinating body for automating welfare and other government payments, even diplomatic overtures can be interpreted as power grabs.

"There is certainly a lot more discussion and activity" surrounding payments issues, Mr. McEntee said. "But you still don't see a lot of cooperation among associations and payment networks ... You have a lot of problems bringing all the interest groups together under a single, national perspective."

"The core issue is the definition of money," Mr. Furash said. "Who can issue it and handle it in its many forms, and how does that relate to the banks' historical role of promoting prosperity? Do U.S. consumers really want the New York City Transit Authority or Blockbuster Video to issue money?" he asked, referring to those organizations' access to stored-value or smart card technology.

"There is no debate on this," he said, "though here and there it begins to creep in."

The issue may come to further and wider attention after Thursday's House subcommittee hearing. For the first time in the series, Rep. Castle has invited a cast that includes bank executives, a consumer advocate, and operators of local stored-value card programs.

From the testimony of Frank Wobst, chairman of Huntington Bancshares, Columbus, Ohio, should come the first public details of a potentially bold attempt at collective action. Mr. Wobst is chairman of a Bankers Roundtable payments committee that has engaged Boston Consulting Group - the same team that worked on the BAI information highway study - to lay out options and make strategic recommendations.

The effort grew out of discussions over the last two years at the highest levels of the Washington-based Roundtable, essentially the top executives of the biggest U.S. banks. The group's consumer banking committee, headed by Chemical Banking Corp. vice chairman Edward D. Miller, resolved to tackle the issue, and Mr. Miller joined Mr. Wobst and several others on the payments panel, which insiders say has a "bias for action."

Among others slated to speak are Dudley Nigg, executive vice president for alternative delivery systems at Wells Fargo Bank, who is active in the Consumer Bankers Association's technology deliberations; Richard Wilhide, vice president of Wilmington (Del.) Trust Co., which is running a smart card project; Michael Karlin, president of Security First National Bank, the pioneering Internet institution; and Jim Brown, director of the University of Wisconsin's Center for Consumer Affairs.

"I will be talking about the concerns and responses of end-users," said Mr. Brown.

"These developments are important not just in terms of opportunities for the financial services industry - which is becoming very different from what we have traditionally thought of as financial services - but it goes to the peculiar nature of money and how consumers think about it," he said.

"It's hard to get too specific about some of these issues because the whole area is so amorphous at this point," he added. "But I'm there to talk about why this is important to consumers and how they relate to their financial transactions."

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