Bit by bit, bankers who have been suspicious of Microsoft Corp. are finding terms on which they can at least coexist with the software giant.

Whether because of changes in Microsoft's approaches or a reassessment of their own attitudes and technological capabilities, many bankers are turning favorable even toward two Microsoft initiatives once regarded with great apprehension.

MSFDC, the software company's electronic bill payment joint venture with First Data Corp., and Investor, the Microsoft Web site that helps subscribers manage their portfolios, still are not free from controversy. But a thaw is evident.

"In both cases, the reaction is changing among banks," said Lewis Levin, general manager of Microsoft's desktop financial division.

The bankers "are coming to appreciate the role of Microsoft and that MSFDC provides an opportunity for banks to build a relationship with customers," Mr. Levin said last week as Microsoft was rolling out a new wave of financial services offerings to banking and brokerage customers.

But it takes two for a kinder and gentler relationship, and in their public appearances and sales pitches, Microsoft spokesmen are conveying a simple and direct message to financial institutions. The company's business model is based on software licenses, they say, not transaction fees or other approaches that would impinge on banks' customer-relationship prerogatives.

Microsoft does not take a cut of the revenue when consumers buy or sell securities from brokerages linked to the Investor site, said Investor product unit manager Chris Payne. It instead garners revenue through advertisements, subscriptions, and sponsorships.

With the announcement of the Investor Platform Kit that will let financial institutions use Microsoft components on their own Web sites, Mr. Payne said, the company was both responding to financial institution requests and returning to its traditional roots in software.

"We are looking for a per-user pricing fee, just like a software sale," said Mr. Payne.

With nearly $1 billion of the company's $12 billion annual revenue coming from financial institutions, Microsoft is increasingly public about its need not to upset its banker friends.

While the MSFDC venture initially brought objections from bankers who saw its companies grabbing a degree of control as well as payment revenue, Microsoft and First Data officials have found a way to stress the benefits for bankers.

"The holy grail of the Internet is to capture the consumers' eyeballs and have the opportunity to sell," said Chuck White, co-president of MSFDC and a First Data representative on the venture's four-man board. (The others are Mr. Levin and Darren Remington of Microsoft and Hank Denero of First Data.)

"The problem is the cornucopia of sites," Mr. White said. "Bill payment is something that consumers have to do and is a guarantee of return traffic."

Microsoft and First Data have sweetened the pot by offering financial institution participants a chance to share in the revenues expected from charging billers 25 to 35 cents per bill presented and paid.

Moreover, by stressing the system as a "real-world convenience enhancer" rather than an alternative to existing payment systems, Mr. Levin and others have tried to defuse lingering doubts that MSFDC would bypass existing payment and clearing methods.

MSFDC advocates have argued that banks could use the system to extend biller relationships and leapfrog into new electronic lockbox services.

Although only four banking companies and one more diversified company have publicly committed themselves to testing the system - Banc One Corp., KeyCorp, Norwest Corp., Wells Fargo & Co., and GE Capital Services - others still on the sidelines seem much less standoffish.

"To me, it makes no sense to try to reinvent this technology," said Gary Messing, first vice president of interactive banking for Firstar Corp., Milwaukee.

Many financial institutions are also hoping that Microsoft's involvement in the venture might make establishing connections to MSFDC easier than competing services such as that of Checkfree Corp.

For a bank, such systems are "compelling because of the range of solutions that Microsoft is bringing to the market, particularly for financial institutions," said Mr. Messing.

For example, the possibility of connecting bill presentment and payment systems to programs built on Microsoft's Windows NT operating system and the Microsoft Internet Finance Server Tool Kit can seem more workable than doing extensive computer translations.

At recent industry forums, an increasing number of large and small institutions tend to dismiss the once common concern that Microsoft's brand would dominate in the consumer's mind.

While employing a common navigational scheme designed to facilitate easy consumer use, mock-up models demonstrated by MSFDC officials last week clearly demarcated biller space from the bank's virtual real estate on the Web site. Just as billers own customer-purchase data and banks own transaction data, each party also decides who, if anyone, can advertise on its section of the Web site.

Referring to the prospect of a large bank's advertising on a biller's Web site, Carl R. Tullis, assistant vice president of Staten Island (N.Y.) Savings Bank, said, "If I'm not the bank they are sending the customers to, I'm out of the mix."

Several of the institutions participating in MSFDC pilots are also members of Integrion Financial Network, the home banking consortium that is allied with Microsoft rivals International Business Machines Corp. and Checkfree.

But banks participating with one seem increasingly less troubled by any potential conflict.

"We are not concerned about MSFDC, if we participate in it," said John R. Beran, chief information officer of Comerica Inc., "because it still uses the bank brand."

With its product not due for launching until October, the Microsoft- First Data venture has managed to generate back-handed compliments from others.

"MSFDC has advanced the question of bill presentment by a very large degree," said William M. Fenimore, managing director of Integrion in Philadelphia. He called attention to the way it has extended its focus beyond mere bill payment into both presentment and payment.

"What they envisioned and portrayed nine months ago is clearly different from what they present now." he said. "We have gotten in and affected it," notably regarding shared pricing with financial institutions.

For the moment, MSFDC intends to stick with hosting a "post office" computer storage facility for each bill to be presented within the system. Concerns about getting a bill to a customer of a bank participating in a competing presentment system might force MSFDC to reevaluate that system, Mr. Fenimore said.

"I have seen a remarkable change" in MSFDC's approach, said Elliott McEntee of the National Automated Clearing House Association. "They are more biller-friendly and more banker-friendly."

"If you are focusing on the end-consumer relationship, MSFDC doesn't necessarily pose a threat," said Rockwell F. Clancy, executive vice president of the Bank Administration Institute in Chicago. "But if you are also on the manufacturing side of financial service products and are in competition with First Data Corp. for processing, then that is a different question."

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