Several major banking companies have completed a yearlong feasibility study that could lead to the creation of a powerful new contender in the electronic bill payment and presentment market.
The principals are circulating a proposal to form a "bank-owned, shared utility" designed to help keep control of the emerging bill-processing business within the banking industry.
The entity would be named Electronic Commerce Trust Co., or ECTC, and would almost certainly include among its owners Huntington Bancshares of Columbus, Ohio, which initiated the project and is poised to play a key coordinating role.
But at $27 billion of assets, Huntington might be one of the smaller partners. First Union Corp., Mellon Bank Corp., National City Corp., Norwest Corp., and Wachovia Corp. helped fund the study, and Gary B. Meshell, a consultant to the group, said "at least seven banks have expressed interest in joining ECTC."
The organization would join others jockeying for roles in delivering invoices to personal computer screens and in processing the resulting electronic remittances. Much of the early attention in the field focused on MSFDC, formed in June 1997 by Microsoft Corp. and First Data Corp. The Denver-based venture recently added Citigroup as a shareholder and changed its name to TransPoint.
Checkfree Corp. of Atlanta also has staked out a strong position as the largest bill-processing company, and it has a close relationship with Integrion Financial Network, a home banking consortium that includes International Business Machines Corp., BankAmerica Corp., Citigroup, Mellon, Norwest, and Visa U.S.A.
Mr. Meshell, executive vice president of Perot Systems Corp.'s consulting subsidiary Benton International, and Huntington Bancshares executive vice president William M. Randle stressed last week that ECTC is not necessarily competitive with those other organizations but could pull together some lower-cost technology alternatives.
"This is potentially complementary to Checkfree," because ECTC is more focused on the wholesale than on the consumer end of the remittance, said Mr. Meshell, who began work on the project during his affiliation with Price Waterhouse.
Mr. Randle said he admires TransPoint's speed to market and Citigroup's opportunism in joining it. "But that leaves a lot of banks without having made a commitment yet, or they may be in Integrion and lacking a bill presentment product."
ECTC would work with networks, vendors, or other technology partners to serve the "biller/lockbox end of the bank" that Mr. Randle said has been neglected in many strategic discussions and is vulnerable to nonbanks' attempts to "control the billers." A byproduct of the formation of ECTC could be a "real-time payment system" with guaranteed funds, he said.
In the ECTC prospectus seeking $15 million for working capital and other purposes, Mr. Meshell is listed as interim chief executive officer. He said the "legal entity" could be created within two months.
He said he hopes to take the discussion further this week at American Banker's Online '98 conference in Boca Raton, Fla., which is expected to draw 450 people from the cyberspace banking community, along with 65 sponsoring and exhibiting companies.