The Banking Industry Technology Secretariat is shifting its strategy for steering the future of electronic payment services into high gear.
The secretariat, an offshoot of the Bankers Roundtable, has invited dozens of financial institutions, technology providers, consultants, academics, and others to enter into a formal dialogue on how best to develop "a real-time electronic payments and delivery system."
The tactic may not be quite as benign as it sounds: The secretariat, supported by some of the most influential chief executive officers from among the Roundtable's big-bank membership, is intent on exercising control over emerging payment technologies.
And companies that fail to respond to the "request for information" that went out in recent days will be frozen out of further participation in whatever the secretariat undertakes.
The stated mission of the secretariat, known by its acronym Bits, is to foster payment and service innovations that "spur competition, strengthen the bank-customer relationship, and enhance bank brands."
One of Bits' key motivations is to bring the historically chaotic and fragmented payment systems under some degree of coordination.
With the invitations issued over the last week, Bits aims "to move solidly and quickly ahead in electronic banking development," said Anthony Cluff, executive director of the Washington-based Bankers Roundtable. He is the acting executive in charge of Bits, pending appointment of a permanent CEO.
The process is on a fast track and has some people in the industry concerned that they do not have enough time to adequately address matters of grave strategic importance. But the criticisms are being voiced quietly and behind the scenes, as some of the most powerful people in banking are perceived as being firmly behind Bits' aggressive agenda.
The document in the mail, "Request for Information on Real-Time Payment Systems for Electronic Transactions," calls for responses to a detailed series of questions by March 11.
The questions range from the general (how a real-time payment system is defined and whether it is feasible or desirable) to the specific (alternative methods of transaction security, and the roles banks and other organizations might play in those processes).
Responses "will be used to assemble a compendium of industry knowledge" about payment technologies, delivery alternatives, and how they fit in the Bits mandate, the organization said.
By the first week in April, during the Bankers Roundtable annual meeting in Naples, Fla., the Bits board hopes to be in a position to "come up with a game plan" based on the responses, Mr. Cluff said.
Parties that want to learn more about what Bits has in mind can call into a teleconference Thursday. Only if they formally respond to the Request for Information will they be eligible to get subsequent "requests for technology" or "requests for proposal" to design or build any resulting infrastructures or components.
"This is an early and critical step" for Bits, Mr. Cluff said in an interview. "We are casting a wide net for as much feedback as we can get.
"Once all the information is evaluated, we expect to put forward a design for a real-time electronic banking and payment system. We are now asking what it would take to put that together."
The Roundtable and Bits, initially galvanized by a confusing array of technological changes and perceived competitive threats from nonbanks such as Microsoft Corp., are moving into uncharted territory.
While bankers and their technology experts have at times called for more collaboration and coordination in payment systems-this was a recommendation in a 1994 Furash & Co. report commissioned by the Bankers Roundtable-the idea has never come this far.
Bits may become custodian of an "acceptance mark" or "seal of approval" granted to systems that meet its standards. It contemplates putting itself, on the banking industry's behalf, in a position to set performance and integrity benchmarks that computer, software, and telecommunications suppliers would have to meet. Bits might also initiate or encourage development of a banking-centered certification authority for security of Internet transactions.
The secretariat carries unprecedented political weight from having the CEOs of Citicorp, NationsBank Corp., BankAmerica Corp., First Union Corp., and others on its board, plus community bank representatives from the American Bankers Association and Independent Bankers Association of America.
Frank Wobst, chairman of Huntington Bancshares in Columbus, Ohio, who headed the Bankers Roundtable task force that presaged the formation of Bits last September, is the body's chairman.
William Randle, a Hungtington senior vice president and close adviser to Mr. Wobst and Bits, called the request for information "a major stake in the ground."
It sends a message to the banking industry and its technology partners- or potential adversaries-"that the industry will dictate its own future with regard to technology as it affects the safety and security of the payment system and the privacy of information."
In other words, any future standards or protocols for electronic banking and payments, along the lines of the Secure Electronic Transactions protocol for credit cards or the Open Financial Exchange proposal for home banking, "will have to be sanctioned by Bits if it is to be a banking standard," Mr. Randle said.
The volume of responses to the request for information will indicate if Bits has significant support beyond its commercial banking core, particularly among technology vendors.
"I suspect you'll see a lot of responses but I'm not sure how in-depth they can be" because of the close deadline, said one recipient of the package, who asked not to be quoted by name. He also wondered how willing banks will ultimately be to endorse the notion of an entirely new payments infrastructure on top of other investments they have already made.
This observer and others have pointed out that several of the banks on the Bits board have already made a significant commitment to Integrion Financial Network, the home banking consortium organized by International Business Machines Corp.
"We are fairly receptive to (Bits) and applaud the fact that very high- level folks in large organizations have electronic commerce and electronic payments on their radar screens," said Dennis Lynch, chief executive officer of NYCE Corp., an electronic banking network representing a key constituency that Bits wants to reach. There is also some overlap between banks on NYCE's board and that of Bits.
Mr. Lynch said the industry "has not done a good job organizing and coordinating" and Bits is in a position to promote "more effective leveraging of infrastructures already built." But he acknowledged that Bits faces a challenge communicating its specific goals and uniting the banking industry's various factions.