The Banking Industry Technology Secretariat has not let its lack of a full-time chief executive officer prevent it from reaching some harsh conclusions about banks' state of payment-system preparedness.

For a meeting of its board in early April, the secretariat is preparing a no-holds-barred assessment of how the industry, in its view, has lacked the planning and coordination it needs to deal with new technologies and new forms of competition.

The secretariat, known by its initials, was organized last year by the Bankers Roundtable to rectify such deficiencies. Its staff has since gotten down to enumerating them and developing some "potential recommendations," said Kit Needham, an American Bankers Association official on loan to Bits pending its naming of a CEO, which is said to be imminent.

At a meeting this week (March 19) sponsored by the Electronic Funds Transfer Association, Ms. Needham previewed the presentation being drafted for the high-level Bits board, which includes the chairmen of BankAmerica Corp., Citicorp, Norwest Corp., and NationsBank Corp.

The overriding conclusion was that U.S. banks-both individually and collectively, and in part because of the industry's fragmented structure- have not adequately focused on payment-system issues and must "radically revise" their management approaches.

The tone of Ms. Needham's presentation, on top of Bits' recently issued "request for information" from companies, associations, and institutions interested in helping promote a bank-controlled electronic payments infrastructure, indicates the organization's resolve to take swift and bold action on the banking industry's behalf.

Although it was the Bankers Roundtable, which represents the 125 biggest banking companies, that launched Bits, the secretariat reached out immediately to the ABA and Independent Bankers Association of America, giving two of Bits' 12 board seats to community bankers designated by those groups.

Ms. Needham's report to more than 100 EFT Association members in San Francisco was a further sign that the Roundtable and Bits intend to be open about their agenda and will welcome the like-minded on to their bandwagon.

Ms. Needham was critical of the way banks have allowed technology companies to control the development of specifications and standards for Internet payments and smart cards.

"I have been frustrated by the lack of banker participation" in standards committees, she said, noting that ABA standards activities are among her responsibilities as the association's director of services. One example was the Joint Electronic Payments Initiative, or JEPI, a standardization project of the World Wide Web Consortium and CommerceNet that Ms. Needham said had no direct bank participation.

She has also begun cataloguing dozens of such consortia, products, and projects that banks should be taking an interest in because they could affect payment systems and business relationships.

"Participation in all these things is good, but banks are not maximizing their participation," she said. "They have to learn how to manage it better."

One of the "potential recommendations" to the Bits board will be for each bank to fill the management gap by making an executive vice president or equivalent "explicitly responsible for payment systems and standards," Ms. Needham said. No longer is it practical for system participations and technical standards to be a part-time or voluntary concern, she added, because specifications like those for Internet credit card payments or home banking links could set the terms of industry-and cross-industry- competition.

Again citing personal experience, Ms. Needham said it is often difficult to identify who within a bank is responsible for its work with outside payment organizations and standards bodies. She said the Bits staff will recommend that individual banks designate and publicly announce their "official point of contact."

"We need a central focus on these issues in a bank," Ms. Needham said. "They have generally been seen as a cost center, not a focus of business strategy."

Bits, meanwhile, can play a coordinating role so that multiple banks do not have to join, say, JEPI. The dues and personnel expense could be shared.

Ms. Needham said barring any compelling business case to the contrary, Bits intends to be a coordinator and facilitator, rather than an "operating entity." There may be exceptions: the secretariat is considering creation of a certification authority to play a role in ensuring security of electronic payments, and it may issue a "seal of approval" to products and programs it deems worthy of consumer confidence.

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