Major software companies that have been feuding over technical aspects of on-line banking announced their intention Thursday to adopt a common technical standard.
Bowing to calls from the financial services community for more consistency and simplicity, Checkfree Corp., Intuit Inc., and Microsoft Corp. said they have put their rivalries aside to stimulate acceptance of banking by personal computer.
The companies plan to cull from their separate approaches a single Internet-based specification called Open Financial Exchange. If all goes as planned, by next fall any financial institution or processor will be able to offer and support virtually all electronic service alternatives faster and more economically than under the current patchwork.
What's more, Open Financial Exchange is expected to be adopted by - or at least be compatible with the offerings of - most of the significant home banking system providers, including Edify Corp., Online Resources and Communications Corp., Security First Technologies, Visa Interactive, and the IBM-led Integrion consortium.
In a press conference and statements Thursday, officials of the three principals hailed their steps toward "convergence," received approving feedback from bankers, and predicted rapid acceptance of Open Financial Exchange.
A draft specification will be posted for comments Monday on the Checkfree, Intuit, and Microsoft Web sites, and the schedule calls for a final version to be published within a month.
Intuit and Microsoft, whose Quicken and Money programs compete fiercely in the personal finance software market, respectively, decided it no longer made sense to fight over "what plug fits into what socket," said William H. Harris, executive vice president of Intuit.
"Banks and brokerages absolutely asked us to do it," said Lewis Levin, vice president of Microsoft's desktop financial division. "In all the meetings we have had with financial institutions, every one of them said, 'Bring this stuff together.' There was a speed bump (preventing progress) toward effective exchange" of information.
"We were looking for this convergence," said Michael Papantoniou, vice president at Chase Manhattan Bank. Microsoft and Intuit "have listened to their customers - the banks - and they have converged standards."
"We can write (our software) to one specification and lower the development cost," said Mr. Papantoniou. Chase could deliver up-to-the second account balances to users of Quicken as easily as to the users of Microsoft's Money.
Open Financial Exchange, or OFX, will be derived from Microsoft's Open Financial Connectivity, Intuit's Open Exchange, and Checkfree's proprietary payment protocols.
Intuit and Microsoft said they will incorporate OFX in the next versions of Quicken and Money, due to be released in the fall.
Groups outside the inner OFX circle seem to be lending their support.
The 16 banks in the Integrion Financial Network will be able to use Open Financial Exchange to link to both Microsoft's and Intuit's products beginning this fall, the software companies' officials said.
A full-scale integration of Integrion's Gold message standard with the Microsoft-Intuit standard is expected to take place in 1998.
Visa Interactive, Security First Technologies, and Edify are also expected to integrate the Microsoft-Intuit-Checkfree approach.
"Anything that gets to a common set of standards is extremely positive," said Bruce Luecke, general manager of Banc One Interactive Delivery Services.
"Customer choice is very important," said Edgar Brown, senior vice president of First Union Corp. "When banks end up making one choice over the other because there is no single standard, that minimizes customer acceptance."
By eliminating confusion about the banks' connectivity to the various software packages and vendors, "we have the biggest opportunity to expand the category because financial institutions can make a long-term commitment," said Mr. Levin of Microsoft.
He said negotiations between Microsoft and Intuit began about a month ago, growing out of their concurrent work to link their latest software to Checkfree, the largest home banking payment processor since its acquisition of Intuit Services Corp. last September.
"We are always looking at each other out of the corners of our eyes," Mr. Levin said of Intuit. "Each of us separately had been getting rumblings from financial institutions, so we each made tentative, friendly calls to each other."
Some speculated that efficiencies springing from the deal could make Atlanta-based Checkfree the biggest winner.
"For us, this represented the maturing of what had heretofore been a collaboration" with both Microsoft and Intuit, said Checkfree spokesman Matthew Lewis.
Some problems may be brewing beneath the surface harmony.
Analyst Karen Epper of Forrester Research, Cambridge, Mass., noted that Visa's interactive banking unit was not directly involved in the OFX discussions and "keeps holding on" to its own ADMS protocol. "You can't have a standard unless you have the leading companies on board," she said.
A single standard "is probably not what the industry really wants," added Ian Morrow of the Gartner Group in Stamford, Conn. "Do I want there to be just one credit card company? No, I want MasterCard and Visa. I want competition."
"We are not in the business of making (OFX) the only standard in the industry," said Paul Harrison, chief executive officer of Meca Software, which is owned by several banks and makes Quicken competitor Managing Your Money.
"We have some very important customers using Visa Interactive, Integrion, and Checkfree, and we will have to huddle with our customers and take their lead" before deciding if Meca will support Open Financial Exchange.