Passing another milestone on its journey to becoming the "bank of the future," Canadian Imperial Bank of Commerce has joined with Northern Telecom to develop electronic commerce products.
The two Toronto companies have each agreed to contribute up to $5 million annually to a joint research and development fund for electronic banking applications.
Among the projects slated for the next year are creating broader- bandwidth telecommunications technologies to enhance automated teller and kiosk functions, Internet and electronic shopping services, Mondex smart card tests, and electronic payment security and encryption projects.
Executives at Northern Telecom, which specializes in designing digital communications networks, said a similar alliance with a U.S. bank could be near.
In addition, consultants said, the CIBC arrangement could spawn other alliances between financial services and telecommunications companies.
Already, Lucent Technologies Inc., a Murray Hill, N.J., spinoff from AT&T Corp., has struck a deal with Visa Interactive to develop telephone banking and bill payment services. A PC-based bill payment service is not far from operation, according to a Lucent spokesman.
"Why not partner?" asked John Kennedy, a consultant in Burlington, Ontario, at Technology Solutions Canada, an offshoot of a Chicago-based consulting firm. "By combining research and development, you can advance the goals of both companies."
Canadian Imperial Bank, which announced the alliance Tuesday, has set up a prototype automated banking center at Northern Telecom's new world headquarters outside Toronto, where 3,000 employees will test the technologies.
The bank will take the lead in determining which applications to pursue with the goal of enhancing customer services, said executives familiar with the deal. The telecommunication company's role will be designing infrastructure to run the applications.
The prototype center includes kiosks equipped with two-way video links to Canadian Imperial Bank's call center, PC-banking terminals, and advanced-function ATMs.