Digital Insight Corp. plans to use a Metavante Corp. funds transfer product as the foundation of a same-day person-to-person payment product that could reach almost every financial company.
The online banking vendor already offers Metavante bill-pay software to its banking clients. The transfer technology will be available to them next year, it said Wednesday.
Though many companies offer funds transfer products that send money through the automated clearing house network, Metavante's is different because it uses its NYCE debit network, which enables faster settlement than ACH transfers.
Metavante, the payments subsidiary of the Milwaukee banking company Marshall & Ilsley Corp., announced the NYCE transfer product in April 2005, but observers said use of it has been minimal.
These observers say Digital Insight will bring a large pool of potential users, though only about 200 of them use its current transfer products. In its second-quarter earnings statement the company said that it had 1,513 banking clients, generally small banks and credit unions.
Michal Geller, a director of product management at Digital Insight, said the Calabasas, Calif., company plans to improve the NYCE product.
The current NYCE product can send money between accounts at banks connected to the NYCE debit network; the network's Web site says 2,358 financial institutions were connected to it at midyear. Because the network treats transfers as debit payments, the money generally moves almost immediately; ACH transfers typically take one or two days to settle.
Mr. Geller said Digital Insight will initially offer transfers to all banks and will use the ACH network to move money to banks that are not linked to NYCE. But he said Digital Insight plans to work with other debit networks to make the product interoperable.
The result would be a same-day transfer product with the potential to reach every financial company connected to a debit network. The debit transfer product would not be available until the second half of 2007, Mr. Geller said.
"Currently, because we only have an agreement with NYCE, we have payments on the NYCE network, but we will be developing it in a way that you can send it off the network as well," he said.
Digital Insight now offers transfers using technology from CashEdge Inc. "Our current funds transfer product has a three-day payment option and a next-day payment option, and the plan with this is to try to do a same-day payments option," Mr. Geller said.
Gwenn Bezard, a research director at Aite Group LLC of Boston, said that Digital Insight is "ahead of the curve, as far as account-to-account transfers are concerned." By using Metavante's faster transfer product, it is "going the next step, beyond ACH," he said.
Metavante has tried to market its NYCE transfer product but has had few takers, Mr. Bezard said. "It's not like the volumes are very significant, but I know that a couple of banks are using it," he said. Because of its reach, Digital Insight will be "a very important sales channel for Metavante," he said.
Mr. Geller said that "very few FIs have used" the NYCE product. But "because of the breadth of our customer base and the breadth of our customers using our transfer product, one of the advantages from the NYCE perspective is we can bring it, in some ways, to more customers," he said. Incorporating the NYCE product into its line of funds transfer products would probably make the same-day transfer capability more appealing to financial companies, he said.
Metavante would not make executives available for an interview Wednesday.
Madhavi Mantha, a senior analyst at Celent LLC in Boston, said Metavante has probably struggled to sell its NYCE transfer product to financial companies that use other vendors for online banking and are reluctant to work with another vendor.
But the service should be well received by Digital Insight customers, Ms. Mantha said. "There has been a push recently to richen the set of services that are provided through online banking," she said.
People comfortable banking online may also find the same-day transfer capability appealing, she said. "There's definitely something that resonates with consumers. To some degree, it is an extension of online bill-pay behavior."
