Group PlansDefense of Bank Role in Web Billing

Several of the biggest banks in the United States are preparing to make a joint assault on one of the industry's most hotly contested technology battlegrounds.

In what some observers regard as a counterattack on Microsoft Corp. and its joint-venture partner First Data Corp., the banks are considering a joint venture of their own to prevent the emerging electronic bill presentment business from passing into nonbank hands.

Details are still sketchy as they trickle out of high-level discussions that have taken place over the last few months. It is not 100% certain that the bankers will go head to head with their collective competitive might against the perceived interloper known as MSFDC. Sources say the banks are certain at least to attempt some sort of counterweight in the form of standards or protocols that MSFDC or any other transaction processing entity would have to adhere to.

Ironically, this counterstrike scenario is unfolding in much the way MSFDC did in June as it passed from top secrecy to open secret and then full-blown product release.

The banks are entering the open-secret phase as confidentiality becomes increasingly difficult to enforce. The principals include companies represented on the board of the Banking Industry Technology Secretariat, which is the Bankers Roundtable's initiative to keep the industry in control of payment system developments, as well as Price Waterhouse LLP and Hewlett-Packard Co. in consulting roles.

Gary B. Meshell, director of Price Waterhouse's electronic financial services group, strongly hinted in a speech to an American Banker conference this week that a formal announcement by the banking combine is imminent. He described it as "a consortium chartered to build an industry utility for bill payment," and he put it squarely in the context of the MSFDC "competitive threat."

Just as MSFDC aims to create an Internet conduit for both delivery of bills and on-line processing of customer remittances, the banks want to define a "real-time bill presentment and payment system on the Internet," said a knowledgeable industry source.

The bankers' objective indeed sounds much like that of MSFDC. Lewis Levin, vice president of Microsoft's desktop finance division, struck either a preemptive or defensive pose at the American Banker Online '97 conference Tuesday in Phoenix, portraying MSFDC as a well-reasoned and economical proposition that will benefit billers, bankers, and consumers alike.

"MSFDC is a service capability being marketed by banks to their customers," Mr. Levin said. He emphasized that Microsoft is "not a competitor," does not project an MSFDC brand identity, and "doesn't own data" about customers or payments that rightfully belong to billers and banks.

It was not clear how much, if anything, Mr. Levin knew about the impending bank program. Matt Cone, Microsoft business development manager for on-line financial services, who reports to Mr. Levin, said, "We are aware of many initiatives among financial institutions, but we don't have enough information to comment on this one."

The effort is sure to be fraught with political sensitivities, which may help account for the continuing official secrecy. Except for Mr. Meshell, whose firm was retained as project manager, participants have shied away from making any public comments.

But inferences can be made about the bank roster and some of the concerns being aired.

Four banks on the Banking Industry Technology Secretariat, or BITS, board-BankAmerica Corp., Chase Manhattan Corp., Citicorp, and Wells Fargo & Co.-are on MSFDC's advisory board. There is also a strong BITS contingent in Integrion Financial Network, the home banking consortium spearheaded by Microsoft's and Hewlett-Packard's rival IBM Corp., including Banc One Corp., Citicorp, and NationsBank Corp. Integrion has a bill presentment system in the works.

David Fortney, Integrion's director of product development, said Thursday he had just begun to learn how the BITS involvement is shaping up. He said the membership overlap could be beneficial, with BITS coordinating standards and Integrion building an electronic payments infrastructure.

He pointed out that Integrion's reason for being dovetails with that of BITS and the partnerships that may now be emerging: "to defend the role of banks in the payment system.

"To the extent BITS does that well, it is good for Integrion," Mr. Fortney said.

One of the important behind-the-scenes influences is Huntington Bancshares of Columbus, Ohio. Its chairman, Frank Wobst, is chairman of BITS, and executive vice president William Randle is a vocal advocate of the BITS mission.

Mr. Randle's proposal for a banking industry clearing house tentatively called Electronic Commerce Trust Co., was an early discussion point for the shared bill payment and presentment concept.

Mr. Randle would not comment specifically on the current situation. But he underscored his support of three key values-"open, bank-centric, and non-exclusionary"-that would seem to leave room for MSFDC and Integrion to continue on their courses.

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