The banks in Integrion Financial Network, the embattled on-line consortium closely associated with International Business Machines Corp., have put some restructuring options on the table.

The most radical, though perhaps least realistic, proposal would be to liquidate the two-year-old technology venture, said a source familiar with the organization's most recent discussions.

More likely would be a reshuffling and regrouping of the 17 owners-major North American banks plus IBM and Visa U.S.A.-that would result in a smaller number of participants willing to make required investments.

There is also a chance that as many as eight banks, separate from the primary owners, might share a seat on the Integrion board, each paying a fee to use the software.

Such scenarios, according to sources, have been under discussion for months-most recently at a Dec. 8 board meeting-as Integrion has had to respond to the diverging preferences of its members. Some have expressed reluctance to participate in the 1999 capital assessment, bringing restructuring issues to a head.

Through it all, Integrion management said last week, it has retained the owners' support and "intends to continue to be an influential player in the industry."

It is widely believed that Integrion will not continue in its current form.

"There is no chance that nothing will happen," said Bill Burnham, electronic commerce analyst at Credit Suisse First Boston in San Francisco. "Something has to happen because there are a lot of dissatisfied members and not a lot of confidence" in the current organization.

In response to an American Banker report Dec. 1 describing turmoil in the ranks, Integrion issued a statement saying that its owners had "unanimously voiced support for the Integrion organization, its goals, its management team, and its role in banking and electronic commerce. Integrion is a going concern ...."

Most observers doubt that the operation would be shuttered. "There are still enough banks committed to the consortium model," said Steven C. Franco, senior electronic commerce analyst at Piper Jaffray Inc. in Minneapolis.

Most agreed that having a core group of owners and a separate group of users makes the most sense. "That would streamline decision-making, which has hamstrung" the group, said one source.

"Integrion will wind up being a two- or three-bank proposition," said Gary B. Meshell, executive vice president of Benton International, the Perot Systems Corp. consulting unit.

Mr. Meshell is spearheading an effort to create a bank-owned bill presentment utility, Electronic Commerce Trust Co., that could challenge Integrion and its bill payment and presentment partner, Checkfree Corp. Mr. Meshell said he envisions a handful of Integrion banks wresting control from IBM and Checkfree.

"BankAmerica, Bank One, and maybe one other would offer bill payment and presentment, replacing Checkfree," he said.

BankAmerica is one of the few major banking companies that does bill payment processing in-house. Others include Citibank, Huntington Bancshares, and Mellon Bank Corp.

BankAmerica completes 65% of its transactions electronically, compared to 52% for Checkfree. The Charlotte, N.C., banking company has not announced whether it will do electronic bill presentment on its own or through an outside provider.

Bank One Corp. takes a hybrid approach. An Integrion owner, it has hired Checkfree to execute transactions. But-unlike most that outsource to Checkfree - it runs its own bill payment engine and keeps payer information in-house.

Bank One is also participating in a test with Transpoint, the bill presentment and payment venture of First Data Corp., Microsoft Corp., and Citibank.

Checkfree fills a role that would be a challenge for any bank, many observers said. "Bank of America relies on Checkfree to execute its bill payments outside the state of California," Mr. Franco said. The bank confirms that.

As with the Citigroup bank unit's involvement in Transpoint, banks may be leery of sending their customers' billing information to another bank for payment execution, the function Citibank contributes to the joint venture.

Another source noted that Checkfree has a patent on a form of risk modeling that lets it make payments on behalf of customers nationally. The model reduces the risk that Checkfree faces because it is not a depository institution, and it helps Checkfree transcend the geographic boundaries that limit most bank operations.

A wild card in Integrion's future is AT&T Corp.'s recently announced purchase of the IBM Global Network, the telecommunications infrastructure Integrion relies on.

In addition to AT&T's $5 billion purchase of the network, AT&T agreed to hand off its software development and computer center operations to IBM for 10 years. IBM would outsource to AT&T its internal telecommunications for five years.

"The way the deal is structured, each company is doing what it does best," said Richard Schurr, first vice president at Bank One in Chicago. He is optimistic that the arrangement will benefit the Integrion banks.

Rusty Carpenter, an IBM spokesman, said the members will get connectivity services from AT&T under the direction of IBM Global Services. "The sale to AT&T will have no effect on IBM's equity interest in Integrion," he added.

Rumors persist that IBM might sever its ownership ties to Integrion and separately market its home banking software-but there was no confirmation that this came up at the recent meeting. One source said this "has been discussed for at least a year."

One sure lesson from the Integrion experience is how difficult it can be to keep together a consortium of this kind. For example, Bank One is one of seven Integrion banks doing bill presentment pilot tests with Transpoint.

Each bank, depending on its degree of loyalty to Integrion or whether it is just along for the ride, brings a different perspective and level of commitment.

Observers of the technology scene say that the uncertainty of outcomes encourages diversification and hedging of bets. No one is sure whether Integrion, Transpoint, or anyone else has the right formula for its sphere of influence. Citigroup's significant equity commitment to Transpoint, for example, might mean it is participating in Integrion more to gather intelligence, some observers suspect.

The difficulty of securing consistent, across-the-board commitments invites the conclusion "that a large number of banks at the table in a consortium will not work," said Mr. Meshell.

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