BankAmerica Corp. and NationsBank Corp. said Wednesday that they had agreed to jointly acquire Meca Software Inc., a competitor of Microsoft Corp. and Intuit Inc. in the personal finance software business.
The banks said they were acting to preserve a role for their industry in the hotly contested market for interactive services, and they are inviting other banks to take ownership positions.
They agreed to pay $35 million to H&R Block for Meca - originally Micro Education Corporation of America - which the tax-preparation giant bought in 1993. The price indicates that many of the nation's larger banks would find it affordable to participate in what could become a Visa- or MasterCard-like utility for home-based services.
BankAmerica and NationsBank officials did not specify how many owners there would be, except to say the number would be limited and that they have received "preliminary inquiries."
In any event, they intend to leave Meca and its management in place in Fairfield, Conn., offering all institutions regardless of ownership status a "bank-friendly" software component for their remote service packages.
"Meca's strategy is the right strategy - aligning with banks and allowing the service to be controlled by the banks under their brand names," said G. Patrick Phillips, executive vice president of NationsBank. "Its Managing Your Money software is consistently rated 'best of breed,' and it made sense for us to look at it when Block chose to put it on the market" about six weeks ago.
Meca president Paul Harrison said more than 30 companies had expressed interest in an acquisition, and many of them performed due diligence before BankAmerica and NationsBank came to the fore.
"This is an exciting and emerging market, and we are both in a position of wanting to provide the best possible electronic financial services," said Bank of America vice chairman Thomas E. Peterson. "Meca is state of the art."
Meca has tried to portray itself as more favorable to bankers than either Microsoft or Intuit, which Microsoft is fighting Justice Department objections to acquire for $2 billion.
The Meca acquisition, which would be completed in 60 to 90 days pending regulatory approvals, is not directly related to the Microsoft-Intuit machinations, parties to the agreement said. But the timing could be advantageous, said William Randle, a noted home banking advocate and senior vice president of Huntington Bancshares Inc., Columbus, Ohio.
One of many observers who applauded the BankAmerica-NationsBank move as being in banking's best interests, Mr. Randle said Microsoft's legal problems could give Meca "an opportunity to get some things done."
The Managing Your Money software is sold through 7,000 retail outlets and has 600,000 users, giving it about 10% of a market that is dominated by Intuit's Quicken.
"We want to stress that Meca will continue with its strategy and that users will continue to deal with Paul Harrison and his team," said NationsBank's Mr. Phillips in a telephone interview Wednesday.
He said that to maintain competitive integrity Meca board members representing owner-banks would not get information about customer-banks' plans and contracts until they are publicly announced.
NationsBank and Visa Interactive, the card association's home banking unit, are each among Meca's allies, incorporating or customizing the software for individuals and small businesses that bank by personal computer. Mr. Harrison said he sees no reason why the Visa relationship cannot continue, though Meca may be perceived as a new industry-owned force.
Fraser Bullock, president of Visa Interactive, in which NationsBank is also participating, joined the chorus in praise of the deal: "This is positive news for the banking industry, (creating) another viable option for remote banking in terms of front-end software." He described it as "complementary to Visa Interactive's back-end processing."
Executives of MasterCard's Master Banking program could not be reached for comment.
Catherine Corby, director of retail strategy at Barnett Banks Inc., said many banks are likely to find a Meca affiliation less costly than other PC software options, including writing their own. "NationsBank and Bank of America are saying they want to do something better for the consumer than Quicken," she said.
James M. Grant, senior vice president for direct banking at First Chicago Corp., a Microsoft strategic ally in PC banking, expressed surprise at the multibank aspect of the purchase and said it is reminiscent of the formation of regional electronic banking networks.
"Time will tell if it's good," he said, "but it reflects that more and more consumers are banking electronically and banks are seeking to control their destiny."
Matthew Cone, business development manager at Microsoft who once worked at Meca, said he expects banks' direct involvement to make the product stronger for a "marketplace that continues to heat up."
Richard Comandich, senior vice president of U.S. Bancorp, another Microsoft partner, saw the Meca deal as a positive indicator for PC banking, but he said he thinks the bank-control issue is overblown.
"What really matters is the functionality you put at consumers' fingertips," he said. "Ownership is one option, which we applaud, but another is partnership, which we think is O.K., too."
"Banks are obviously very wary of financial software providers' inserting themselves between them and their customers," which could lead to "more deals of this nature," said Edward L. Neumann, senior consultant at Furash & Co. in Washington. "Whether banks will take the next step and purchase an on-line service provider is up in air."
