Intuit-Meca Deal Eases Fears of Software Giants

Bankers are beginning to believe that software companies can be their friends-and on terms set by financial institutions.

One stumbling block was removed this week when Intuit Inc., the maker of Quicken personal financial management software, said it would permit the banking industry joint venture Meca Software to offer customized versions of Quicken.

Bankers had expressed fears about Intuit similar to those raised about Microsoft Corp.-that its personal computer software and powerful brand name could diminish or interfere with banks' relationships with customers.

Bankers feared being reduced to commodity providers, indistinguishable among the many companies listed on computer screens that are controlled by rivals from the world of technology. The Intuit-Meca agreement helps financial institutions control key aspects of the on-line financial experience.

"This indicates loud and clear that there are still many financial institutions that believe it is important to have a bank-branded solution," said David Fingerman, vice president of interactive banking and business development at Fleet Financial Group, one of the seven owners of Trumbull, Conn.-based Meca.

"In our experience with (Meca's Managing Your Money software), our customers found it easier when the look and feel of the on-line channel is consistent with the way banks display information through other channels," said Mr. Fingerman.

The desire for control and consistency had discouraged a powerful trio of Meca owners-Fleet, BankAmerica Corp., and NationsBank Corp.-from offering widespread customer access to accounts through Quicken or Microsoft's competing product, Money.

These banks were also leaders in Integrion Financial Network, the home banking venture that was widely perceived as a response to the threat posed by the major consumer software companies.

Given Integrion's neutral stance on matters relating to banks' connections with consumers, the hard feelings between bankers and software interests seem almost a thing of the past.

"It is great to see that we now have Quicken, the market-leading package, available in a tailored version," said Trace H. Poll, senior vice president of PC channel strategy at NationsBank.

Besides branding the software, he said, banks must also ensure "end-to- end" customer support to answer both technical and financial questions.

For Meca, which launched the personal financial software industry with Managing Your Money in 1982, reselling its toughest competitor's top product might appear humbling.

Not so, said Paul D. Harrison, Meca's chief executive officer and president, who joined the company in 1993 and managed it through the transition to bank ownership two years later.

Speaking about Quicken and Intuit, he said, "I have never had a problem with the product, but I have always had a problem with the business model."

Now with access to the software code embedded in Quicken, Meca officials will continue to hone their strategy of helping banks offer differentiated on-line services. Eventually, Intuit and Meca may broaden the relationship to include components from other Intuit products, said William H. Harris, executive vice president of Mountain View, Calif.-based Intuit.

"There is a segment of consumers that are much more comfortable receiving software from the financial institution," said Mr. Harrison. "They would like to have the benefit of an electronic relationship that is tightly integrated" between the bank and the software.

Intuit and Meca are not alone in offering customized software to banks. Home Financial Network and CFI Proservices routinely customize their home banking programs. Microsoft has cobranded its Money product over the last year with such institutions as KeyCorp, H.F. Ahmanson & Co., and Union Bank of California.

The growing role of the Internet in on-line service delivery is only likely to accelerate a shift that favors financial institutions over software vendors, analysts said.

Revenues from direct sales to consumers are "going to dry up in time, and Intuit sees that," said Cliff Condon, senior analyst for money and technology strategies at Forrester Research in Cambridge, Mass. "Intuit sees that its future will be dependent upon licensing fees from financial institutions."

Its partnership with Meca is likely to help Intuit tap a new revenue source without distracting itself from its central business.

"They needed to work with someone who could take that off their hands, and Meca has a good relationship with some good-sized banks," said Ian Rubin, an analyst who follows home banking for the Newton, Mass.-based Tower Group.

"The fact that they picked each other is a pretty good move on both of their parts," he said of Intuit and Meca.

Meca, long since overtaken by Quicken in its original software business, is also undergoing a strategic transformation. Meca's promotion of Quicken could spell the end of Managing Your Money. Last November, Meca laid off 50 employees as part of a broader restructuring to focus more on its Internet- based e-branch, a software product under development that is based on Sun Microsystems Inc.'s Java programming language.

Mr. Harris said the partnership approach would be valid for at least several years.

"There is a great unknown as to when consumers will move away from personal financial managers and onto the Internet," he said. 'Consumers are not ready to have their financial data stored any place other than their PCs."

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