The Intuit-Microsoft battle is shaping up as home banking's version of Coke versus Pepsi.

Microsoft Corp. has made what it considers a direct attack on Intuit Inc.'s dominance in the personal finance software market. In the unaccustomed position of playing catch-up, Microsoft is offering banks a wide choice of processors for home banking transactions that run through its Money software.

Up for grabs are the thousands of banks that have yet to make their software decisions, and that Microsoft and Intuit see as a significant distribution channel for their products.

Market researchers say Intuit's Quicken software controls about 80% of the personal finance market. Microsoft's Money handles around 15%.

Meca Software Inc., a joint venture of several major banks led by BankAmerica Corp. and NationsBank Corp., is still a relative also-ran with its Managing Your Money software.

By creating a technology standard called "open financial connectivity," or OFC, Microsoft has built a path for banks to connect to Money through the Internet. And by signing seven third-party processors to settle the transactions, Microsoft has given banks choices for offering Money services.

Intuit, by contrast, has historically steered all its bank partners to a subsidiary, Intuit Services Corp., which was also Microsoft's first - and until recently its only - processor. Through the unit, Intuit claims to provide the "one-stop" support that banks most desire.

Only recently has Intuit taken steps toward more "open" options such as the Internet and the America Online computer network. Intuit also recently announced its first two data processing partnerships - with the bank-owned companies M&I Data Services and Electronic Payment Services Inc.

"Microsoft is trying to be in love with everyone, and Intuit is being more selective and cautious," said Alfred S. Dominick, who handles retail products at M&I Data Services.

"To me, it will be a situation where some people prefer Ford, and some people prefer General Motors," said Mr. Dominick. "Quicken has an early lead, but the race is only a quarter over."

So far, 58 banks have signed up for Microsoft's new service, which the Redmond, Wash.-based software giant began promoting in March and which should be up and running by yearend.

"Essentially, what this allows banks to do is to build components of Money into their Web sites," said Lewis Levin, general manager of Microsoft's desktop finance division. "All of the screen 'real estate' is the bank's."

Taking a different tack, Intuit chairman Scott Cook last month unveiled BankNow, which he described as an easy-to-use home banking service that banks can offer through the Internet or America Online. BankNow, which should come to market in the fall, is being offered free to banks. Intuit Services Corp. stands to collect fees from processing consumer-initiated transactions.

Although banks still must use Intuit Services Corp. to support banking via Quicken, Intuit's recent decision to work with third-party processors blunted some of the criticism of its inflexibility.

Executives at Intuit in Menlo Park, Calif., said it alone gives banks one place to go for personal finance software, a home banking program, and processing services. "Folks are forgetting that banks outsource most of their processing, and that's what we're trying to offer," said spokeswoman Sheryl Ross. Microsoft's game plan is to offer simple and direct connectivity to its Money software, and to tout the bank-friendly aspects of its approach. Bankers have blanched at paying Intuit's rates of up to $7 a month per customer.

But some bankers question whether Microsoft is an ideal partner.

"We want to come to the marketplace with a brand that is ours and a bill-payment provider that will give us a cut of the action," said Robert B. Hedges, executive vice president responsible for Fleet Financial Group's home banking division.

Believing that Intuit and Microsoft failed on both those criteria, Fleet joined the Meca consortium pushing Managing Your Money. It will introduce home banking in the fall.

Seeking to differentiate itself from Microsoft and Intuit, Meca forswears any future interest in the consumer. "We will never censor the products and services that a bank wants to offer their customer five years from now," said Meca president Paul Harrison.

Still, Microsoft executives explicitly want to reverse their company's predatory image. Bankers and analysts have softened their views of Microsoft - which has had a hard time shaking chairman Bill Gates' oft-quoted "dinosaur" comment - and have hardened their opinions of Intuit.

"I would view Intuit as a very closed solution," said Marc Singer, an electronic commerce consultant in McKinsey & Co.'s San Francisco office. "Microsoft is evolving toward an open solution.

"I think what Microsoft has done is quite interesting and changes the game for everyone," he said.

Microsoft officials say their goal is to be the leader in providing software tools to financial institutions, including future technologies that will facilitate banking over the Internet.

Some people question whether the open financial connectivity standard lives up to its name.

"An open system happens when the masses call it open, not when some company comes and says, here is an open specification," said Meca's Mr. Harrison. "In the end, it is the banks that will decide what the communication standard is, not a software company."

Although Meca plans to broaden its base beyond the five banks that now own it, so far only NationsBank and BankAmerica have begun offering services based on Managing Your Money.

Despite Meca's bank ownership, many analysts said Microsoft and Intuit hold the key to the future of home banking.

Phoebe Simpson, an analyst at Jupiter Communication, agreed, called the publication of OFC "a defining point between Microsoft and Intuit. Microsoft has decided not to make the investment in being a middleman, and it will definitely pay off for them."

First Union Corp. is one institution not yet ready to choose a single personal finance software package. It is offering home banking through Money, Quicken, and others.

"Microsoft has targeted a product toward the consumer that wants to manage relationships with multiple financial institutions," said Edgar D. Brown, First Union's senior vice president for alternative delivery. "On the other hand, many of our customers have a total financial relationship with First Union, and we want to keep it that way."

Beginning in the fall, First Union plans to offer Meca's Managing Your Money along with Microsoft's Money. But bank officials would prefer a bank- specific version of Meca's software over Microsoft's.

At the same time, First Union will support all the major avenues to home banking - including the Internet - and allow consumers to make their choices.

"There are many consumers out there who are tremendously loyal to their banks and are willing to switch software in order to maintain the relationship with their primary bank," added Meca's Mr. Harrison.

But financial institutions also realize that no matter what other programs they are developing, it is hard to ignore Microsoft's marketing muscle.

"It makes sense in the long run for BankAmerica to work with Microsoft," said Mack Hicks, a BankAmerica vice president of interactive banking technology, He said the company has not "aligned itself with a particular strategy for Microsoft" but is "using a large part of their product suite."

"I was very impressed with the scope and the capabilities of the framework that Microsoft is elucidating," Mr. Hicks said, referring to OFC.

Mr. Levin of Microsoft contended that Money's market share is larger than commonly reported - perhaps greater than 30% - because the product comes bundled into many newly purchased personal computers. Among people who receive the product that way, 26% report they use it at least once a month, he said.

"We're actually in much better shape than would meet the eye," Mr. Levin said.

He also cited Pepsi-versus-Coke-style "taste tests" in which more participants with a preference chose Money over Quicken.

"Quicken has got an edge, because they're out with more versions and there's more functionality," he said. "That's a battle we're willing to fight on the merits of our software."

By promoting Money, Microsoft may be less interested in direct revenues than in advancing other technology offerings, like its Windows products and "Active X" programming language for the Internet.

"They want to be the technology provider - to a certain extent, they would give Money away," said David Renard, an analyst at Gartner Group in Stamford, Conn. "It really seems that their focus is residing more on the back-end technology and less on the modularity of the product."

In announcing BankNow, Mr. Cook portrayed the Intuit product as a bank- branded offering that could draw customers to banks that offered it.

"All the financial institution needs to do technically is to make one simple connection to Intuit," he said.

BankNow on the Internet will only sharpen the rivalry with Microsoft's Money.

The Internet "absolutely will be the predominant way that people - customers - get connectivity to their banks," Mr. Levin predicted. "Two years is the long term."

Both companies were careful to depict themselves as technology providers that provide users with greater control over their finances.

"We're not a financial institution," Mr. Cook said bluntly.

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