PHOENIX - Magic Line Inc., the largest regional automated teller machine network in the Midwest, has formed an alliance that will bring home banking services to its 700 member banks.
Magic Line announced its venture with SmartPay Processing Inc., an Omaha-based provider of electronic banking and bill-payment services, at the Bank Administration Institute's retail delivery systems conference here.
The Detroit-based network plans to have electronic bill payment services available by the first quarter of 1995, and will follow with a series of additional home banking services soon afterward.
"We want to strategically offer added value for our members," said David A. Lind, chief operating officer of Magic Line. "With home banking and electronic bill payment services, we offer our member institutions an additional access point to the consumer - in their homes."
Magic Line members have requested home banking services, said Mr. Lind, and its more than 8 million ATM cardholders are ready for the convenience of banking at home.
Customers will not have to visit an ATM to take advantage of the bill-payment option; instead, they will be able to pay bill by phone or by using a personal computer.
Magic Line will handle the bill-payment settlement as its does its current ATM and point of sale settlement.
That's one of the real benefits of this alliance: since source settlement." said Mr. Lind.
All the networks are looking for additional transaction volume to achieve better economies of scale," said Richard Fitzgerald, vice president and director of sales for SmartPay.
"With the bill payment option, banks need no added backroom capability because Magic Line will be settling ATM, POS, and home banking transactions all together," he added.
Not only will this alliance allow Magic Line member banks to gain cost efficiencies and introduce a new service, but it offers the opportunity for fee income as well.
Magic Line as a network will not be handling the fees, but will let member banks set their own prices.
Once the bill payment rollout is complete, SmartPay has many other options in which Magic Line member banks may have interest.
For example, said SmartPay's Mr. Fitzgerald, banks could set up a services network that, on a local level, could compete with some of the services offered by America Online or Prodigy.
"Banks could offer a 24-hour, seven-day-a-week brokerage service," he said, "with Dow Jones reports on-line, and the ability to execute a trade in real time from your personal computer."
The fee potential, he said, would be great, while at the same time, banks would be building relationships with their customers.
SmartPay could set up a menu-driven auto financing program through which customers could get specifications, prices, and even pictures of new automobiles without leaving their homes.
If a customer expressed interest in purchasing a car, the next screen would prompt them with information on getting an auto loan - another value-added service banks could offer, Mr. Fitzgerald said.