Systems Inc., the software developer and payment processor. Experts said the move could jump-start the card association's stalled remote banking program. Under the new agreement, which has been rumored in the industry for more than a month, Servantis will replace Checkfree Corp. as the bill payment processor for the program, known as MasterBanking. The 15 financial institutions now participating are expected gradually to migrate from Checkfree to Servantis, according to A. Christian Fredrick, MasterCard's senior vice president of remote banking and U.S. strategic planning. None of these banks have committed to the new service, he added. "With the way the industry has changed in the past three years," Mr. Fredrick said, MasterCard and Checkfree have decided to go their own ways. MasterCard and Servantis both plan to market the Norcross, Ga.-based service company's Bank at Home software interface. The pair said they will pursue the possible use of screen phones and the Internet as delivery channels. MasterCard already offers services employing touch-tone telephones and personal computers. Some see the new alignment as a needed catalyst for MasterCard's home banking business. "MasterCard was dead in the water," said David Weisman, a senior analyst with Cambridge, Mass.-based Forrester Research. Phoebe Simpson, an analyst with New York City-based Jupiter Communications Co., said this may be MasterCard's way of "putting a fresh face on ... after being jilted on their (electronic commerce) standards agreement with Visa." By sacrificing the relationship with Checkfree, MasterCard appears to have found a partner that shares its home banking vision. But even a good match may not guarantee smooth sailing for MasterCard's remote banking program. "They're really putting everything at risk," said one bank executive involved in MasterBanking. Since the bank will have to go through a conversion to get onto the Servantis system, the banker said his institution plans to look at some other home banking partners. According to Mr. Weisman, MasterCard has had a "history of painful conversions," but he expects the card association will take care to make the Servantis conversions as trouble free as possible. Some said that MasterCard could lose several of its current remote banking participants; First Interstate Bancorp, Wells Fargo & Co., and Chemical Banking Corp. are considered potential defectors. However, observers said the program will almost certainly retain die- hard MasterCard banks such as Mellon Bank Corp. Mr. Weisman said the new partnership will result in several improvements, including the creation of a single data base to support different home banking front-end devices. This ensures that the information delivered over different devices will be consistent at all times. In addition, Mr. Weisman said, banks will have greater flexibility in customizing their home banking services through Bank at Home - already offered to customers by a handful of financial institutions, including USAA Federal Savings Bank. For example, a bank could offer on-line application services, even if other financial institutions in the program do not. The MasterCard deal also places Servantis, a unit of Welsh, Carson, Anderson & Stowe, in a better position to go public in the next 12 to 18 months, according to Robert Campbell, the company's president. Servantis has been beefing up its home banking capabilities in the past few months, most notably by acquiring bill payment processor Amresco Systems. Both Mr. Weisman and Ms. Simpson characterized the deal as a loss for Checkfree. But both also said that since the bill payment processing company is positioning itself to play in a broad spectrum of electronic commerce businesses, the loss of MasterCard is less damaging than it could have been had Checkfree been more dependent on revenues from home banking services.

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