Twelve years ago, when Meca Software Inc. first shipped its Managing Your Money personal finance system, PC-based banking seemed a remote possibility.
The personal computer, then several times more expensive and a fraction as powerful as now, had yet to reach the average consumer. And the earliest proprietary PC-based banking programs, such as Chase Manhattan Corp.'s Spectrum, were in their infancy.
As the PC has gained greater acceptance, Meca - once the top dog in personal finance software - gradually has ceded share and has settled into a distant third place behind Intuit Inc. and Microsoft Corp.
Given this drop in prominence, it would be easy to write Meca off as a long shot in the race among home banking service providers - except that it is experiencing a rebirth of sorts.
Recently acquired by NationsBank Corp. and BankAmerica Corp., the Fairfield, Conn.-based company now has both the financial backing and bank- friendly image that Meca chief executive Paul Harrison believes can make Meca an increasingly powerful force in home banking.
And, unlike years ago, it appears to be making a push in the home banking market at just the right time.
"What we are trying to do is work with the financial institutions and provide them with a piece of software which will distinguish the bank, differentiate the bank, and truly is a product controlled by the financial institution," Mr. Harrison said.
Since its acquisition two months ago, Meca has repeated this bank- centric message, which, not coincidentally, has been echoed by the other major players in PC-based banking.
In recent months, Intuit and Microsoft have each partnered with several major banks to offer customers access to their accounts via the personal computer.
Mr. Harrison however is quick to caution financial institutions against his formidable competitors, claiming that a year after branding banks as "dinosaurs" the prevailing forces in personal finance software have not really changed their tune.
In a speech at the recent Home Banking Forum in San Francisco, Mr. Harrison shot this barb at the preceding speaker, Scott Cook, the founder and chief executive of Intuit: "Unlike some of our competitors, we didn't become bank-friendly in the past 45 minutes."
Microsoft's aborted attempt to buy Intuit beginning last October created a scare among financial institutions that has seemingly dissipated in the two months since the deal collapsed.
However, though the acquisition is off, Mr. Harrison warned, the heat from nonbank competition in home banking is still very much on.
"It's convenient or comfortable to feel the threat has disappeared because Microsoft and Intuit did not get together," he said. "But previously we had a giant with a gun in each hand, if they got together. Now you have two giants with one gun.... The reality is their strategies are very similar."
Conversely, Meca's strategy, Mr. Harrison contends, is focused on working with and providing its products through banks. Its new ownership places it in a position to compete more effectively against the rivals that have badly battered Meca's market share.
Meca has "taken closeness with the banks to a new level," said Adam Schoenfeld, a consultant with Jupiter Communications Co., a New York-based consulting firm. "This is a bold experiment in banks owning a software company."
NationsBank and BankAmerica jointly bought Meca from H&R Block for $35 million - a small percentage of the $2 billion that Microsoft was ready to fork over for Intuit.
The tax preparation giant had itself owned the software company just over a year before putting it up for sale. Industry insiders at the time surmised that Block might have bitten off more than it could chew with Meca, lacking the deep pockets of Microsoft or the strong customer base of Intuit.
Mr. Harrison agreed that Meca's former parent seemed unwilling to heavily commit financial resources to get the company back on its feet. Block instead had seen Meca as a good fit with Compuserve, its on-line service subsidiary.
But "there was very little interest at Compuserve in working with us," Mr. Harrison said. "Block does not force synergies."
"As a result, Block needed to make a decision if they were willing to invest a lot of money over a period of time to create a new life for their business, or would they just prefer get out that business," Mr. Harrison said. "And they were not willing to make the investments required to be in this business."
Its new owners, by comparison, are eager to nurture the ailing software company and help renew its vigor.
NationsBank and Bank of America plan to take in a handful of other bank partners, who would also invest in the company and take ownership roles in it. Chase Manhattan Corp. and Banc One Corp. top the list of institutions rumored as possible entrants into such a venture. Spokesmen from both banks declined to comment on the possibility.
Meca is now overseen by a board of directors made up of two executives from each of its owner banks: Tom Peterson, a vice chairman, and Marty Campbell, senior vice president, of Bank of America, and Patrick Phillips, president of financial products group, and Amy Brinkley, corporate marketing director, of NationsBank.
The committee brings to Meca "the banking insight" it needs to get closer to the banks. With a strength in on-line banking, Meca will have an anchor service to help it compete with Intuit's Quicken and Microsoft's Money.
In addition to the plans for expanded ownership, Meca intends to tailor its software for 15 key bank partners, adding features to meet the needs of each of the particular institutions. It is hoped that these and other bank- aimed initiatives will lure potential partners to offer the software. Visa Interactive, the remote banking arm of Visa International, has also agreed to distribute the software.
"The strategic direction of the company has not changed at all," Mr. Harrison said. "Having two well-respected institutions like NationsBank and Bank of America buy into our strategy adds an instant credibility to what we're doing. A lot more people are taking us seriously than may have before."
Meca began to espouse a more bank-friendly approach when it was bought by Block and Mr. Harrison was put in charge.
Before that, Meca had been fighting a losing battle with Microsoft and Intuit on the retail shelf. Block preferred Mr. Harrison's scheme to redirect its attentions from the retail outlets to banks, and brought him up from his post as chief operating officer to replace then chief executive Dan Schley.
But Block proved uncertain in its efforts, and Meca has remained in a kind of limbo for almost a year now, while its competitors gobble up market share and pursue their own bank alliances.
Meca has often had the misfortune of being just ahead of or just behind the curve.
Micro Education Corporation of America, as Meca was originally known, launched the premier version of Managing Your Money in 1983. Within three years it was commanding 50% to 60% of the market, which at the time was under one million users, Mr. Harrison said. The software cost $150 to $199, and a personal computer cost several thousand dollars.
But, despite this apparent success, the company was losing money, and Marketing Corporation of America sold out to venture capitalists in 1987. This was when the roots of the PC banking revolution were first taking hold.
Intuit's Quicken took the market by storm in the late 1980s and early 1990s by dropping the price on financial software from $125 to $35. By 1992, with a price tag still over $100 and a minority of the market, "the retail battle had been lost" for Meca, Mr. Harrison said.
And so he began to change the company's direction.
Though Managing Your Money has been bashed for its complexity, Mr. Harrison said that about 60% of those who use the software enlist its sophisticated portfolio management component. But the perception that the software is made for the advanced user may be a problem for banks that are looking to lure PC neophtyes who have not used personal finance software, said Mr. Schoenfeld of Jupiter Communications.
He said Managing Your Money "may not be the best convenience tool."
He noted that Microsoft and Intuit are distributing their products through a variety of pipelines, "throwing scads of money" into development and promotion, and successfully courting the banks in the process. As evidence of such aggressiveness, he pointed to Microsoft's announcement Thursday that it would offer Money for free over the on-line networks for two months.
Mr. Schoenfeld also pointed to the potential culture shock of placing a "freewheeling software company" into the hands of "staid bankers."
"Banks don't necessarily know how to sell software," Mr. Schoenfeld said. "(Meca) is in a very perilous situation."
But, confident in his new backing, Mr. Harrison insisted that though one battle may be lost, the war in on-line banking has just begun.
Meca will make a minor upgrade this October, followed by a major release sometime in early 1996. The latter may include a brokerage component. Mr. Harrison said the focus is less on individual features though, and more on the overall strategy that he believes can yet help Meca fight its way up through the ranks.
"What's going to make this a better mousetrap is not that it's going to display the bank's name better on the screen or reconcile the account any better," he said. "What's going to make this a better mousetrap is that it is supporting the marketing initiatives of the financial institution."
