Though online banking and bill-payment software have long been offered as discrete applications, the vendors that provide them are starting to integrate them with other important financial capabilities.
The goal, the vendors say, is to offer end users new services to manage their money and to make the existing services more efficient.
In some cases the drive to integrate banking software has prompted acquisitions, such as CheckFree Corp.'s purchase of Corillian Corp. and Intuit Inc.'s purchase of Digital Insight Corp. Others, including Metavante Corp., are simply making more of an effort to link products they already offer.
Susan Hawkins, a senior vice president with Metavante and its general manager for electronic banking, said her company has spent the past few years improving its online banking product. The project has focused on integrating other Metavante products, including electronic payment and presentment, document image management, and personal financial management.
Ms. Hawkins said one of the keys is making sure Metavante's online banking software is closely linked to its core processing product, which helps it handle transactions in real time. "The integrated system is better positioned to meet the needs of 'on-demand' consumers — that growing market of consumers and businesses that are looking for everything to be done in real time," she said in an e-mail.
Paul T. Danola, a Metavante senior vice president and its group president for enterprise solutions, said that many banks would like to work with fewer vendors, which is usually more cost-effective. "At the end of the day, customers want as much of the banking solution suite from one supplier," he said.
Dan Schatt, a senior analyst with Celent LLC's retail banking group, said Metavante, a unit of the Milwaukee banking company Marshall & Ilsley Corp., has made great gains in integrating its various products.
As a core banking software vendor, it is in a particularly strong position to offer online banking services that banks will want, he said.
Mr. Schatt co-wrote "Retail Internet Banking Vendors: Luring the Laggards," a report published in February. It found that "core processors, which have traditionally lagged in a number of areas, have now emerged as frontrunners" in online banking.
It also found that Metavante had made the most progress among the core vendors in this space.
"In the past," Mr. Schatt said in an interview Tuesday, "many core vendors saw online banking and bill pay as ancillary products, but Metavante has taken a more strategic approach."
Having access to the core banking software makes it easier to move the valuable customer data in the core to other applications, Mr. Schatt said. "It's hard to provide the more strategic financial management capabilities without owning all three services — core, online banking, and bill pay."
Jeff Weikert, the senior vice president of CheckFree's consumer services provider unit, said "consumers have become more demanding of their financial institutions. When they use Amazon, or eBay, they become accustomed to a certain ease of use and they expect that from their financial institution. But banks aren't generally there yet in terms of having an integrated, seamless experience."
CheckFree, of Atlanta, bought Corillian, of Hillsboro, Ore., last month for $245 million. Mr. Weikert said that integrating Corillian's online software with his company's bill-pay capabilities is a top priority. He said that combining the two applications will make it easier for his company to promote services, such as electronic invoices or emergency bill payments, which are currently available, but are often hard for people to find.
Making the online channel more useful will make people use it more often and hence make it a more effective sales tool, Mr. Weikert said. One study said that sales from the online channel account for about 3% of a bank's sales now but should reach 13% by 2010.
Paul Rosenfeld, a vice president with Intuit and the general manager of its small-business solutions group, said the most common online banking activities are checking balances and monitoring activity.
His company's research, however, shows that "consumers' range of needs is much, much more broad than what today's online banking solutions actually do," he said.
Intuit, of Mountain View, Calif., bought Digital Insight, of Calabasas, Calif., in February for $1.33 billion. Intuit is working to integrate its Quicken financial management software and QuickBooks small-business accounting software with Corillian's online banking capabilities. It plans to begin testing the consumer version this summer and roll it out in the fall. It will test the small business software early next year.
