For the NYCE network, 1995 will be remembered as the calm before the storm.
In a year when other regional electronic banking networks have been creating processing ventures, joining in unusual marketing alliances, and expanding their services, NYCE seemed to be quietly integrating the operations of Yankee 24, the New England network with which it had merged in late 1994.
NYCE's surface calm, however, hid a flurry of activity, foreshadowing numerous products to be launched in the coming months. The first - a new home banking platform - was unveiled last week and will be ready for tests in the spring.
"What we are witnessing - and going through ourselves - is a change in orientation about what the networks are," said Richard P. Yanak, president and chief executive officer of Infinet Payment Services Inc., the Hackensack, N.J.-based company that operates NYCE.
"Shared networks had been viewed as a utility," said Mr. Yanak, who has the distinction of having administered the first multibank automated teller machine, in Bellevue, Wash., more than 20 years ago.
The utility mentality "was very much our charter up until, I think, the last few years," he said. "But now the networks' role is expanding to education, research and development, and product development. I view us as very much an extension of the banks themselves."
While monitoring changes in consumer desires, NYCE executives say they believe they have tapped into a drive for convenience that far surpasses a wish to get quick cash from conveniently located ATMs.
"Our research shows that consumers are ready for remote banking and bill payment," said Dennis F. Lynch, the network's chief operating officer and executive vice president of marketing and strategic planning. "There is a real time pressure to get a product to market."
To this end, Mr. Lynch hired Dori Shimoda, a much-trusted consultant to the network, as a full-time vice president of product development. Charged with finding ways to extend the use and profitability of all electronic banking activities, Mr. Shimoda and a small team got together to determine the appropriate way for NYCE to tackle the home banking phenomenon.
They saw that a good number of large banks had already aligned themselves with software providers like Microsoft Corp. and Intuit Inc. They noticed some banks, as well as at least one regional network, allying with Electronic Data Systems Corp. for its home banking technology. And they were acutely aware of possible competition from the two bank credit card associations and their assorted home banking and bill payment software and processing ventures.
After studying the available home banking alternatives, Mr. Shimoda's team suggested the most viable route for NYCE would be to build its own home banking processing platform - one that any of its member institutions could use to offer consumers access through types of software from banks, card associations, or technology companies.
Mr. Yanak said NYCE will offer more than just a conduit to Intuit's Quicken software, or Microsoft Money, or competing financial management programs for personal computers.
"With our new technology platform, we will also be able to facilitate the passing of financial information between the bank and the consumer," Mr. Yanak said. "One component is home banking. Another is bill payment. But there's much, much more.
"We won't have it all on day one, but we will have built the infrastructure to support more products, which we will be rolling out over the next year or so."
The NYCE executives point out that the company already has expertise in multibank settlements, as well as contractual arrangements with 1,236 financial institutions and their more than 28 million customers.
"We have the critical mass needed to develop an advantageous remote delivery service," said Mr. Yanak.
NYCE also intends to make available its own package of home banking and bill payment software sometime in 1996. The software, which will reside within the NYCE technological infrastructure, will support home banking and bill payment transactions conducted over touch-tone phones.
"It's home banking 'lite,' intended for a lot of our customers who want to offer just a basic kit, without all the bells, whistles, and charts that an Intuit or a Microsoft has to offer," said Mr. Lynch.
The technical platform is based on Tandem fault-tolerant processing hardware, similar to the system NYCE currently uses to run its core ATM and point of sale business at transaction volumes approaching 350 million for 1995.
Vicorp, a Connecticut-based firm with close ties to telephone companies, has already installed the software that will manage all the interactions with phones, screen phones, personal computers, ATMs, and any other device a consumer may wish to use to conduct banking transactions. Several NYCE members have already expressed interest in participating in pilots next year.
"We will be testing the service with a few of our large bank members because we want banks that already have a sizable constituency of users to jump-start the program," said Mr. Yanak.
He added that NYCE wants the test to be as close to real market conditions as possible. That means finding consumers who use different home banking packages, whether from banks, software vendors, or NYCE.
"We are impressed with the speed at which NYCE is moving," said Ronald V. Congemi, president of Star System Inc., the San Diego-based regional funds transfer network. "There's no question that NYCE has the technological know-how to accomplish this."
NYCE has sounded out a number of other regionals about their taking equity positions in its nascent home banking technology venture.
"I think that taking an equity position is a very strong possibility," said Stan Paur, president and chief executive officer of Pulse EFT Association in Houston.
Mr. Congemi said Star may also be interested, though he is continuing to investigate other options.
"NYCE is taking a very intelligent approach," said Mr. Congemi. "I believe that it is the only solution that accommodates first, second, and third-tier financial institutions."
A big bank, for example, might allow its customers to use any home banking software they like, and process the transactions through NYCE's central switch.
A bank that lacks the bigger institutions' financial resources, on the other hand, might provide its customers with NYCE's proprietary software, with a more limited set of transaction options available through the NYCE switch.
Either way, NYCE gets to use some of its available processing capacity and in the process increases its revenue stream.
"The small banks are going to get this technology one way or another," said Brian Derman, senior vice president of National Westminster Bank, a NYCE member. "As shareholders of NYCE, we can work together to create an open system, while improving the profit margins for NYCE."
"Largely, the top 10 credit card issuers are nonbanks. That's stupid," said Roger O. Goldman, executive vice president of National Westminster Bancorp, who suggested that banks have to take steps now to take control of home banking initiatives, lest they lose out to software companies.
NYCE doesn't intend to stop with a simple home banking platform. The network plans to introduce electronic bill presentment, through which utilities and other companies deliver bills in an electronic format to consumers.
NYCE also thinks it may be possible to sign contracts with insurance companies so that consumers could buy insurance, file a claim, and check on the status of their coverage through the NYCE switch.
"It comes down to who executes the best technology and comes up with the most feature-laden products and services," said Mr. Lynch. He clearly believes NYCE will be the one.