Banks once feared Microsoft simply because its Money software threatened to disintermediate their customers. Now that Microsoft and Intuit have each introduced "Web-enabled" personal finance management strategies for 1998, sources argue that banks really have something to worry about.

Building on their mastery of the customer interface, Microsoft and Intuit are developing content that industry observers say, in effect, marginalizes the financial transaction. Seizing the opportunity to provide customers with financial information and more convenient ways to comparison shop for services, these two companies' Web-enabled software offers consumers regularly updated news, expert opinion and interactive programming so that they can make informed financial decisions.

In the case of Intuit, "financial marketplaces" will be created and upgraded in '98 so that consumers can actually comparison shop for term- life and auto insurance policies, home mortgage loans and small business services by rates and product features. Banks and insurers simply stack their products on Intuit's shelves where consumers peruse the market, deciding which products best fill their needs.

So how can banks-like Chase Manhattan, which agreed to take part in Intuit's mortgage marketplace-turn such "progress" to their advantage? If they can create value for customers beyond what Microsoft and Intuit offer, says Lewis Levin, vp of Microsoft's financial desktop division, who would like to see banks private label some of Microsoft's products and then add site features specific to their banks. Microsoft's financial desktop is comprised of Money, now with an interactive information and advisory Web site called Money Insider; Microsoft Investor, an investment research site; Marble, now called Microsoft Internet Finance Server Tool Kit; and the MSFDC electronic bill pay and presentment venture.

Intuit, on the other hand, is not building infrastructure for the banks (though Quicken 98 will have pipes in place to receive electronically presented bills) as much as tools to help consumers make and execute financial decisions. Intuit doesn't charge consumers for its services; revenue comes from site advertising and transaction referral fees.

So, says Mildrid Wulff,a Jupiter Communications analyst , bankers need to ask themselves if they can really compete with the technology companies, or should they try to leverage their abilities through partnerships. "Some banks will not be able to provide all the information an investor needs, you'll have to depend on the aggregator sites."


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