NEW ORLEANS -- A roundtable on electronic banking that was billed by one network executive as a financial version of a professional wrestling match lived up to expectations.
The roundtable at the Bank Administration Institute's annual Retail Delivery Systems conference featured top executives from six of the nation's largest electronic funds transfer networks.
Though their performances were tempered by the competitive seriousness of the discussion, the panel members approximated a wrestling match's sense of theater and humor -- delivering their opinions in sometimes inflammatory tones. .
The panelists were Thomas Bennion, president of the Honor nework; Stephen Cole, president of Cash Station; Ron Congemi, president of Star System; Michael Douglas, chief operating officer of MAC; Stan Paur, president of Pulse; and Gary Roboff, president of NYCE.
Positions of Power
As the roundtable moderator, consultant Richard Speer, pointed out, these men and a handful of others are in positions of increasing power, as recent consolidation has cut the number of electronic banking networks from 150 in the mid-1980s to about 65 today.
In his introduction, Mr. Speer said he expected that consolidation to continue until roughly 25 regional EFT networks remain.
In no uncertain terms, Mr. Paur of not-for-profit Pulse said that consolidation was shaping up to be a game of survival of the richest rather than survival of the fittest.
"The conventional wisdom is that bigger is better, but I do not agree," he said. He worried that the evolution of networks into diversified processing companies "that are looking like EDS, Fiserv, and Systematics" will attract regulatory attention and may lead to exploitation of smaller financial institutions.
In some networks, he said, smaller institutions pay 10 to 20 times what larger members do for switching a transaction.
"Sounds like we're getting into a discussion on socialism versus capitalism," quipped Mr. Bennion of the for-profit Honor network in opening his remarks.
Mr. Bennion summed up his feelings about the role of a network: "Diversify your product and expand your market or get the hell out of the way."
Finding a Partner
Mr. Cole of not-for-profit Cash Station spoke of the partnering of networks with other companies. His philosophy was simple: Networks, like banks, should look for a partner "when it does not make technological or economic sense to go it alone," he said.
For instance, Mr. Cole said, networks and providers of telephone services could team up to deliver home banking services.
Mr. Congemi of not-for-profit Star spoke about antitrust issues raised by the emergence of superregional networks. Nearly every large network has been subjected to antitrust inquiries, he said, and an increase under the Clinton administration would not be surprising.
Sees Status Quo Continuing
Mr. Douglas of for-profit MAC addressed the issues raised by the coexistence of regional networks and national entities such as Cirrus and Plus, which are owned, respectively, by MasterCard International and Visa U.S.A.
He indicated that he expected that present conditions would be preserved well into the future. He said that regionals provide diversified services and products that the nationals have shown no interest in providing. He also said no regional was even close to attaining the market penetration that would eliminate the need for the nationals.
"If you've ever been out of town and out of cash, you've probably been happy to see a bug on your card that allows you to do a transaction anywhere," he said. "That's not likely to change."
Mr. Roboff of for-profit NYCE rounded out the panel discussion with comments about the marketing of new network products. He said that about 50% of retail banking transactions are currently done from remote sites, such as a mated teller machines and point of sale terminals, and suggested that number will increase to about 90% before leveling off.
With many of these automated transactions likely to run through networks, Mr. Roboff said it is important for banks and networks to advance the brand names of individual institutions rather than the network logos printed on the cards that consumers will use.