For software entrepreneur Daniel M. Schley, home banking is a numbers game. He differs from most everybody else who is struggling to make something out of this business because his numbers - his projections of the potential market - are bigger. The company he runs with long-time partner Eric T. Jacobsen, Home Financial Network Inc. of Westport, Conn., is dedicated to the proposition that tens of millions of American consumers would jump at the chance to bank by computer. The systems, they say, just have to be as simple as basic household gadgets like televisions, microwave ovens, and garage-door openers. The Home Financial principals view the current state of personal financial software, dominated by Intuit Inc.'s Quicken package, as more akin to those perpetually blinking videocassette recorders. Mr. Schley is more than happy to let Intuit battle for the "high-end" software buyer against Microsoft Corp.'s Money, a relative upstart, and against Meca Software Inc.'s Managing Your Money, the distant third product that was once owned by Mr. Schley and that is now controlled by a group of banks. While those providers are concerned about "competing for share of a largely saturated market and getting upgrade revenues," Mr. Schley said recently, Home Financial Network fully expects to trump them in the "consumer middle market and mass market." In contrast to the high-end products' "400-page manuals and help screens -a real Tower of Babel," as Mr. Schley put it, Home Financial Network will put out bill-paying and banking software called Home Pay and Home ATM without extensive instructions, requiring "no learning curve." "It's completely intuitive," said marketing vice president Tom Dittrich, not minding the pun. As Intuit and Microsoft tinker with their formulas for bringing banks into their networks as marketing partners, and as Meca tries to lure those and other institutions to its "association" approach, Home Financial Network wants to be completely nonthreatening. "Disintermediation is not in our game book," said Mr. Schley, chairman and chief executive officer of this 17-employee enterprise that opened last September. When software releases begin in the fall, they will be sold through financial institutions, not on store shelves. His mission is to support the institutions, and in turn their customers, not the Home Financial Network brand image. "We're not asking for anything in return for our relationship with banks," Mr. Schley added. "Microsoft and Intuit require sharing of the relationship (with customers). The relationship is with Microsoft first, then the bank. If you are an Intuit customer, their screen says 'Quicken, Quicken, Quicken,' and then the bank name." Mr. Jacobsen, the company president, said all but the few banks that are "totally Internet-centric" will find Home Financial's pitch attractive. Even Intuit and Microsoft loyalists may want a complementary, low-end product for home banking. "I'd take 80% of the banks any day," he said. Such comments and calculations are, to be sure, just examples of the positioning and posturing that are rampant on the interactive banking frontier. Intuit and Microsoft have even countered with persuasive "bank- friendly" pitches of late, But Mr. Schley and Mr. Jacobsen have credentials - as well as early equity backing from U.S. Order, an influential home technology vendor that likes what it sees in Home Financial's mass-marketing approach - that make their venture a force to be reckoned with. Mr. Schley had his sights on the financial management market in the 1980s, when only a few visionaries were beginning to comprehend the implications of desktop computing. A self-described "classic early adopter" who became enthralled with Meca Software's Managing Your Money, Mr. Schley bought the company in 1987, when it was five years old. The software had been out since 1984. One of Mr. Schley's innovations was a slimmed-down version, CheckWrite Plus, that was the first example of what might now be called "home banking lite," the centerpiece of Home Financial Network's strategy. "My career is starting and running businesses. I probably bought the first copy of Managing Your Money in Massachusetts," said the Harvard MBA graduate. "I loved the product and got totally involved in it. When I sold a prior company and went looking for another, I came up with Meca." Then began a corporate odyssey that included an initial stock offering in 1990 and acquisition overtures from, among others, Microsoft and Intuit. Meca agreed in 1993 to a bid from ChipSoft, a tax software firm. The deal was nixed by the Justice Department's antitrust division in a foreshadowing of its objections to the Microsoft-Intuit merger agreement the next year. ChipSoft was eventually acquired, ironically, by Intuit. In November 1993, the tax preparation giant H&R Block bought Meca. Mr. Schley, with visions of electronic commerce on a mass scale, approached his deep-pocketed parent with a proposal "for a major transformation of Meca." "That would have been a three- to five-year development effort requiring a lot of capital," Mr. Schley recalled. He said the response from Block was, "We love your ideas, but we don't make investments that don't pay for themselves in a year. "By then it was May 1994. I could have spent my career at H&R Block, but their preference for the tax business and lack of interest in personal finance meant there was no future for me." Nor was there a future for Meca at Block. In 1995 it sold the subsidiary, which Mr. Schley built from $5 million in revenue and 19 employees to $40 million and 250, to BankAmerica Corp. and NationsBank Corp. They have since added three co-owners. Two months ago Meca announced two simplified versions of Managing Your Money, labeled Lite and Ultralite. They aim at the same consumer targets as Home Financial Network and perhaps lend credence to the latter's strategy. Mr. Schley, 41, draws on his experiences and analyses within H&R Block to dismiss Intuit and Microsoft pronouncements: "They say they have mass- market products. We don't see it that way." He doesn't spend too much time agonizing about Meca because his former company doesn't hold a candle to the 95% market share of Quicken and Money combined. He also wonders how Meca can please banks outside of its ownership circle. "If you're First Union and you see Meca owned by NationsBank, you have a problem," Mr. Schley said. (One banker involved with Meca offered a ready answer to the First Union dilemma: "We hope they'd join us. Why not?") "We are safe," Mr. Schley said. "We will not be a strategic drawback." Mr. Schley makes boasts - "we expect to emerge as one of the leading providers," or, "a year from now, we will be viewed as banks' single best alternative to Microsoft and Intuit" - that are tempered by his junior partner. "Dan is optimistic and ebullient. I'm optimistic, but I also have to be pragmatic, more of a counterbalance," said Mr. Jacobsen, 31, who has the day-to-day responsibilities of chief operating officer. "I have to make sure we are here in five years if the market doesn't take off as fast as we think it will." Mr. Jacobsen has been on pretty much the same path as Mr. Schley. After graduation from Stanford University and three years in investment banking at Smith Barney, he joined Meca Software in 1989, playing a key role in its going public. He was Meca's vice president of corporate marketing and then vice president of sales and marketing for H&R Block's tax software division. Having followed Mr. Schley to the new venture, Mr. Jacobsen oversees the lean headquarters operation in Connecticut and a research and development facility in Utah. Home Financial Network controls strategy and marketing. It outsources the design of the customer interface, among other functions. "We never wanted to go beyond 20 people, but I didn't think we'd get to 17 this fast," he said last month. He anticipates breaking the 20-employee barrier because of the need to manage institutional relationships, both with equity partners and nonequity participants, which he and Mr. Schley expect will proliferate rapidly as banks get down to making their strategic choices. Through alliances with home banking "utilities" like Visa Interactive and Checkfree Corp., Home Financial's more simple, customizable products could become an option for thousands of institutions. U.S. Order bought 40% of Home Financial last fall because of its emphasis on bank branding and affordability, said William F. Gorog, chairman of the Herndon, Va., interactive services company. Market research indicates "consumers want to be able to use a variety of devices to access their bank," Mr. Gorog said. Home Financial is prepared to help financial institutions with a range of delivery methods, whether a conventional PC connection or some sort of Internet-based system. Because Home Financial will stay clear of the "high end," Mr. Schley doesn't expect conflicts with banks already doing business with Intuit, Microsoft, or Meca. "We will be the Switzerland of this business," he said. "No product has guaranteed success - the only guarantee comes from giving the consumer adequate choices, and then you can't go wrong," said Jupiter Communications Corp. analyst Phoebe Simpson. "If you look at the numbers of people with bank accounts versus PC users, there is a big gap showing room for growth. "Many of the PCs with modems are owned by people in the demographic range for lite products. Many of them certainly won't want to take the time to learn Quicken." Home Financial has spent more time and money than is typical for a start- up on market research, and it confirms Ms. Simpson's conclusion. The majority of checking account holders, who do not balance their books, show little inclination to become educated in high-end software like Quicken. "If somebody can't load the software, understand it, and find its utility in three to five minutes, they won't ever use it," Mr. Jacobsen said. Mr. Schley also doubts some of the numbers being thrown around about the high-end market, where Intuit says nine to 10 million people are actively using Quicken. "There are roughly 40 million PCs in homes," he said. "Maybe 30 million indicate an interest in organizing their personal finances, but think about the disconnect. If there are five million active users of personal finance software, I'd be surprised. I know Intuit talks about 10 million, but we projected only 3.5 million from a phone survey." Mr. Schley sizes up the field in social-psychological and behavioral terms - what marketers call psychographics. "Outside of a very few people at Intuit, including (chairman) Scott Cook, no one has done more research, design, and development work than we have," Mr. Schley said. "From serving millions of customers, listening to focus groups, hearing calls from irate customers, you understand that at some level the customer response is intellectual, and at some level it is visceral. "Either you are totally committed (to learning high-end software) or you're not. You can't just dabble. Forget the research - most people just don't do that. If even 3% do the detailed budgeting by category, I'd be surprised." Naysayers about Home Financial tend to be, in Mr. Jacobsen's parlance, Internet-centric. William Randle, senior vice president at Huntington Bancshares in Columbus, Ohio, said the so-called lite approach makes logical sense, especially for banks that want to hedge their home banking bets. But Mr. Randle also contends the Internet, combined with a cheap in-home appliance, "can be the mass-market model," which would obviate the need for customer PCs running banking software. Consultant Richard K. Crone, also an Internet believer, who recently joined Cybercash Inc., said the complications of "managing an electronic file cabinet" can hinder acceptance of all products, whether heavy or lite. "None of us is smart enough to know what to plan for five years out," Mr. Randle conceded. "Banks will have to be a lot more nimble than in the past. Mr. Schley sees the uncertainty working to his advantage. "Twenty-five million consumers want the benefits of automation and haven't found it in the products out there today," he said. "We think we will crack this mold. "We think we will be the market-share leaders by orders of magnitude, to the great benefit of our financial institution partners. We'll give them the first line of defense against disintermediating forces, be they Microsoft, Intuit, or another neighborhood bank."

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