The First Fruit of Bank One’s Microsoft Pact — Aggregation

The release this week of the first major product developed under an unorthodox pact between Bank One Corp. and Microsoft Corp highlights the growing ease that people in the financial services industry seem to feel about working with a company they once — rightly or wrongly — considered an enemy.

The product, a bank-branded account aggregation service based on Microsoft technology and introduced Wednesday, was the direct result of a three-year, $30 million marketing and research and development deal that Bank One and Microsoft announced in December. Five years ago, the notion of bank technologists sitting down to collaborate with their counterparts at Microsoft might have been unthinkable.

But Bank One is not the only banking company showing a new attitude. Last month, Citigroup Inc. said that its credit card division will use two Web applications from Microsoft’s .NET, a broad-scale Web platform and collection of services. The deal is more of a vendor-client situation than the broader arrangement that Bank One signed up for.

Avivah Litan, a vice president and research director at the consulting firm Gartner Inc., said that the Citi and Bank One deals show that financial institutions have begun to view Microsoft as a useful ally. “This definitely sets a new trend,” she said.

“Bankers have a right to be cautious about Microsoft, but I think what Bank One and Citibank are showing is that if you work with them cautiously, you leverage the best of both worlds,” she said. “You leverage their advanced technology and Web services, and you maintain a wall around your financial data.”

Banks have not completely abandoned their wariness about Microsoft, she added. Financial companies have been particularly apprehensive, she said, about Passport, Microsoft’s e-wallet service that stores consumers’ financial information to enable single sign-on and one-click shopping on participating Web sites. More than 30 institutions — including Citigroup — have joined the Liberty Alliance, a rival Passport service backed by Microsoft competitor Sun Microsystems Inc. In efforts to address security concerns about Passport, the Citi and Bank One arrangements require customers to sign on to both Passport and the banking Web site before getting access to financial data.

But James Van Dyke, a research director at the consulting firm Jupiter Media Metrix, said that financial institutions take a gamble by aligning themselves with a technology company, which customers tend to view as less trustworthy. “I think there’s more to be lost than gained. I think there’s a risk there,” he said.

“If we’re talking about who’s the custodian of my financial assets, I don’t think consumers place value in Microsoft in that category,” Mr. Van Dyke said, “Now if we’re talking about who’s a great technology company, Microsoft has off-the-charts value there, but those are two different things.”

That said, Mr. Van Dyke observed, there may be reason for smaller banks to make partnerships with Microsoft. “I think more banks and other financial firms will try this.”

James Dimon, the chairman and chief executive officer of Bank One, said that since the Microsoft deal was struck he has been trying to persuade doubters that Microsoft is not the enemy. “We’re going to need an awful lot of partnerships” to achieve the company’s technology goals, he told an audience at Nacha’s Payments 2002 conference on Monday in Dallas. “Customers are always looking for better, cheaper, faster. We should be forward-looking but not protective.”

Though he said that the Microsoft arrangement may one day turn out to be “the smartest thing we ever did while I was at Bank One,” he simultaneously defended his decision to turn an outsourcing arrangement with AT&T Corp. and IBM Corp. into vendor-client relationships in order to regain control over Bank One’s technological destiny. He did not directly compare the two situations.

Bill Rielly, a vice president in Bank One’s consumer Internet group, said the Microsoft alliance helps his company supply the services consumers want. The product announced this week, Bank One MoneyManager, is an adaptation of Microsoft Explorer, which is itself a browser-enabled product that uses the backbone of Microsoft’s Money personal financial management line of software.

Bank One MoneyManager lets customers retrieve and consolidate financial information from bank accounts, loans, 401(k)s, and investment accounts from more than 2,000 financial companies. It connects to the Bank One Web site and updates customers’ account information automatically.

“Rather than going out to a vast array of Web sites to find all that stuff, our customers indicated they wanted the ability to do all that in one place,” Mr. Rielly said. “The unmet customer need matched well with what Microsoft offered in this product.”

Chris Jolley, the director of marketing for Microsoft’s financial products group, said that Microsoft has historically worked closely with financial institutions but has recently heightened its focus on marketing technology — such as Money Explorer, introduced in December — that can be private-labeled by financial institutions and offered to their customers.

“We’ve really increased the activity and the number of solutions and the types of solutions we have available to the industry over the last six months,” he said.