Washington Mutual Inc. has selected M&I Data Services as its online bill payment vendor for retail customers, a move that raises speculation that big banks may begin favoring smaller providers over bill processing giant CheckFree Holdings Corp.

Washington Mutual, a Seattle thrift with $189 billion of assets, has been using Integrion Financial Network for Web bill payment but started looking for a new provider when Integrion announced in March that it would fold. Washington Mutual said it chose M&I, of Milwaukee, over Atlanta-based CheckFree because it wanted the option of outsourcing its customer service telephone operation.

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