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Metavante Set to Acquire EBPP Provider Spectrum
American Banker Monday, July 29, 2002
By Steve Bills
Metavante Corp. plans to announce today that it is acquiring Spectrum EBP LLC, the electronic bill presentment consortium — a deal that ends months of speculation about the future of the beleaguered bank-owned enterprise.
The three banks that set up the Atlanta-based outfit in 1999 — J.P. Morgan Chase & Co., Wachovia Corp., and Wells Fargo & Co. — did so to provide a bank-run alternative to big vendors like CheckFree Corp.
But the venture never seemed to gain momentum. In 2000, the same year that CheckFree bought a major competitor in Transpoint LLC, Spectrum embarked on a lengthy search for a chief executive officer, and complaints about extended delays in bringing the presentment service to market soon followed.
The deal is a big boost for Metavante, the technology subsidiary of Milwaukee-based banking company Marshall & Ilsley Corp., which has been in hot pursuit of CheckFree, the market leader. While CheckFree, also of Atlanta, is exclusively an electronic bill payment and presentment company, Metavante offers a wide range of services, from customer relationship management to electronic funds transfer and Internet banking.
By adding Spectrum to its lineup, as well as the 24 banks committed to using Spectrum’s network for routing e-bills, Metavante will have access potentially to 60% of the nation’s credit card customers, said Hans Mykelbust, Metavante’s vice president of electronic presentment and payment.
“And those are national players,” Mr. Mykelbust said. “If I’m a regional biller, I’m not dependent on my regional bank now.”
Michael Hayford, the chief financial officer and an executive vice president of Metavante, said the deal, which is expected to close in late August, is “needed to help drive the adoption and growth of this industry.” (The price of the deal was not disclosed.)
Mr. Hayford said the merger talks grew out of Metavante’s longstanding relationship with Spectrum. In August 2000 Spectrum hired Metavante to provide a pay-anyone electronic bill payment service on an outsourced basis. In December, the two organizations announced a partnership under which Metavante would distribute electronic bills from its 90 biller customers to the nearly eight million online customers served by Spectrum’s founding banks.
Metavante already offers a variety of products that let billers put their statements on the Internet and consumers view them. With the addition of Spectrum’s switching capabilities, “those pieces will be integrated together for someone who doesn’t want to deal with the parts,” Mr. Hayford said in an interview Friday.
He said Metavante would provide “a bundled offering” for customers who wanted a turnkey solution but that it would also continue to sell the individual components.
Executives at Spectrum could not be reached Friday.
“For the last few months, we’ve had ongoing dialogue,” Mr. Hayford said, describing the thinking at Spectrum that “somebody else might be in a better position to take the concept of an open switch and take it to the next level. We believe we are best positioned to do that. Being a very bank-centric organization, we have very similar philosophies and beliefs.”
Metavante also has been active in acquiring other players in the EBPP space. It gained the majority of its biller customers by buying Derivion, another Atlanta company, in June 2001, and its purchase last month of Cyberbills of San Jose, Calif., brought it 450,000 enrolled consumers. Earlier this month Metavante bought the biller-direct technology provider Paytrust Inc., gaining marquee customers such as American Express Co. and Citigroup Inc.
Beth Robertson, a senior analyst at the advisory firm TowerGroup, in Needham, Mass., called the deal “a step toward the maturity of the market” and said it would help bring order to the chaotic e-billing industry.
“The pieces have been there, but it’s been difficult for people entering the market to know how to put the pieces together in a cost-effective way,” she said. Billers will now find “an increased ease in entering the market, because all the pieces are in place.” |
