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Technology Stocks : CheckFree (CKFR)
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To: chirodoc who wrote (366)8/20/1997 8:16:00 AM
From: Brooks Jackson   of 8545
 
I don't see much risk from in-house competition.

Currently Citibank has its own billpay service for the bulk of its PC banking customers -- those who use Citi's proprietary software. But Citi also supports Quicken, and those of us who use Quicken's billpay through Citi get their bills paid by CKFR.

Also -- somebody check me on this -- I think Wells Fargo has their own in-house service for California, but uses CKFR for non-California business.

But aside from those, I don't see any others trying to get into this very difficult business. Intuit tried it and gave up, selling its billpay to CKFR.

Citi has a history of doing it themselves. It worked very well for them when they developed their own ATM technology, which as a customer I consider far superior to the off-the-shelf systems used by other banks. But in the billpay business there are enormous economies of scale. The more transactions you handle, the more money you make PER TRANSACTION. That means bigger is better and more profitable. And no one bank can hope to come anywhere close to CKFR's volume.

I think Citi's in-house business is doomed. Don't know about Wells -- maybe California is a country big enough unto itself to make the business profitable for them.

Anybody from Citi or Wells out there who can illuminate?
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