Benny's Review:
I attended the Individual Investors meeting in Florida and the Institutional Investor conference in Georgia. I pointed out highlights of both meetings, although many are overlapping issues:
The Florida meeting was quite an adventure where members of the Silicon Investor thread were able to meet face to face for the first time. This was also an opportunity for most members to meet Pete Kight and Allen Shulman for the first time. Highlights are as follows:
* Pete clarified the misconception that online banking, billing, and payment are slowing down. In doing this, Pete clarified the transition from PC based banking to Web based banking and that CheckFree has been planning for Web based banking for quite some time. Pete also pointed out while banks are building their Web based banking platforms, many have stopped marketing their PC based products which in turn is helping create lower subscriber growth rates.
* Allen Shulman was recently promoted to Chief Financial Officer. He spoke on various issues at both the Florida and Georgia conferences. Mr. Shulman was up to speed on current and past issues with CheckFree. His 13 years of experience as CFO of United Refrigerated Services, Inc., and his legal background should serve him well.
* There are many patent issues surrounding the Internet and bill presentment. Mr. Kight stated that the U.S. Patent office is having a hard time determining the validity of patents, therefore, it is leaving it up to the courts to determine if a patent is valid or not (CheckFree has filed for numerous patents).
* The recent changes in the CheckFree salesforce was addressed. CheckFree has changed its strategy from a sales force approach to a relationship manager approach (or account management approach).
The Institutional Investors Conference went very well. Members of senior management presented various areas of the company. This was CheckFree's largest investor conference to date. The conference was very informative. Highlights are as follows:
* Dan Schulman, President of AT&T Worldnet Service, presented the importance of bill presentment from a billers point of view. Dan gave the impression that AT&T will be aggressively pushing bill presentment through TV adds and other forms of media. AT&T and other billers will advertise bill presentment and payment which should directly effect CheckFree's bottom line. Dan was also quick to point out the cost savings associated with online bill presentment through lowered paper costs, also pointed out was the costs associated with lowered customer care due to interactive bills which allow consumers to look up phone numbers called and flag questionable calls without the intervention of a customer service representative. In summary both banks and billers will market bill presentment and payment, but it is more likely that large billers will be more aggressive in marketing due to the direct impact it has with consumers.
* CheckFree plans to start building consumer awareness and education through the EBA Trade Association. Thirty million web impressions will be used in order to educate and guide consumers towards Financial Institutions that offer online banking and bill payment. This education campaign will start at the end of September and last until mid December.
* The Internet has created many new threats for the traditional bank. The advent of the Internet has enabled other firms to vie for "Trusted Agency" status. Firms offering financial services can be broken down into three tiers; Banks (i.e. Mellon), non-Bank financial Institutions (i.e. E*Trade), and other financial service providers (i.e. Yahoo). Banks are in the best position to win "Trusted Agency" status with consumers, but if banks move to slowly to market, non-bank financial institutions and other financial service providers may win "Trusted Agency" status from consumers. CheckFree made it very clear that they are FI agnostic and that they will work with whomever the consumer wants as their aggregator (E*Trade, Yahoo, etc.).
* Dudley Nigg, Executive Vice President of Wells Fargo, did a presentation of bill payment and presentment from a billers point of view. Wells Fargo found that 70% of PC owners wanted to try online banking (currently only 5% bank online). Currently, Wells Fargo is the leader in online banking with over 500 thousand subscribers (or 10% of their customer base). Mr. Nigg also pointed out that customer service costs drop approximately 17% when a customer banks online. In addition customer loyalty is stronger for a customer who uses online bill payment verses an online bank only user.
* CheckFree is finding new ways of extending its electronic reach and at the same time strengthening its partnerships with banks. An example of this is electronic lockbox wholesale partnerships. The partnership allows CheckFree to extend their electronic reach to billers that normally would be very difficult to connect to, and at the same time allow banks to generate new revenue from their existing lock box service.
* CheckFree is on track with its next generation bill presentment and payment products. Including its online registration and Biller Originated Signaling System (BOSS). With online registration, consumers will be able to go to a banks web site, enroll, and be able to begin online banking immediately. BOSS allows customer service reps to track the status of an online bill, at any stage from presentment through payment (basically works like a FedEx tracking number). Consumers will also be able to look up the status of a bill and therefore avoid a call to customer service in many cases.
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