Spectrum moving ahead at full speed - 2 banks can present bills, but it will take until 1Q02 before they can pay them. Meanwhile, the BofA advertizing blitz will start soon.
Noise
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Progress for Spectrum: 2 Founders Using It
Thursday, November 1, 2001
By Steve Bills
Two of the three banking companies that founded the electronic billing network Spectrum began using it in October to present bills to consumers, and the third is expected to start doing so by mid-November, the company said.
John Perry, the chairman and chief executive of Atlanta-based Spectrum, declined to say which of the founders — J.P. Morgan Chase & Co., Wachovia Corp., and Wells Fargo & Co. — were presenting bills. He emphasized that the two-year-old consortium was exactly hitting the deadlines it set out publicly in May.
Still, the announced progress is limited. Most of the bills being sent through the system have been issued by one of the Spectrum banks. Only two undisclosed nonbank billers are presenting bills through Spectrum, and they are doing so in what marketing director Julie Counterman described as a “pilot production mode.”
Moreover, the consortium is not yet providing the return-trip portion of the service — digital payment of the electronically presented bills, Ms. Counterman said. That feature is expected to be introduced in the first quarter of 2002.
The network is ramping up just as electronic bill presentment and payment, or EBPP, is said to be poised for a surge in adoption. Even before Sept. 11 a growing number of consumers were signing up for online billing; the consulting firm Yankee Group recently found that 8.7% of consumers were paying bills online in 2001, compared with 5.1% last year. The anthrax scare may accelerate the trend.
“Everyone has been saying the bank is the natural provider” of online payment services, said Avivah Litan, a vice president and research director at Gartner Inc., based in Stamford, Conn. But banks’ slowness in offering EBPP raised the risk that the market could slip away from banks in favor of other providers.
In Gartner’s most recent survey, 47.5% of consumers said they preferred to view their bills online at the biller’s Web site, while 24.7% preferred a consolidated view of those bills at a site sponsored by their bank, thrift, or credit union, Ms. Litan said. When it comes to what they actually do, rather than what they prefer, biller-direct sites were more popular than bank-consolidated sites by an 8-to-1 margin, the survey found.
“Banks are definitely behind, and they need Spectrum to help them move ahead,” she added.
Mr. Perry defended Spectrum’s cautious approach, describing it as “a very disciplined, methodical process of certifying these processors and getting bills into the switch.”
Spectrum now has 22 financial institution participants, including Citigroup Inc. and FleetBoston Financial Corp., Mr. Perry said, and it has certified nine processors to provide the actual presentment of online bills to the end-users on the banks’ behalf.
Now that the service is functioning with the backing of the industry, banks may feel more comfortable about marketing the service to consumers, Ms. Litan said. They may have been reluctant to promote EBPP earlier, when nonbanks such as market leader CheckFree Corp. held unchallenged dominance in the field.
“The banks are in this for the long run,” she said, noting that Spectrum has arrived just as the market appears ready to blossom. “It’s not like they’ve missed this big boat. They’re behind, but they’ve got time to catch up.”
Indeed, banks could vault quickly into the lead. Of the 24 million Americans who view bills online, 20 million of them are looking at credit-card statements, with only 4 million looking at anything else, according to Gartner. “There has been very good adoption there,” Ms. Litan said.
Simon T. Nahnybida has joined Spectrum as vice president of sales, a new position, the company said. Mr. Nahnybida, formerly the vice president of business development at CheckFree, will head Spectrum’s sales strategy; oversee business alliances, new products, and services; and negotiate strategic alliances and partnerships.
At CheckFree, Mr. Nahnybida developed the company’s international strategy for EBPP. Before that, he was vice president of new EFT products at MasterCard International, where he installed MasterCard’s remittance processing service in more than 20 major banks. |
