An MSFDC article:
On-Line Banking/ Microsoft Product Unveiling
Raises Vendor Fears
April 30, 1998
American Banker via NewsEdge Corporation : Now that Microsoft Corp. has quieted a
good deal of discontent among financial institutions, it has a lot of restless software
vendors' feelings to worry about.
At a recent Microsoft-sponsored conference on Internet-based banking and brokerage
initiatives, software people and technology consultants posed the hardest questions
and voiced the loudest misgivings about where Microsoft is heading.
One technology company representative, noting that the components of the Microsoft
Investor service could now be customized for financial institutions' Web sites, asked:
"Given that you are offering content and hosting to banks and brokerages, why should
they be thrilled about what we have to offer? "
In other words, Microsoft could be emerging as a competitor of companies it considers
partners. Sound familiar?
Currently battling the Department of Justice over whether it is illegally tying its Internet
browser to the Windows operating system, Microsoft has been accused before of using
monopoly-like strength in one area to catapult into another.
Microsoft has apparently made considerable progress in convincing bankers that it is
not trying to muscle them out of their core business. But the financial services projects
Microsoft highlighted before an audience of more than 300-split evenly between
financial industry practitioners and technology company representatives-went well
beyond its major revenue generators-Windows 95 and Office desktop software and
Windows NT and Back-Office server software.
Announced or previewed were version 2.0 of the Microsoft Internet Financial Server
Tool Kit, familiarly known by its former code-name Marble; the Investor Platform Tool
Kit; a real estate Web site named Home Advisor; and a consumer- oriented gateway to
the Web called Start.
Also on display were the MSFDC bill payment and presentment system, which is a joint
effort with First Data Corp., and the combination of the financial management software
Money with its companion Web site, Insider.
Officials of the Redmond, Wash., software giant contend as always that they are not in
the business of developing financial software per se.
"We have no intention of getting into these deep vertical areas," said Pete Higgins,
group vice president of Microsoft's consumer-oriented interactive media group and a
member of the executive committee that reports to chief executive officer Bill Gates.
The company's aim is to create a foundation on which more specialized developers can
build applications.
Lewis Levin, general manager of the Microsoft desktop financial division, who reports to
Mr. Higgins, put it another way when he said Microsoft believes in "high volume and
low cost. When you count the lines of code in Back Office, you'll find it's a screaming
deal."
"Microsoft is excellent at doing pilot projects that show people what you can do in an
area," said Robert K. Fenstermaker, vice president of business development for Step
Technology Inc., a software engineering firm in Portland, Ore.
"It raises the bar, opens up the technology door, and stimulates a whole new segment of
the economy and the market," he said. Yet he still worries about how the Investor
Platform Tool Kit could affect his financial institution system- integration business.
In the interactive travel area, Microsoft has sold the technology associated with its
Expedia site to American Express and several airlines. Now it would do the same with
Investor for banks and brokerages.
"Where does the overlap (between stimulating a market and selling actual applications)
start and stop?" asked Tripp Johnson, senior vice president of Crestar Financial Corp.
"That is something that all the independent software vendors are looking at, and I think
it is a valid concern," said Mr. Johnson, whose banking company relies on home
banking software from Microsoft partner Corillian Corp., Beaverton, Ore.
"We like the Marble strategy a lot," said software executive John Backus, president of
Intelidata Technologies Corp., Herndon, Va. "For us, Microsoft will do a lot of the heavy
lifting" by providing the protocol and connection to computer servers. "It is very
complementary to our business."
As a measure of the opportunity, Mr. Backus said, Microsoft charges $9,999 for its
Marble package, but Intelidata charges $100,000 for the Interpose financial engine that it
builds on top of Marble.
Sending another message about its bank-friendliness, Microsoft is making a small
change in its home banking software. Rather than having the customer choose a
financial institution from a list, the program establishes its first on- line connection only
after the customer types in the name of a bank or other institution.
Likewise, officials said, the Investor Web site will list all the brokers through which
on-line trades can be made and information obtained; it will not recommend one over
another.
"Banks didn't want to be 'spreadsheeted' in a long list with a big bank on the bottom,"
said Matt Cone, business development manager at Microsoft, referring to the 175
institutions that offer connections to the Money personal finance software.
Left unsaid was the fact that near the end of an alphabetized list would be Wells Fargo
Bank, one of Microsoft's closest banking industry friends.
Microsoft Money's link to Integrion Financial Network warranted a joint announcement
by the organizations.
As with Intuit Inc.'s Quicken, which announced a similar agreement in October,
customers of banks using Integrion's home banking system will be able to make
transactions regardless of the fact that they may subscribe to different technical
standards.
The agreement that bridges the gap between Microsoft's OFX (Open Financial
Exchange) and Integrion's Gold will tide them over until a fully converged standard is
published around August. The convergence agreement was announced this month with
the Bankers Roundtable's Banking Industry Technology Secretariat, but that was too
late for the next round of software releases.
The two sides are still discussing what to call a combined OFX and Gold. BITS had
proposed "Financial Services Exchange," or FSX. But that trademark appears to be
taken, said Mack McCauly, a Microsoft product unit manager.
He lightheartedly suggested NCSMCIAMOFXAIFNG, for "New Converged Standard
Merging Checkfree, Intuit, and Microsoft's Open Financial Exchange and Integrion
Financial Network's Gold." Copyright c 1998 American Banker, Inc. All Rights Reserved.
americanbanker.com
By DREW CLARK
[Copyright 1998, American Banker]
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