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Banking on Java-based billing

Standards-based open-systems protocol raises groundswell of industry and consumer interest

By Tom Clements, JavaWorld.com, 11/01/99

Page 2 of 7

Relationship banking

Relationship banking -- or the value proposition therein -- may seem like an idea best suited to brick and mortar. Have the customer sit down in front of you. Offer coffee. Smile. Schmooze. Sell.

Well, think again. Electronic commerce is still in its infancy. Churn, the tendency of Web-site customers to bolt when not entirely satisfied with Web-site service, is a fact of network life. How to ensure that your customers remain your customers? How to keep them bound and happy? The answer seems to be personalized customer care via the Internet.

Companies, especially Web-based companies, appreciate the value of information in general. Their customers are pickier. They want information that applies specifically to them. Personalized information. What's in it for me, the consumer?

Sharon Osberg, the executive vice president and head of online financial services at Wells Fargo, has the answer: "Bill presentment," she recently told American Banker, "is, from the consumers' point of view, a critical piece of this [new online banking experience]. We want them to come to us, which gives us an opportunity to do more things, meaning expand our relationships."

To that end, Wells Fargo has joined with Chase Manhattan and First Union to form Spectrum (aka Exchange), a consortium for an open financial exchange that has the look and feel of a bill-paying eBay. First Union, by the way, is the other Charlotte, NC, national bank -- not the one run by take-no-prisoners Hugh McColl, which recently swallowed up Bank of America, keeping its name but few of its top executives.

This is the new wild, wild west, folks -- Internet style -- and the stakes are huge. In an August 17 Online Banking report, American Banker put it like this: "[Spectrum] is building an Internet-based switching system using Sun Microsystems Inc. technology to route electronic bills from the corporate customers of the banks to their retail customers. The three founders have an average of 60 million consumer and small-business customers, and relationships" -- there's that word again! -- "with more than 59,000 corporations and institutions."

Consolidators

Spectrum, on the whole, represents a standards-based open-systems approach to bill paying that allows billers to participate in the coming era of electronic commerce. Central to the success of a bill presentment and payment system like this is the concept of a consolidator.

Consolidators, as you might expect from the name, lump stuff together under one central roof. The stuff in this case is all those bills you want to pay electronically to all those nagging billers, without having to mess around with paying off each of them individually. Waste of time. The whole point to electronic bill paying is to make the job easier. Hence, the consolidator. "Almost one-quarter of consumers say they want all their bills presented in one place on the Internet before they will use online billing and payment," according to a recent report from Forrester Research in Cambridge, MA.

 

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