Conference 7.286::dcu

1014.0. "IBM & others form electronic banking company" by STARCH::brevet.shr.dec.com::WHALEN () Tue Sep 10 1996 09:17

I heard a story on NPR this morning about IBM and electronic banking; so I 
looked at their home page and found this: 
(http://www.ibm.com/Newsfeed/ls960909.html)

 [ Lead story ]

15 North American banks and IBM form company to offer electronic banking
and commerce services

NEW YORK, September 9, 1996 -- Fifteen of North America's leading banks and
IBM today announced the formation of Integrion Financial Network. Beginning
in early 1997, Integrion will offer a broad range of interactive banking
and electronic commerce services to banks in the U.S. and Canada.

Representing over half the retail banking population in North America, over
60 million households, Integrion will be owned and operated by the member
banks and IBM. This ownership structure enables banks to play a central
role in determining the manner and format in which these services are
offered to their customers, ensuring that electronic banking services are
consistent with the bank's full range of services, are branded by the bank,
and that the bank's customers receive maximum benefit.

This landmark alliance will help ensure that banks can rapidly deliver
secure, convenient and reliable electronic banking services for the fast,
growing segment of the population expecting to participate in electronic
commerce over the Internet and other electronic channels.

The Integrion alliance creates unprecedented opportunity for banks to
develop industry standards for electronic commerce, to gain significant
economies of scale and to offer levels of customer service in electronic
banking unmatched in the industry today. In addition to IBM, the initial
owners of Integrion include:

   * ABN AMRO
   * BANC ONE
   * Bank of America
   * Barnett Bank
   * Comerica
   * First Bank Systems
   * First Chicago NBD
   * Fleet Financial Group
   * KeyCorp
   * Mellon Bank
   * Michigan National Bank
   * NationsBank
   * PNC Bank
   * Royal Bank of Canada
   * Washington Mutual, Inc.

Through Integrion, the banking industry will work with leading technology
providers to establish open standards for electronic commerce that will
speed banks' ability to deliver a wider range of integrated products and
services at lower costs.

The Integrion Financial Network will be an independent, for-profit limited
liability company charged with developing and offering industry leading
electronic commerce solutions for the banking community. Integrion will
have the freedom to move swiftly in its mission to create the "best of
class" capabilities with a broad range of potential providers and partners
in financial services and technology.

Rationale for banks

Banks wanting to offer their customers access to their services through the
public Internet still face significant security issues around transmitting
payments and other sensitive private information over this channel.
Integrion helps to solve this by providing both public Internet access and
parallel private network access, and addressing security and privacy issues
in interactive banking. This represents a significant breakthrough in
customer-focused electronic commerce.

Banks can let their customers choose whatever personal financial management
software or Internet browser programs they want to use. Integrion has
created an open infrastructure that is intended to accommodate front-end
customer software like Microsoft Money, Quicken and Managing Your Money,
and Internet browsers like Netscape Navigator and Microsoft Explorer.
Access will be available to consumers via the Internet, through online
services such as Prodigy, America Online and CompuServe, via the IBM Global
Network as well as via the telephone.

By sharing Integrion's development, marketing and operating costs, banks
avoid duplication of the same basic infrastructure. They also take
advantage of economies of scale by pooling their volume. The Integrion
owner banks serve over half of the U.S. and Canadian households, clearly
putting this new company in an outstanding position to gain scale quickly.

In building its service offerings, Integrion focuses on allowing banks
maximum opportunity for branding and for customizing the "look and feel" of
interactive banking to their end-customers. As a result, Integrion enables
banks to concentrate on serving their customers instead of developing
additional technology.

Integrion welcomes any bank as a customer and makes no distinction between
owner banks and additional customer banks in its fee structure and other
important service dimensions. With the commitment of major banks and IBM
behind it, Integrion expects to be able to provide better services faster
and cheaper than third-party providers or a homegrown effort of any single
bank. This will have a positive influence on the value available to
customers.

Benefits for customers

Customers will gain the most benefit from Integrion. They will be able to
bank directly with the financial institution they have chosen, via the
access method of their choice. Bank customers will be able to access these
services using a Web browser by connecting directly to their bank over the
secure IBM Global Network, or by connecting through the Internet using
secure firewall and encryption solutions. Customers also will be able to
access bank services through the personal financial management software of
their choice or through a touch-tone phone. Eventually, customers may be
able to access the services through interactive television and kiosks, as
the market for these devices develops. Internet users will benefit by
having a way to send the most sensitive data over a secure and private
network that already carries millions of payments today.

By helping to set standards, Integrion will appeal to technology and
service innovations from a wide range of providers, broadening the service
offerings for customers. Initially consumers will be able to execute, in a
secure way, all the core banking transactions like balance inquiries, fund
transfers, electronic bill payment, and to send e-mail to their banks.

Future enhancements may include securities trading and stock quotes, access
to mutual funds, applications for loans, and the ability for customers to
receive bills electronically. Eventually the services will extend to
electronic cash and smart cards, sophisticated risk and information
services, and interactive video sessions.

Roll out

Technology development is well underway, with the two initial pilots slated
for launch by BANC ONE and NationsBank in early 1997. Additional partner
banks will roll out Integrion-based services later in 1997, with other
customer banks to follow.

Common network infrastructure

This unprecedented range of electronic commerce services is made possible
by the common network infrastructure that uses open Internet-based
standards and computing technologies. The network infrastructure provides a
secure, high-performance, reliable transaction processing platform to
enable electronic access between banks and their individual and small
business customers. The IBM Global Network, which already securely handles
a large volume of electronic payment transactions, will support the
infrastructure, providing a safe, accurate and non-proprietary delivery
channel.

Outside perspective

"We expect the number of U.S. home banking users to grow 75 percent
annually until the year 2000. To handle this demand, U.S. commercial banks
may be forced to grow their home banking expenditures to over $1 billion by
2000," said Deogo Teixeira, President, The Tower Group. "But banks can help
control cost growth by providing a shared infrastructure and transaction
standards. New features such as bill payment or bill presentment have
significant economies of scale and are already disaggregating. By owning
Integrion, these major banks are moving to retain control of this important
new channel, allow access from all customer devices, and ensure bank
branding of new services."
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