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December 13, 1999

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Spectrum's Online-Billing Network Grows
Eleven Banks join forces to compete with others offering bill payment and presentment

By Marguerite Reardon

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    • S pectrum LLC strengthened its position in the emerging online- billing market last week by adding 11 banks to the bill presentment and payment network it operates.

    The addition of the banks gives Spectrum-owned by Chase Manhattan, First Union, and Wells Fargo-the credibility it needs to compete with the likes of CheckFree and Yahoo, which also offer online-billing services. "Commercial banks are realizing that online bill payment is a lucrative revenue source, and they need to retain control," says Judith Rosall, an Aberdeen Group research director.

    The banks' biggest threat could come from online brokers. In the 1980s, banks managed 90% of household assets. Today, they manage about 50%, with a large chunk lost to stock brokerages. "They're already losing money to brokers, and if they lose bill payment they could also lose checking," says Avivah Litan, research director at Gartner Group Financial Services. "That's where a lot of banks make their money."

    Studies show that most consumers would rather pay their bills through their banks than through another type of company. While the online-billing market is minute-only 1% of consumers and 7% of businesses pay bills online-a Yankee Group study indicates that more than two-thirds of people surveyed want to pay their bills from a central site. And of that group, 80% say they would prefer that site to be a bank. "People have entrusted banks with their money for over a hundred years," says Paul Hughes, a Yankee Group senior analyst. "CheckFree and the others still need to build up customer confidence."

    The Spectrum network acts as a hub by routing electronic bills using a standard protocol called OFX-Open Financial Exchange-through a single connection to other participating banks.

    Among the banks that have joined Spectrum are Commerica, First Tennessee, HSBC USA, M&I Marshall and Ilsley Bank, Mellon Financial, Michigan National, Summit Bancorp, and Wachovia.


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