Microsoft to offer investor software

In a major push to win over bankers, Microsoft today announced efforts both to sell back-office software to financial institutions and to help them attract customers to online banking and brokerage services.

The most dramatic news was Microsoft's plans to sell software developed for Microsoft Investor, its own investment Web site, to banks and brokerages for use on their own Internet pages.

At Microsoft's FinNet conference in Redmond today, the company also announced that version 2.0 of Microsoft Internet Finance Server Toolkit (MIFST), formerly called Marble, will be available by year's end. The toolkit will support the scheduled convergence of two online banking standards, the Gold standard from IBM-led Integrion, and Open Financial Exchange (OFX) from Microsoft, Intuit, and Checkfree.

"While the focus is always on Money [Microsoft's personal finance software], the money is in selling back-office systems to banks," said Mike Dusche, Microsoft's worldwide manager of financial services. Forrester Research estimates Microsoft sells $1 billion annually in infrastructure software to banks.

Microsoft had news on the consumer-oriented front too. When its Money 99 software ships this fall, it will let users do online banking with banks that support the converged OFX-Gold standard, which has yet to be named. Intuit already offers that option in current versions of Quicken, its personal finance software.

In a related announcement, Hewlett-Packard said it will back Microsoft's Distributed interNet Applications architecture for Financial Services (DNA FS). Specifically, HP's Changengine software for Windows NT 5.0 will be integrated with DNA FS framework.

Earlier this week, Microsoft and its OFX partners announced that the specification's 1.5 version has finalized the way "bill presentment" will be handled. Bill presentment refers to letting customers see routine bills such as utilities or charge cards online.

Microsoft's bill presentment joint venture with First Data, called MSFDC, lets banks present bills to consumers on bank Web sites, but MSFDC has worried bankers because it also lets users see and pay bills at the MSFDC Web site. Integrion, which represents 75 percent of bank deposits in North America, has a ten-year deal with CheckFree for bill presentment services.

Microsoft sees bill presentment as a potentially lucrative source of revenue, estimating that more than 1 billion household bills are paid monthly in the United States. In the past, Microsoft has discussed pricing its bill presentment services below the cost of a first-class stamp.

"The electronic service takes a lot of cost out of the system," Microsoft Group Vice President Pete Higgins told Reuters. "The biller can make money, the bank can make money, and the guy paying the bill can make money."

Because Microsoft isn't selling stocks, its new Investor Platform Kit, with components of the Microsoft Investor technology, may be embraced more enthusiastically.

"For banks it's a less expensive way to offer a far more functional site for their customers," Higgins told Reuters. The software, based on Microsoft's subscription-based Web site, lets users track their portfolios and research stocks, mutual funds, and other investment opportunities using a variety of filters.

Microsoft did not disclose pricing on the components for its investment software, due in several stages by October, or the new version of its MFIST tools. The current version of Microsoft's server tools for banks costs $10,000.

Banks will be able to customize the software using their own brand name and using only the components they want.

The plan to license its investment software is similar to what Microsoft has done with its Expedia travel site, where consumers can book plane, hotel, and car reservations on line.

Higgins said Microsoft likely would follow the same model with other Web sites it has developed, such as its CarPoint service for prospective car buyers.

But he said in the long run Microsoft expects its interactive services to make more money from transactions and advertising than from sales of specially developed software.

Reuters contributed to this report.