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Personal finance spec launched

Microsoft and Intuit, formerly rivals in Internet consumer banking, will unveil a common specification for online financial transactions.

Pressed by financial institutions interested in banking on the Internet, Microsoft (MSFT), Intuit (INTU), and CheckFree (CKFR) today announced a single, unified specification for online banking and financial transactions.

Open Financial Exchange (OFX) merges separate protocols from each of the companies, major players in personal finance software, or online bill-paying. A draft of the proposed specification will be posted Monday on Web sites for each of the companies. After a comment period, the three expect to finalize the spec in mid-February.

That means that annual updates of Intuit's Quicken personal finance software and rival Microsoft Money, which are generally issued in the fall, will support OFX.

The spec also would allow banks and stock brokerages, for example, to write to a single protocol to let customers who use Quicken, Microsoft Money, or CheckFree's bill-paying service to do online transactions. By making software development easier, today's announcement is likely to encourage more financial institutions to offer online transactions.

But the news may have little direct impact on consumers or small businesses interested in online banking.

"The hope is that this now convinces financial services firms and software vendors to get the mechanics out of the way and think about consumer value," said Ira Morrow, a research director for the Gartner Group. He noted that few consumers use online banking.

The question of who to write software programs for is finally answered, he added. "Now the question should be, 'What should we write?'" he said.

"The banks and brokerages absolutely asked us to do this," Lewis Levin, Microsoft vice president, said today. The three parties began working on the spec late last year, and it came together quickly because the existing interfaces were relatively similar.

The new protocol is relevant not just for banks but for other financial companies too, including stock brokerages, mutual funds, and credit card payment processors. Intuit's William Harris said more than 50 financial firms will support OFX. Statements of support were issued by ten financial institutions, including mutual fund company Fidelity Investments, discount stock broker Charles Schwab, payment processors First Union, Chase Manhattan Bank, Citibank, and Wells Fargo Bank.

But the agreement won't eliminate friction between financial institutions and software vendors like Intuit, which has expanded its own offerings into banking, insurance, and credit cards. Intuit competes against financial services firms in those areas.

"That's not a bank-friendly strategy," said Melissa Krantz, a spokeswoman for Meca Software, which competes with Intuit and Microsoft. "It's hard for us at Meca to believe that Intuit or Microsoft would do anything that's good for the banks, not themselves."

Meca, owned by a consortium of banks including Bank of America and NationsBank, markets a rival personal finance software that has not caught on in the market.

But another consortium of big banks plus IBM, called Integrion Financial Network, said it would merge its Gold Standard specification with the new OFX in 1998. For now, Integrion and the OFX group will make their specs interoperate. In addition, the OFX group is working with Visa Interactive to link OFX to Visa's bill-paying network.

"If it catalyzes the financial services and software industries to come up with products and services that add value to consumers, this protocol would be very beneficial," said Gartner's Morrow.