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
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
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
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
"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
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.