Intuit enters deal to build home-banking system

July 15, 1995|By Bloomberg Business News

MENLO PARK, Calif. -- Intuit Inc. has signed agreements with 19 banks and other financial companies to build a computer home-banking service that will cover much of the country.

The banks will use Intuit's popular Quicken software to let customers check their balances, pay bills and transfer money between accounts using a modem and a personal computer.

Banks are trying to cut the high cost of running branch offices by persuading more customers to bank electronically. If it works, time-pressed consumers will be able to forgo the inconvenience of visiting a bank's office by managing their checking and savings accounts on PCs at home.

Intuit isn't alone in its bid to build a nationwide electronic home-banking network. Microsoft and BankAmerica Corp. and NationsBank Corp., which recently created a home-banking software venture, are setting up their own networks.

Menlo Park, Calif.-based Intuit will link the banks through its Intuit Services Corp. unit, which will process requests for electronic payments. The company expects the service to be working this fall.

Intuit said it won't make money on the service for two years.

Intuit shares rose $4, to $87, on late trading of 1.46 million shares. Earlier, the shares traded at a record $88.50.

Chemical Banking Corp., Chase Manhattan Corp., Bank of Boston Corp., Compass Bancshares Inc., Michigan National Corp. and Wells Fargo & Co. are among the banks that joined Intuit. Financial-services companies American Express Co. and Smith Barney, Harris Upham are also part of the group.

"By combining what we are good at separately, we can accomplish things that we could not accomplish alone," said Intuit Chairman Scott Cook. The banks have customers in 36 states, representing about 90 percent of the U.S. population, Intuit said. Many of the financial institutions will be the first in their markets to offer on-line banking.

Banks hope that name-brand recognition will persuade customers to use their home-banking services, which is why they are turning to Microsoft and Intuit.

Many big banks have operated PC home-banking services for a decade, although few customers have signed on. Critics say the systems are cumbersome and require too much time to master. About 500,000 people, or less than 1 percent of U.S. households, bank electronically at home.

The difference now, however, is that there are about 35 million PCs in U.S. homes, more telecommunications lines connecting computers and simpler software.

Software under development will include insurance and brokerage services, offering bank customers the ability to manage nearly all their finances from home.

Modems, which let PC owners dial up their banks, turn homes into the equivalent of bank branches. There are about 70,000 full-service bank branches in the United States, and the move to home banking will let banks cut costs. Some analysts have said as many as half the branches in the country could become obsolete.

Baltimore Sun Articles
|
|
|
Please note the green-lined linked article text has been applied commercially without any involvement from our newsroom editors, reporters or any other editorial staff.