Electronic commerce and banking, a market that so far has been long on promise and short on returns, has gotten a huge shot in the arm from Microsoft Corp.’s ill-fated attempt to acquire personal finance software maker Intuit Inc.
Microsoft’s intention to buy Intuit - an acquisition that would have given Microsoft a dominant position in personal finance software - served as a wake-up call to bankers who had been slow to offer customers electronic banking as a new service.
Fearing the potential of Microsoft to control consumer electronic banking, several banks have announced deals with software companies in recent weeks.
Meanwhile, following Microsoft’s announcement Saturday that it has scrapped its $2.4 billion bid for Intuit following a Justice Department antitrust suit to block the deal, both companies are vowing to pursue opportunities in electronic banking and commerce aggressively - as fierce competitors rather than collaborators.
“It sounds like we’re going to compete in a major way,” Intuit Chairman Scott Cook said.
“Everyone’s jockeying for position in electronic commerce and electronic banking service,” Cook added. “This is a nascent business that everyone knows they don’t have figured out. We’ll see what sticks and what doesn’t.”
Today, only about 1 percent of all banking transactions are believed to be handled using home computers, according to a 1994 Ernst & Young study. But the study - conducted before Microsoft proposed its acquisition of Intuit - projected that that figure will grow to 6 percent by 1997.
And Ernst & Young said that the core users of electronic banking will be the wealthy, customers that banks certainly don’t want to lose.
On May 11, BankAmerica Corp. and NationsBank Corp. announced plans to jointly purchase Meca Software Inc., creator of Managing Your Money, for $35 million.
Last week, Sanwa Bank California and Union Bank, both based in San Francisco, confirmed that they and 10 other banks were forming an alliance with Intuit to offer home-banking services using Quicken, which now holds 70 percent of the personal finance software market. Other members of the consortium include First Chicago Corp. and U.S. Bancorp of Portland, Ore.