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Management Strategies

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Association Update

John A. McKinley, Jr., of Merrill Lynch to speak at the TowerGroup 2002 conference; The Financial Services Technology Consortium to launch a next-generation account aggregation framework pilot; NACHA allows checks delivered to remittance and lockbox locations to be converted into e-checks using the ACH Network.

John A. McKinley, Jr., chief technology officer for Merrill Lynch, will be a featured speaker at the TowerGroup 2002 Financial Services Business and Technology Conference.

This year's TowerGroup conference, themed "New Realities: Business & Technology Strategies For Excellence," will be held on May 14-16, 2002 at the Westin Copley Place in Boston, MA. McKinley will be speaking on the topic of "Business and Technology Fusion: Strategies for a Changing Market."

McKinley is an executive vice president of Merrill Lynch & Co., responsible for heading the firm's global technology and services group. He is also a member of the Merrill Lynch executive management committee. During his tenure, the firm has won numerous industry awards for creatively applying technology to both the retail and institutional sides of the business.

"We are thrilled to have an individual of John's stature and expertise speak to our clients and associates at our annual business and technology conference," said Mark Sievewright, president and CEO of TowerGroup. "His insights on the role of technology in achieving excellence both today and tomorrow will undoubtedly be regarded with significant interest by all of our attendees from the global financial services community."

For more information on the conference, visit


The Financial Services Technology Consortium (FSTC), together with its member financial institutions and aggregation technology providers, is launching a pilot to prove the feasibility of a next-generation account aggregation framework.

The interoperable framework will provide the technical foundation for customers to one day use a single aggregation provider to update multiple accounts, initiate payments, and transfer funds between financial institutions. The framework will be based on FAST, a financial industry authentication methodology developed by FSTC members to extend the trust relationship a customer has with their financial institution out to other organizations.

"Current aggregation technology is based on having customers share their personal account passwords with aggregation providers, making it difficult for financial institutions like Bank of America to differentiate customers from aggregation providers and audit the overall process," said Chauncey Smith, senior vice president for eCommerce at Bank of America. "Financial institutions are concerned with both risk and quality of customer experience as the current aggregation environment continues to evolve, and we encourage the efforts of the FSTC to find ways to authenticate the aggregator that do not require the customer to disclose their private passwords."

Based on the FAST model, the interoperability framework will not require customers to share passwords directly with aggregation providers when signing up for account aggregation services. Instead, aggregation providers delegate the authorization to financial institutions that authenticate the user, and enable aggregation of their account data with the aggregation provider of their choice. With FAST, users control access rights to their own account and can partially or fully grant aggregation providers access to their financial records.

Financial institutions contributing expertise to the pilot plan include Bank of America, Federal Reserve Bank of Chicago and Fidelity Investments. Aggregation technology providers involved include Access Softek, Business Logic and Yodlee.

For more information on FAST and the FSTC, visit


New NACHA Operating Rules, known as the Accounts Receivable (ARC) application, became effective on March 15, 2002 allowing checks delivered to remittance and lockbox locations to be converted into e-checks using the Automated Clearing House (ACH) Network.

"The Accounts Receivable application allows a billing company to take advantage of the inherent efficiencies of electronic payment processing, while allowing consumers to continue to use checks if they choose," said Elliott C. McEntee, president and chief executive officer of NACHA. "With billions of checks sent to accounts receivable locations every year, the use of e-checks can substantially reduce payment processing costs."

An e-check is an electronic debit to a checking account that is initiated at the point-of-sale, on the Internet, over the telephone, or through the accounts receivable application, and processed using the ACH Network. E-checks are covered by the Federal Reserve's Regulation E, which defines specific consumer protections from error and fraud.

Under the new rules, a check that a consumer mails to a biller's remittance or lockbox location, or delivers to a dropbox location, may be used as a source of information for originating an ACH debit to the consumer's account. Billers must notify consumers if they intend use checks as source documents for ACH debits.

The NACHA Operating Rules standardize payment formats for the ACH Network, and define the rights, obligations and warranties of parties involved in ACH payments. Operating rules provide a uniform business and legal framework for the exchange of payments, which enhances participants' confidence in the safety and reliability of the payments system.

A new publication, entitled "Guide to Implementing an Accounts Receivable Entry Program," is being issued to assist billers and financial institutions in implementing an accounts receivable conversion program. The publication will become available at NACHA's PAYMENTS 2002 conference, April 14-17, 2002 in Dallas, Texas, and can also be pre-ordered from NACHA at [email protected]

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