Blue Skies

Along with bankers and consultants, BS&T asked several technology providers and experts for their views on the prospects for financial technology in the new year. The common thread among their visions: optimism.

George Thomas
Executive Vice President
The Clearing House Payments Company (New York)

"The nation's 19 largest financial institutions - which represent 60 percent of U.S. check deposits - will largely complete their integration into The Clearing House's Image Exchange Network, which will enable financial institutions to transmit check images directly between themselves in a peer-to-peer model. With these institutions on board, there is likely to be a significant increase in check image volume in the second half of 2005, with volume ramping up sharply in 2006."

Gary Cawthorne
Managing Partner, Global Banking
Unisys (Blue Bell, Pa.)

"Forward-looking financial institutions will view check image exchange as the impetus to begin transformation of their payments operations as a whole. By re-engineering check processing, banks can look beyond paper transactions and use images and data in an 'all-payments' engine and archive. A broader payments strategy will see greater acceptance in 2005, as advances in technology now allow banks to deploy enterprise solutions that can access external systems and internal image databases and complete payment histories, allowing banks to more intelligently import, capture, store, manage and use transactional information."

Carl Hugener, Partner, Financial Services Practice
Larry Lerner, Principal, Financial Services Practice
DiamondCluster International (Chicago)

"We can expect vigorous merchant challenges to interchange fees, large retailers cutting special interchange deals and merchants aggressively driving out these costs. Retailer lawsuits, technology advances in payment processing and the rise of non-banks such as First Data Corp. in payment processing have loosened banks' grip on payment options and pricing. On the heels of the $3 billion lawsuit won by Wal-Mart and other retailers over MasterCard and Visa in 2003, more than half of the $24 billion in payment fees that U.S. card-issuing banks earn annually could disappear."

Jim Sizemore
Senior Vice President & CIO
Fiserv ITI (Lincoln, Neb.)

"Service-oriented architectures (SOA) will be among the banking technology stars of 2005. Being independent of a specific block of code, SOAs will offer banks real-time aggregation of customer data from disparate computer systems. This comprehensive information will help staff make better product and service recommendations.

"The most over-hyped technology of 2005 may turn out to be biometrics. Even with the continued focus on security and the technology's potential, biometric technologies such as PC-resident fingerprint recognition must first establish a much more significant track record."

Warren Lewis
Global Industry Manager, Banking
Microsoft (Redmond, Wash.)

"Currently, the bank is not a destination; it's an errand you have to run on the way to or from somewhere else. Creating a warm and welcoming environment, where customer service representatives truly know their customers and provide valuable financial guidance, will draw people who want to go to the bank and hang out for a while. Banks that become a destination spot will improve their cross-sell ratio and, thus, increase revenue."