Magazine article American Banker

Scott Cook Takes His Turn Taking Heat from the Banks; Accusations Are Flying from Disgruntled Bankers, but Intuit Still Has a Trump Card: Nine Million Users

Magazine article American Banker

Scott Cook Takes His Turn Taking Heat from the Banks; Accusations Are Flying from Disgruntled Bankers, but Intuit Still Has a Trump Card: Nine Million Users

Article excerpt

The scene is familiar: The chairman of a major software company takes the podium to give the keynote speech at a banking conference. The audience listens attentively, if somewhat skeptically. Later, in a panel discussion, a group of competitors, partners, and prospective customers proceeds to critique and dissect the previous speaker's strategy and question his ultimate (or ulterior) motives.

The catch?

The software mogul in question was not Bill Gates, the founder of Microsoft Corp., who at such an event last December disarmed much of the criticism and suspicion abroad in the banking industry.

This time, in a turning of the tables, the object of scorn was Scott Cook, chairman of Intuit Inc., maker of the Quicken program that dominates the financial management corner of the software market against Microsoft Money and other pretenders.

Once bankers' favored underdog, seen as a desirable counterweight to mighty Microsoft, Intuit and Mr. Cook have acquired the enemy's mantle.

"I think they deserve every bit of criticism they get," said an executive at a large bank that is working with Intuit in its home banking program. "I don't consider them (Intuit) a partner. As a vendor, they're monopolistic, and they certainly don't negotiate."

The sullying of Intuit's image centers on complaints that it has been inflexible in its pricing and seeks to lock banks into using its subsidiary, Intuit Services Corp., for payment processing.

Microsoft's recent strategic moves - a payment services venture with Visa International, "open" specifications allowing its Money service to be offered by any bank or third party, and a reaffirmation of its mission as a software and systems vendor (rather than potentially a bank) - have only helped to paint Intuit as the more unyielding.

"Microsoft is interested in developing options for the industry," said Tim Kemp, manager of on-line services at First Chicago NBD Corp. "Intuit is interested in what's best for Intuit."

Intuit supporters, led by Mr. Cook himself, talk up its consumer marketing skills and comprehensive service offering, which packages personal financial software with electronic bill payments, Internet access, and, soon, other financial services.

"We offer the same price to everyone," Mr. Cook said. "That may be read by some people as inflexible. We read it as fair."

He might have added that the company claims 9 million Quicken users and at least an 80% market share - affluent, computer-literate, financially savvy customers who are coveted by marketers of home banking services.

Mr. Cook said that by achieving economies of scale through a single processor - its own - Intuit can keep prices down while offering better service.

As for Microsoft Money, which has about one-sixth Quicken's market share, he said, "The business is so small that it doesn't really matter where you put it, because there aren't enough customers there."

Quicken is Intuit's trump card. Bankers who offer both Money-based and Quicken-based on-line services said Quicken was at least twice as popular even after Microsoft gave away the most recent version of its software.

And Mr. Cook, speaking in a recent interview, claimed bankers' complaints have abated since the company resolved its widely reported problems with bill-payment routing earlier this year.

But some bankers have become increasingly vocal in their discontent.

"They sort of own the swimming pool," said the bank executive who asked not to be identified. "They continue to throw their weight around."

The combination of Quicken's lock on the market and Intuit's control over its system, critics say, puts the banks in a vise. Although they would prefer to choose among options, including back-end processors, bankers say they cannot afford to tamper with a formula that is bringing them customers.

An average 20% of those who sign up with a bank for Quicken (or Money) services are new customers, Mr. …

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