Imperial Solution

Imperial Bank and San Jose-based CyberSource Corp. have formed a strategic marketing alliance to support secure online payment capabilities for Web merchants. The deal will expand Imperial’s e-commerce services to include the CyberSource ‘Internet Commerce Suite’, which offers real-time payment services, fraud screening, tax calculation, and delivery and address verification. By referring to CyberSource’s e-commerce services, Imperial Bank’s Internet merchants will be able to establish complete, fully automated electronic storefronts that minimize their exposure to Internet credit card fraud. Imperial’s clients may take advantage of the bank’s preferred rates for the ‘Internet Commerce Suite’ on a per-transaction basis.

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Canopy Express

Home Account, the leading developer of Internet-based financial services, Tuesday unveiled Canopy Express, an affordable, state-of-the-art Internet banking solution for community banks.

For an initial investment of just $12,000, community banks can now have a fully transactional, branded web site using Home Account’s preeminent Internet banking technology, in as little as two weeks. Canopy Express is a subset of the popular Canopy First(tm) 30/30 product (installed in 30 days for $30,000) introduced last year. Home Account continues to offer the 30/30 product to financial institutions that require more customer branding and additional functionality.

Canopy Express is a robust, secure Internet banking solution that offers a wealth of resources and functionality. Using Canopy Express, financial institutions can offer their customers the convenience of branded Internet services such as balance inquiries, stop payment requests, transaction history, bill payment, funds transfer and online Internet banking enrollment. Canopy Express also provides critical customer support functionality that allows banks to add new accounts, update customer profiles, change and delete account access, and more.

Home Account pioneered the concept of delivering sophisticated, secure, transactional web services, deployed by the nation’s largest banks to the community bank market. By streamlining its implementation process to offer unprecedented speed, efficiency and service to financial institutions, Home Account can offer many of the same sophisticated features used by large banks to the community banking market at an affordable price.

Last month, Home Account renewed its commitment to the community banking market with the creation of its Community Bank Division, which is dedicated to delivering affordable, cutting-edge web services to the nation’s community banks and headed by industry veteran Mark Nelson. Canopy Express is the latest of many solutions from Home Account tailored to the specific needs of community banks that will help them leverage Home Account’s broad set of Internet financial service solutions.

“Home Account’s first community bank installation at Amarillo National Bank (www.anb.com) was recognized last December as being the ‘Best Internet Banking Site’ of any size bank by Retail Delivery News,” said Mark Nelson, Vice President of Home Account’s Community Bank Division. “We’re now bringing much of the same functionality and security used by the best Internet bank in North America to community banks-at a fraction of the cost paid by large financial institutions.”

About Home Account

Home Account delivers patent-protected home banking, financial management and electronic commerce solutions to banks, brokerages and other financial service organizations. Home Account’s products include: Canopy Server(tm), an OFX (Open Financial Exchange) financial services platform that allows distribution of services through multiple channels; Canopy Advisor(tm), a strategic financial planning system for use by individuals and financial professionals; Canopy First(tm), a family of outsourced, scalable and brandable Internet products and services for financial institutions, card issuers and brokerages; Canopy Card(tm), innovative Internet account access programs for card issuers; Canopy Business(tm), Internet-based cash management services for business customers; and Canopy Clients(tm), a series of financial management user interfaces.

Home Account is headquartered in Emeryville, Calif., with offices in Charleston, S.C., Omaha, Neb., Los Angeles and Atlanta.

Please see Home Account’s website at

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Asia/Pacific Pulse

The latest MasterCard ‘MasterIndex of Consumer Confidence’ confirms the Asian economic crisis is subsiding. The survey measures consumer confidence in thirteen countries and territories in Asia/Pacific. Across the region, the most optimistic consumers are the Malaysians (89.3), Singaporeans (84.5) and Indonesians (82.1). The Korean MasterIndex is currently at 77, compared to last December’s 44.3 and pre-crisis (December 1996) levels of 43.7. Thailand exhibited similar optimism with last December’s index of 38.5 leaping to the current 67.9 — a far cry from a low of 25.3 in June 1997. Australian consumer sentiment has rebounded to 62.7 from record lows of 29.3 in the June 1998 survey. Hong Kong enjoyed almost a 400% leap in consumer confidence from a December 1998 reading of 14.4 to 51.5. The survey was conduced in June.

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NGA Endorses Concord

Concord EFS, Inc. announced Tuesday that their electronic data interchange (EDI) product for retailers has been endorsed by the National Grocers Association. Concord’s Internet-based service, called “EC-Connect,” allows retailers and wholesalers to communicate all business transactions with manufacturers and pay invoices electronically, improving accuracy and reducing costs. Concord’s EC-Connect was launched in early July, and is currently being utilized at twelve supermarket chains across the U.S.

“Concord’s EDI solution is the right program at the right time at the right price for the U.S. food industry,” said Stuart Zlotnikoff, president of NGA Services Corporation. “It represents an effective and affordable solution for companies and trading partners of all sizes, providing small to medium size businesses the same EDI benefits traditionally available only to the largest companies.”

The Concord solution combines information management with payment processing technology to improve the timeliness and accuracy of invoice processing. Implementation of the program requires minimal effort and no changes to the customer’s existing systems. The EC-Connect software also meets the EDI requirements of food manufacturers, making participating retailers eligible for preferred pricing and extended payment terms from the manufacturer. All transactions are executed using the latest security techniques, including firewall interfaces, encryption, server authentication, user ID’s, password protection, user profile controls, and restricted exchange of documents between trading partners.

“Electronic payment processing between retailer and manufacturer is a natural evolution of our payment processing between consumer and retailer,” said Edward A. Labry III, Concord president. “Our EDI product allows us to expand the range of services we offer that are designed to help retailers, especially those in the grocery industry, to streamline their operations and reduce costs. We’re proud to have received the NGA’s exclusive stamp of approval on our service.”

About Concord:

Concord is a vertically integrated electronic transaction processor, providing transaction authorization, data capture, settlement and funds transfer services to selected markets. Concord’s primary activities include providing credit, debit, check authorization and electronic benefits transfer (EBT) processing services to supermarket, petroleum, convenience store and other retailers; and providing gateway processing, ATM driving and MAC(R) network access to the financial services industry. Concord also provides electronic payment and payroll services to trucking companies, truck stops and other segments of the market.

About National Grocers Association:

N.G.A. is the national trade association representing the retail and wholesale grocers that comprise the independent sector of the food distribution industry. An independent retailer is a privately owned or controlled food retail company operating in a variety of formats. Most independent operators are serviced by wholesale distributors, while others may be partially or fully self-distributing. N.G.A. members include retail and wholesale grocers and their state associations, as well as manufacturers and service suppliers.

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PMG Board

PMG Systems, a leading provider of advanced profitability measurement and management software solutions that empower institutions worldwide with the knowledge and tools to achieve sustained profitability and growth, announced that Robert L. Wagner, President and Chief Operating Officer of the company, has been elected to its Board of Directors.

Gregory J. Nolan, Chief Executive Officer of PMG Systems, stated that “Bob is a very respected and well-regarded executive whose insight and experience will be enormous assets as we grow our organization to meet demand for our products and services across the globe. His many years of experience in financial services and, in particular, with fast-growing companies, give him a unique perspective on effectively managing rapid growth. Bob’s ability to transition organizations from being niche players to world-class solutions providers is a key reason that we made the commitment to bring him on board.”

Wagner was previously Executive Vice President of SEI Investments, where he led the reengineering of their investment systems and services business, which achieved annual, compounded double-digit revenue and profitability growth. During his 12 years at SEI Investments, Wagner was responsible for sales, customer service, operations, product management/development, business strategy, and overall business-line profitability. Wagner has also held management positions at Bank America Corporation, American Express, and Xerox Corporation and most recently as president of the institutional markets division of Pilgrim Baxter & Associates.

About PMG Systems

Based in West Chester, Pennsylvania, PMG Systems offers leading-edge profitability measurement and activity-based costing software that enables financial institutions worldwide to better understand their business, their products, and their customers. Its principal products are the Customer Profitability Management System, Integrated Profit Management System, Cost Management Workstation, and Profitability Workstation. The company currently has over 30 percent of the top 30 North American banks as clients.

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ABS to Re-Ignite

Against a backdrop of low inflation, slowing GDP growth and sound credit quality, the Federal Reserve raised the federal funds rate target 25 basis points (bps) to 5.25%. The Fed also increased the discount rate by 25 bps to 4.75%, however, maintained its neutral stance toward future policy action. These actions follow a 25 bps increase in the federal funds rate target at the last FOMC meeting on June 30 when the Fed changed its bias to neutral.

The Fed took preemptive measures to keep the lid on unexpected inflation despite an inflation rate of 2.1% for the past 12 months and second-quarter GDP growth of only 2.3%. Fitch IBCA expects that slower productivity, higher unit labor costs and a jump in the employment cost index (ECI) during the second quarter contributed to the Fed’s decision to raise the target for short-term interest rates for the second time this year. During the second quarter, productivity slowed to 1.3% and unit labor costs increased 3.8%, their highest gain in over two years. Moreover, the ECI jumped 1.1% during the second quarter.

Since the beginning of the year, Treasury yields have drifted higher on concerns that the Fed may be looking to raise rates in response to the strength of the economy reflected by first quarter GDP growth of 4.3%. Nonetheless, absolute rates still remain near all time lows and the yield curve remains relatively flat. The spread between 2- and 10-year Treasuries is currently 25 bps, versus the 10-year average 2- to 10-year spread of 99 bps.

US Securities Industry, Corporate Bond Sector and Asset Backed Securities

The securities industry has posted two consecutive quarters of very robust results on the strength of M&A activity, healthy underwriting volume in most sectors, material improvement in investor appetite versus the second half of 1998, and the corresponding return of liquidity. To the extent that reduced underwriting activity and lower M&A volume results from interest rate uncertainty and Y2K concerns the fourth quarter will be more modest. “Widening spreads in the recent months may dampen the current period results, although credit fundamentals (e.g. leverage, liquidity, risk appetite) remain sound,” said Robert Upton.

“Investor discrimination in the corporate bond market is unlikely to diminish as the U.S. debt markets remain under pressure,” said analyst Eric Stephenson. The high-yield sector is likely to continue to struggle and investor demand will be limited to large, liquid issues. According to Fitch IBCA, weighted average credit spreads for new high yield issues is over 560 bps. With respect to the high-grade sector, sizable, liquid deals will get done although issuers may face wider credit spreads due to waning investor appetite as we approach year-end.

The asset backed securities (ABS) market is anticipated to re-ignite in September and continue through October, particularly for the more traditional credit card and auto loan backed products. Beyond that, ABS issuance is expected to taper through year-end for all but the most frequent, high quality issuers, as concern over Y2K mounts.

“Today’s 25-basis point rate increase is not expected to have any negative impact on ABS transaction performance. Future increases, however, could negatively impact individual consumers’ balance sheets, leaving highly leveraged, marginal credit quality borrowers with even higher debt service burdens. To the extent those borrowers begin defaulting on their obligations, losses on securitized transactions backed by consumer loans would likely rise,” said Michael Dean.

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O’Scratch Cards

Oberthur Smart Cards announced this morning it is extending its phone card product range with the development of a global telecom prepaid solution which includes the introduction of ‘O’Scratch’ cards. Other parts of the new solution include manufacturing of scratch-off cards, automatic generation of hidden reload numbers and their secure transmission to the operators, as well as the design of complete presentation kits. With ‘O’scratch’, the user opens his account or replenishes his telephone credit for the amount indicated on the card. The prepayment function is managed entirely by the operator, who updates the user’s account information according to the HRN revealed under the scratching area of the card. ‘O’scratch’ cards are personalized by the printing of a secret HRN, a serial number, and possibly other options as requested by the client such as bar code, expiration date, etc.

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Scoring Class

Fair, Isaac says it is teaching credit counselors throughout the U.S. about credit scoring. The company recently held classes for member agencies of the National Foundation for Consumer Credit, also known as Consumer Credit Counseling Services. Fair, Isaac says one of its goals is to dispel the myth and reality surrounding scoring models in general. For example, the company explains that credit bureau risk scores only consider the collection, inquiry, derogatory public record and trade line information contained in the credit bureau report. The scores do not consider prohibited factors such as race, religion, gender and education. The NFCC, with 1,450 branches nationally, specializes in consumer debt workouts and bankruptcy prevention.

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Highly Confidential Tx

AboveNet Communications Inc., the architect of a global one-hop network that brings together high-bandwidth content sites, ISPs, and Application Service Providers in centralized co-location facilities, today announced a suite of secure services that are unsurpassed for meeting the physical security requirements of organizations with business-critical Internet assets, and the network security requirements of those using the Internet for highly confidential or sensitive communications and transactions.

Enterprise-class corporations in the financial services, health care, real estate, insurance, and manufacturing industries are demanding these advanced security services, as are many government agencies.

Secure Services build on AboveNet’s core competencies in co-location facilities, Internet connectivity and network services and include: Secure Vault for high level physical security, Secure IP Response for filtered network access, and Secure Connectivity for managed, high-performance low-latency bandwidth.

In a related release, AboveNet also announced today its Secure Alliance Program consisting of “best-of breed” technology providers that extend AboveNet’s open business model and offer additional security solutions.

For most Fortune 500 companies and government agencies, Internet security and reliability remain the major impediments to taking full advantage of the economies offered by Internet technology.

Outsourcing Internet connectivity is attractive to many of these organizations, however they require stringent physical security for their equipment and they want to be able to access their equipment in the same manner they can within their in-house data centers.

AboveNet’s new Secure Services gives these organizations the physical and network security they require plus many of conveniences they would have if they maintained their equipment in-house.

“In designing these three secure services, AboveNet was responding to customer demand for the utmost in physical and network security,” said Sherman Tuan, AboveNet Founder and Chief Executive Officer. “Now, our clients with highly confidential and sensitive information can have the best in security plus the benefit of AboveNet’s superior network and low-latency Internet connectivity, which AboveNet backs with the best service level agreement in the industry.”

“With Secure Services, corporations and agencies handling sensitive, confidential data and transactions can also enjoy the peace of mind that comes with AboveNet’s scalable network and non-stop facilities,” said David Rand, Chief Technology Office and AboveNet Co-founder.

Secure Vault

Secure Vaults are high security co-location facilities located within AboveNet’s Internet Service Exchange (ISX) facilities. Secure Vaults clients have 24X7 direct access to their equipment, with facility access managed by round-the-clock security officers, biometric hand scanners and iris scanners, multiple surveillance camera systems, interlocking bullet resistant doors, and shielded, reinforced walls.

The Secure Vault facilities are ISO 9002 certified, and were designed to meet Federal standards for secure data centers. No other major co-location facility has taken such steps to ensure as high a level of security for its clients.

Secure IP Response

Secure IP Response helps protect organizations from disruptive network intrusions and gives them better control over their Internet security. Secure IP response provides router level packet filtering and router level IP blocking of ports, addresses, and protocols predefined by each client.

To further minimize network disruptions, a state-of-the art network monitoring and response system detects intrusions and sets in place pre-defined response procedures.

Secure Connectivity

Secure Connectivity enables VPN solutions with national and global reach by leveraging AboveNet’s superior network and ISP partnerships. Through the equipment and services provided by AboveNet’s Secure Alliance members, Secure Connectivity is able to support up to 300 Mbps of 3-DES encryption.

Availability

AboveNet’s secure services are available today at AboveNet’s Vienna, Virginia Internet Service Exchange (ISX) and will be rolled out to AboveNet’s other ISX facilities beginning with the New York ISX facility in October of this year.

About AboveNet Communications Inc.

AboveNet Communications Inc. is a leading provider of Internet connectivity and co-location solutions for high bandwidth and business-critical applications. AboveNet, headquartered in San Jose, is the architect of the Internet Service Exchange (ISX) — a world class network that provides co-location services and Internet connectivity for Content Providers, ISPs and Application Service Providers (ASPs).

The AboveNet Global One-Hop Network is designed to deliver fast, scalable and reliable connections to the Internet and improves the Internet experience for end-users. With its Tier 1 status and ISO 9002 certification, AboveNet is seeking to serve the global community of the Internet. For more information on AboveNet and its service offering call 800/475-2733 or visit the company’s Web site at [www.above.net][1].

[1]: http://www.above.net

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Card Management

IFS International announced the market release of its new card management product, ‘TP-CMS’. The new modules extend the existing functionality of the ‘TPII’ family of products to encompass all aspects of payment card processing, and is the first of a new breed of card management systems to be designed with multi-function smart cards in mind. ‘TP-CMS’ utilizes the Oracle relational database to provide a graphical user interface and extensive capabilities in the area of report generation. Operating on the widest range of UNIX hardware platforms and supporting the mainstream communication protocols, including TCP/IP and X.25, ‘TP-CMS’ combines 24X7 availability with a simple operation interface. ‘TP-CMS’ comprises two main components: ‘TP-CMS Issuer’ and ‘TP-CMS Acquirer’. ‘TP-CMS Issuer’ modules provide support for all types of card products and manages the application process, issues cards (mag stripe or chip) and generates PINs. ‘TP-CMS Acquirer’ provides functions needed to manage merchants, ranging from application processing, opening of the merchant’s account through to the calculation of commissions and settlement.

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Providian Update

Facing cardholder and shareholder lawsuits, Providian Financial said last night that its processing centers have been given a clean bill of health by an outside auditor. The card issuer says that Ernst & Young has completed its study of key aspects of Providian’s six payment processing operations. In June, Providian hired E&Y to examine whether Providian is crediting payments to customers’ accounts on the date they are received. After performing test procedures at each processing site, four of which are operated by outside vendors, E&Y reported that it “found no evidence that Providian or any of its vendors were intentionally withholding payments.” Most of the cardholder lawsuits focus on Providian’s late fee policies. On July 22 Providian reported it discovered a computer glitch which improperly delayed the posting of payments received on weekends. The issuer is in the process of refunding nearly $20 million in late payment penalties improperly charged. Providian also announced Tuesday it will soon establish a pay-by-phone service to enable cardholders to “avoid the uncertainties and possibilities of delay associated with paying by mail.” The company expects the service to be fully operational by late September. Additionally Providian announced it is extending its enhanced customer satisfaction program for another 90 days.

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