News Release (Smart Card Forum): Friday, September 27, 1996 Consumers Can Be Confident in Smart Card Security TAMPA, Fla. -- Two scientists at Bellcore announced a theoretical model for penetrating the security of smart cards and other tamperproof devices. It is important to point out that this is just a mathematical theory. The Smart Card Forum does not believe that this theoretical attack presents a real-world risk. Multiple techniques are used together to make the entire system secure. And good systems are designed so that they cannot be attacked successfully at a single point. Even if a single card could be compromised, though unlikely, it would not compromise an entire system nor allow the production of counterfeit cards. That is not to say that Bellcore's work is not useful. In fact, the Smart Card Forum encourages this type of healthy speculation because of the importance of ensuring that all security issues be considered, analyzed and resolved as early in the product design as possible. For a smart card product to be successful, consumers must have confidence in its security. The Bellcore research should not be perceived in any way as diminishing the security of smart card products consumers are now using. The smart cards used in North American stored value trials today are not vulnerable to this theoretical attack. The Smart Card Forum The Smart Card Forum is a non-profit, multi-industry membership organization promoting the widespread acceptance of multiple application smart card technology in North America. Its primary mission is to bring together in an open forum, leaders from both the private and public sectors to address topics associated with the development and evolution of smart card technology applications. The Forum was established in September 1993 and currently has more than 225 corporate and government members including: Chase Manhattan, Citibank, Bellcore, MCI, MasterCard, Visa, IBM, Microsoft, Mobil Oil, Schlumberger, Gemplus, Delta Airlines, U.S. Postal Service, the Federal Reserve, U.S. Department of Treasury and U.S. Department of Defense. Dow Jones: Friday, September 27, 1996 Chase Says Findings Won't Halt NYC Smart Card Plan A potential security flaw in electronic cash cards found by Bellcore scientists will have no effect on a pilot program to test the cards in New York City early next year, a leading bank involved in the program said. Chase Manhattan Corp. (CMB) spokesman Ken Herz - speaking on behalf of a consortium that includes Citicorp (CCI), Visa International and MasterCard International Ltd. - said Bellcore's warnings won't hinder the roll-out of the pilot program. ''The industry is well aware of the vulnerabilities of the system,'' Herz said, adding that the consortium members have discussed the potential problems ''for months now.'' Herz said the consortium is planning to test the cards during the first quarter of 1997 with about 50,000 Chase and Citicorp customers on the Upper West Side of Manhattan. American Banker: Friday, September 27, 1996 Why Intuit Pulled Plug on Home Banking Processing By DREW CLARK Intuit Inc., which boasts of being able to turn on a dime, proved it could with its decision to get out of the processing of home banking transactions. An acquisition that looked so smart just two years ago turned into an albatross. When 40 top executives gathered at Mountain View, Calif., headquarters last month to determine the fate of Intuit Services Corp., the answer quickly became evident. As was announced last week, Checkfree Corp. agreed to buy the unit for $228 million in stock. "We have always anticipated this change, but we did not anticipate that it would come so fast," said Intuit executive vice president William H. Harris. Intuit bought the Downers Grove, Ill., processor, then known as National Payment Clearinghouse Inc., for $6.8 million in 1994. Overnight, Intuit established itself as the leader in handling transactions emanating from PC-based financial management programs. By this year, though, bankers have been complaining loudly about service quality and worrying aloud that Intuit wants to control their relationships with users of its popular Quicken software. Complicating matters for Intuit, as it was dealing with rapid growth in transaction volume this year, was a flurry of new entrants -- banks as well as software companies -- into the home banking market. The Intuit executives knew they had to take action. Should they add to the more than $30 million already spent on Intuit Services, or cut their losses and refocus on the core software business? "We put up on a board a list of the highest priorities that we wanted to address," Mr. Harris said. "The list was overwhelming." Besides home banking and bill payment, the company envisioned itself connecting customers to mutual funds, insurance, and tax preparation as well as facilitating bill presentment and electronic commerce. It became obvious to the executives that ownership of Intuit Services was not helping them to meet those priorities. "By the end of the process, there was close to complete unanimity," said Mr. Harris, who reports to chief executive William V. Campbell. "A number of people changed or modified their points of view. There were those who argued we could innovate faster by continuing to do every part of the chain." Once they decided to sell Intuit Services, the software company's leaders moved on the issue of openness. "We needed many people to help us," Mr. Harris said, "and one of the ways to get other people to help us was to open up our system." Along with the announcement of the sale, Intuit said it would decouple its financial software from the back-end processing network to be owned by Checkfree. No longer would banks be forced to use the facility for back-end processing and bill-paying work. Under a new regime called OpenExchange, Intuit promised to release software specifications by the end of the year. Banks and other financial institutions will be able to offer customers on-line access to Intuit products regardless of their payment processor. Mr. Harris said the decision "frees us up to concentrate on the front-end software and allows us to find appropriate partners" for back-end processing. But he added, "one of the disadvantages of an open approach is that you depend upon your partners." "This decision underscores the trend toward open standards in on-line financial services," said Marc Singer, a consultant with McKinsey & Co. in San Francisco. "It also illustrates the importance of collaborating to compete. In an uncertain environment you have to stake out positions and continually revisit them." Securities analysts also praised the evaluation of Intuit Services Corp. as "a drag on earnings. Intuit wants to hold on to the lead, and this will make Intuit more appealing to the large banks," said Steve Higgens of Bear Stearns & Co. in San Francisco. Although Intuit's move toward open software came just a week after the bank-owned Integrion Financial Network emphasized its own "open standards," Intuit officials insisted that the timing was coincidental. Quicken 6.0 for Windows is scheduled for release in October. The 1997 version will be the first to comply to the OpenExchange standard, Mr. Harris said. "We've done a lot in a hurry." He expressed no regret about the company's two-year experiment in payment processing, saying Intuit technicians had learned much by establishing back-end connections to banks and bringing many customers into the home banking field. "When we purchased National Payment Clearinghouse, the only viable way to connect securely with large numbers of consumers was through a private network and on a central hub," said Mr. Harris. "That was true one year ago, and probably even six months ago," he added. "It was now time for us to adjust our connectivity strategy and embrace the open approach." Intuit now hopes OpenExchange will be its gateway to the Internet. The company plans to implement Internet connections for on-line investment activities next spring and for on-line banking and bill payment next fall. "Today," said Intuit chairman Scott Cook on the day the sale and OpenExchange were announced, "rapid advances in safety and reliability of the Internet make it the central focus of our overall connectivity and business strategy." OpenExchange is akin to other protocols being developed by Intuit competitors. But unlike Microsoft Corp.'s Open Financial Connectivity and Visa Interactive's ADMS (Access Device Message Specification), OpenExchange will also transmit nonbanking financial information. Intuit hopes thereby to encourage sales of its investment, tax, payroll and accounting software. American Banker: Monday, September 30, 1996 Bad News for High-Tech Lending: Borrowers Prefer People By Edward Kulkowsky About 97% of all homeowners prefer to apply for mortgages in person, according to a survey by the Mortgage Bankers Association. The finding suggests that there might be tough sledding ahead for lenders considering alternative marketing channels for mortgages, such as the Internet, phone, and video conferencing. The survey uncovered other consumer preferences that could be useful to lenders. "The findings are expected to help mortgage lenders more precisely target current homeowners to refinance, as well as help them retain their own current borrowers," said David Lereah, the MBA's chief economist. "Further, the information contained in the study provides investment bankers and institutional investors with an analysis of which types of mortgages are likely to refinance, in order to better predict prepayment speeds on mortgage-backed securities." The MBA said the final report and a data tape of the complete study, "Mortgage Refinancing Practices and Decision-Making Dynamics," is available for purchase. The tape provides extensive demographic data that can be sorted and stratified by 169 fields, according to the announcement. All 1,500 respondents originated or refinanced a loan between January 1991 and March 1996. The survey found that borrowers had limited loyalty to their current lender. About three-quarters of the 1,500 respondents to the survey were willing to consider lenders in addition to their present provider. About 80% of those who plan to remain in their homes more than five years said they would refinance if rates fell by one to two percentage points. More than half reported having refinanced their original mortgages, motivated primarily by attractive rates and lower fees. Other key findings: * Some 80% of those who refinanced now have fixed-rate loans. * About three-quarters of those who did not refinance already had fixed- rate loans, and two-thirds have loans with rates of 6.6% to 8%. * About a third of those who refinanced took out loans larger than their outstanding balances. * About half of the respondents said "too much paperwork" was the major difficulty in the refinancing process. The study was sponsored by the MBA, Citicorp Mortgage Inc., First Union Mortgage Corp., First Chicago NBD Mortgage and Norwest Mortgage Inc. and was conducted by R.S. Carmichael & Co., a market research company. News Release (Microsoft): Monday, September 30, 1996 Survey Shows Americans Struggle with Financial Fitness Experts look to PCs and Personal Finance Software for Better Money Management Results from the recent Money '97 Financial Fitness Survey reveal the average American's state of financial fitness falls well below expert guidelines. Microsoft Money '97 personal finance software commissioned the telephone survey of more than 1,000 respondents, in conjunction with the release of the latest version of the software package, to gain a better idea of how Americans are currently managing their personal finances. Some financial experts point to the online revolution as a promising part of the solution to America's woes. Studies show that over 750,000 households are already using online banking, with projections for a staggering 13 million by the year 2000. Computers and personal finance software are dramatically improving America's potential to gain control of their money management. For so long, so many have struggled to face the numbers, dreaded the monthly reconciliations and wondered whether they were really saving enough. But help is here in a way generations before never imagined. With a PC and personal finance software, people can now sit in the comfort of home and use online banking to pay bills electronically, reconcile check registers, transfer funds, and so much more. This new technology opens up a whole new world of financial ease and control for household money managers. Survey Reveals Persistent Trouble Spots Conducted by Opinion Research Corporation of Princeton, NJ, the Microsoft Money '97 Financial Fitness Survey compares American's personal finance management practices with the advice of leading personal finance experts in four key areas: 1) Budgets, Tracking & Categorizing; 2) Savings & Investments; 3) Credit Cards & Banking; 4) Retirement & Big Ticket Items. In all four fitness categories, the survey shows that many Americans struggle with common problem areas. For example: On Budgeting Experts say a solid, categorized budget is the foundation for financial fitness, however: * only 37% of Americans follow a categorized spending plan, while 42% simply pay bills and allocate what's left. Another 17% say they just don't budget at all. On Saving The advice "Pay yourself first!" is a familiar battle cry among financial experts, however: * more than half the Americans surveyed (56%) admit they do not set aside a fixed amount or percentage from each paycheck. Regarding those all-important personal emergency funds, experts say we should have a minimum of two months living expenses on hand, however: * among households with children between 12-17 years, a distressing 51% have either no funds tucked away or only enough to cover 2-4 weeks in a crisis. On Credit Paying high interest on credit card debt can negate gains of other good investments, however: * among the 76% who have credit cards, more than half don't pay off their balance each month, needlessly incurring finance charges and further debt. Planning for the Future It's important to know early on what we'll need for the big ticket items like college or our own retirement fund. However: * on college tuition, among households with children under 12 yrs, a surprisingly high 71% could not correctly estimate the cost of sending a child to one year of state university 15 years from now ($22,000). * on inflation, only 18% of Americans were able to correctly identify how much today's dollar will be worth in 20 years (38 cents). The Easy Way To Manage Money "The Money '97 survey does signal some troubling financial fitness problems," says personal finance expert and best-selling author Neale S. Godfrey ("Money Doesn't Grow On Trees," "A Penny Saved," "From Cradle to College"), "But it's my job to tell people, 'it's okay,' and where to go from here." Godfrey and other experts advise would-be money managers to start by getting the right tools and getting organized. Says Godfrey, "I use Microsoft Money to help people manage their money on a day-to-day basis and to see their complete financial picture. Then, they continue using it to keep finances in shape." Jack B. Root, President of Successful Money Management Seminars (SMMS) notes, "By computerizing personal finances, the formerly unfit will soon be able to determine exactly where their money's going. They'll have the understanding needed to set long term goals, make strategic decisions and stay in control." Microsoft Money '97 is an excellent task-based tool for tackling the most common financial fitness problems. Money '97 is quick and simple to learn, and helps the user work from categorized budgets, track finances, easily manage accounts and pay bills electronically (no more checks!). Even for the well-disciplined home finance manager, the online banking feature of Microsoft Money '97 can be a real time-saver and expand options. The user can easily download statements, balance accounts and transfer funds from home. In the Money '97 Financial Fitness Survey, nearly a quarter (22%) of respondents admit they reconcile their checking account to a bank statement (when notified of insufficient funds) only occasionally or never. But even for the many who reconcile regularly, studies show all but one percent are doing it the tedious manual way. Online banking allows people to access statements and reconcile checks at the touch of a button. Money '97 Launches National Financial Fitness Campaign To help America set out on the road to recovery, Money '97 is launching a national Financial Fitness Campaign. The multi-tiered program kicks off with free, open to the public Financial Fitness Events in New York, Chicago and San Francisco. Regional survey results and Money '97's campaign for change led the mayors of all three cities to declare "Financial Fitness Day" on the date the event comes to town. Participants will have a chance to take a financial fitness test, have their most pressing fitness problems diagnosed, and meet with financial experts for advice and information. The Money '97 training team will also be out in full force helping event-goers learn how to computerize their finances. Download Trial Version of Money '97 Free at MoneyZone Americans will have easy access to the tools needed to get started on their own financial fitness program. Beginning September 30th you can download a trial version of Money '97 for free (connect charges apply). Just go to Microsoft MoneyZone on the World Wide Web at www.microsoft.com/moneyzone. MoneyZone also links users to product support, a complete list of Money '97 ONLINE bank partners and a wealth of other personal finance management information. Additionally, working with Money '97, Successful Money Management Seminars (SMMS), will conduct ongoing seminars across the country to help Americans improve their financial management skills. Founded in 1975, Microsoft (Nasdaq: MSFT) is the worldwide leader in software for personal computers. The company offers a wide range of products and services for business and personal use, each designed with the mission of making it easier and more enjoyable for people to take advantage of the full power of personal computing everyday. --- Dr.Dimitri Vulis KOTM Brighton Beach Boardwalk BBS, Forest Hills, N.Y.: +1-718-261-2013, 14.4Kbps