By Geoffrey Adamson, Haim Mendelson
2001 | Case No. EC28 | Length 21 pgs.
Peter Kight, created CheckFree Corporation, an electronic payment service company based in Atlanta in 1981. By 2000 it dominated the fragmented electronic bill payment market, and provided the processing services for 350 financial institutions including 40 of the top 50 banks. The Internet had turned the financial services industry into a war between technology companies and banks, with payment systems as the first battleground. Though CheckFree had emerged the winner in 2000, fierce competition was growing from consortia set up by major banks to provide electronic bill payment and presentment (EBPP), amongst others. Having heavily invested to improve the quality of its service CheckFree pursued a strategy of acquiring competitive and complementary providers and forging alliances with major banks. CheckFree had three strategic challenges for 2001 1) to sustain its leadership position as the electronic bill presentment and payment market was transformed by bill presentment technology. 2) to manage its relationship with a small number of large bank clients as the banks themselves established competitive services, and 3) to diversify their services and reduce paper-based transactions without losing their core business. This case provides a vehicle for readers to discuss the issues CEO Pete Kight and CheckFree’s executives must consider in order to sustain the company’s value proposition for the future.
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