In a potentially ground-breaking move, First Union Corp. is testing interactive video technology that enables prospective mutual fund customers to meet electronically with investment experts.
The Charlotte, N.C., banking company is introducing the program in 14 branches this month. And if all goes well, the technology could be installed in many of First Union's 1,328 branches next year.
Though such interactive technology has been used rarely in banking -- and never in the investment products area -- First Union is pouring considerable energy into the project.
Testing Readiness
"We want to see if customers are ready for this," said Judge Fowler, senior vice president and director of systems development at First Union.
While the project is still in the experimental stage, First Union is hoping the technology will help it realize its goal of becoming one of the top banks in the mutual fund business.
Last year, First Union Chairman Edward E. Crutchfield Jr. announced plans to train 2,400 branch employees to sell mutual funds, and said he wants to amass $25 billion in the proprietary First Union Funds by 1998, up from $3.8 billion at present.
Taking a big step toward its mark, First Union is about to complete the purchase of a $3.1 billion-asset fund family, the Evergreen Funds.
In the video project, First Union is using technology developed by AT&T to link customers and financial advisers via television monitors. The system, known as Person-to-Person, also allows financial advisers to use a special pen to draw diagrams, illustrate calculations, and underline their messages.
"It's the John Madden approach," said First Union's Mr. Fowler, referring to the sportscaster who is known for drawing diagrams of football plays on the screen for television viewers.
Initially, the video conferences will take place in specially-equipped "bubble rooms" located at the 14 test sites.
The service is aimed at "high-end" customers making large transactions, Mr. Fowler said. By providing these customers with more in-depth investment advice, First Union hopes to boost sales volume.
Also, the arrangement would enable customers to connect with investment advisers who are licensed to sell a wide range of products, including individual securities and unit investment trusts.
In contrast, the sales representatives who staff most First Union branches are generally licensed to sell only mutual funds.
Industry observers say First Union's move into interactive technology underscores the company's commitment to mutual funds, though they are divided over whether the move will help First Union attract substantial fund assets.
Initially, the technology will be a way of enhancing services to bank customers, but in time it could help the bottom line, said Patricia Santelli, senior vice president and mutual fund sales manager at Huntington Trust Co., Columbus, Ohio.
"As people become more familiar with investment products, it could increase sales," she said.
Paul Hondros, president of Fidelity Institutional Services Co., said First Union's initiative is "on the cutting edge right now."
Although mutual fund companies like Boston-based Fidelity are not in a scramble to develop such technology, "if it works, it works, and we'll copy it," he said.
But others say the technology will do nothing to improve sales or add value for customers.
"People are just not going to use it," said Joshua M. Harris, president of Jupiter Communications Inc., a New York-based information technology consulting and research firm.
Mr. Harris said the older, affluent customers to whom the program is geared tend to be among the least comfortable with technology.
First Union is "trying to make the technology fit the application, and that's the absolute worst thing possible," he added.
Other Applications
Despite such criticism, First Union executives are pressing ahead.
Though the interactive technology has been well-received by early test groups, First Union is well aware that some customers may reject it as too impersonal, Mr. Fowler said.
Even if that happens, he said, the system is likely to have applications for the bank.
For instance, First Union plans to use the technology to conduct training sessions for branch-based investment sales representatives.
It could also be used to connect commercial lenders with underwriting specialists and to enable managers to review spreadsheets together, Mr. Fowler said.
In addition to introducing the interactive video product, which has been in testing for about two years, the bank is rolling out a similar prototype for mortgage customers. That system has been created by Picturetel Corp.
The visual telecommunications equipment manufacturer, based in Danvers, Mass., developed the system in partnership with International Business Machines Corp., Armonk, N.Y.
