For Online Resources and Communications Corp., 1998 could prove to be a defining year.

The McLean, Va. company is expected to launch an initial public offering in the next 12 months, and it is preparing to deal with an expected rush of new customers for its on-line banking products.

"If you think on-line banking has a decent future, then Online Resources has a decent future," said Bill Burnham, senior research analyst for electronic commerce at Piper Jaffray Inc. in Minneapolis.

"It has become much more focused on being an on-line banking service bureau for small- to medium-size banks, and that was a good strategic move," he added.

Online Resources almost quadrupled its customer base to 168 this year, and it has tripled its employee base to 152. The company anticipates landing 60 to 70 new financial institutions by yearend.

"Business is booming," said Matthew Lawlor, chief executive officer of Online Resources. "We've got the infrastructure in place and working. It's now time for us to move to profitability."

As part of that effort, the company is realigning management.

Three top executives in the last few weeks have resigned, leaving six senior managers. The departing are: Michael Heath, president and chief operating officer; Thomas Rideout, senior vice president in charge of client services; and Robert Drennan, executive vice president in charge of strategic alliances.

All three will retain seats on Online Resources' board of directors. Mr. Heath and Mr. Rideout (a former American Bankers Association president) are pursuing other interests. Mr. Drennan will continue to drive alliances for Online Resources, but will not work for the company full-time.

Mr. Lawlor said the moves would reduce costs and cut Online Resources' management team to a size more fitted to the number of employees. He added that one senior manager for every 16 workers was unnecessary.

"If we want to become a public company we need to be profitable," said Mr. Lawlor.

To help it meet demand for its products and services, Online Resources secured $20 million in equity financing in June. It expects to raise another $5 million to $10 million in the next month or so.

"Our concentration is to cope with our growth in getting our banks on- line and with more users," said Mr. Lawlor.

This quarter, Mr. Lawlor expects 25 banks to go live with Online Resources' banking platform, which lets users pay bills, transfer funds, view account information, and execute stock trades. There are already 63 financial institutions in production and 35 of these have launched the service to their customers.

The company can design and host a fully transactional World Wide Web site for a bank for $35,000. Online Resources also can provide at a similar cost banking applications for dial-up personal computer networks, screen phones, and regular telephones.

About one-third of Online's current customers use these media rather than the Web.

The low price is possible because "we've been at it for 18 months and as we're part of a much larger platform, our economies are better," said Mr. Lawlor. He said the company has spent $20 million building its technology infrastructure.

Edward Neumann, director of Dove Associates' Washington office, said customers seemed pleased with Online Resources' Web services.

He said, "The level of personalization and flexibility is limited. But that's as you'd expect from a price point that is geared toward smaller asset-sized institutions."

Mr. Neumann said the greatest challenge facing the company is to get clients in full production and to get them to promote the services to their customers.

Long-term Online Resources intends to continue providing home banking services through multiple delivery devices.

It also plans to continue offering middleware to connect home banking applications with existing electronic delivery channels, such as automated teller machine networks and call centers.

Though it expects to continue to offer bill payment and cash management, Online Resources has no plans to offer its own electronic bill presentment service.

Mr. Lawlor said his company would rather strike alliances with providers of presentment services, such as Checkfree Corp., American Payments Systems, and MSFDC, the joint venture between Microsoft Corp. and First Data Corp.

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