NEW ORLEANS - Plain old deposits still are retail banking's revenue engine, and banks should get more focused if they want to get more of them.

That was the chief finding in research by First Manhattan Consulting Group, which gave the results of its latest work last week at the Bank Administration Institute's Retail Delivery conference here.

First Manhattan said interviews with top executives at 35 of the top 50 retail banks and about a dozen equity analysts showed that the most successful banks specialize in one or a few of six areas to build deposits: price, convenience, advice, service, tailored products, and best-customer recognition/rewards. Deposits accounted for 87% of banks' $39 billion of profits in 1999, said the New York firm, which was assisted in its research by the BAI.

"Breakout banks are choosing how to be defined," said James McCormick, president of First Manhattan. "To gain a share of the wallet, banks need to decide what their calling card is going to be."

For Commerce Bank of Cherry Hill, N.J., that would be convenience, something "it obsesses about," Mr. McCormick said.

Commerce was the first bank in its area to have Sunday hours. It also redesigned its branches to look and flow like fast-food outlets. And after many banks stopped offering coin-counting services, Commerce installed free coin-counters in all its branches.

Despite the cost increases it has entailed, Commerce's approach has helped its bottom line, Second Curve Capital chief executive Tom Brown said in a separate roundtable discussion.

"Commerce Bank provides below-the-market interest rates on deposits, but it still wins customers because it is such a convenient bank," Mr. Brown said.

Other banks focus on service by investing in their back offices or call-center representatives, or on saving customers money by offering free checking.

The only financial services company succeeding with several of the six areas at once is Charles Schwab, which excels at providing convenience, advice, recognition, and tailoring, Mr. McCormick said.

He added that most banks should try to perfect one thing before attempting to diversify. "Spreading over many segments is a fancy dance not recommended for most banks."

Most banks have the same technology investments as Schwab - large data warehouses, Web sites, and call centers - but are not taking full advantage of these resources, Mr. McCormick said.

Gordon Goetzmann, managing vice president at First Manhattan, concurred. "Though most analysts agree that banks have the information and the technology, they have not seen any action on it," he said.

Added Mr. Brown, "The key to winning is closing the gap between strategy and execution."

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