1st Union Hops on Financial EDI Bandwagon With a Line of Services for

First Union Corp., Charlotte, N.C., has announced a line of cash management services using financial electronic data interchange.

First Union is the latest of a growing number of cash management banks to offer EDI services to corporate customers as a way to help them streamline their accounts payable and receivable operations.

A form of electronic commerce, electronic data interchange is the business-to-business exchange of payments and payment-related documents in standard computer formats. In its purest form, it eliminates the need for paper-form processing and manual data entry.

"We are really committed to come out with cutting-edge products, and we want to be seen as a top EDI bank," said Karen Ogden First Union's assistant vice president and EDI product developer.

The service allows businesses to send to the bank or receive from it payment files and remittance information using direct transmissions, magnetic tapes, diskettes, or value-added networks.

First Union completed the installation of Sterling Software Inc.'s EDI system earlier this year. It is piloting the service with several undisclosed entities, including a health care organization and a government agency.

The anticipated growth in EDI, which has only recently started to materialize, prompted the bank's effort to provide full EDI services.

The reason for the slow acceptance of EDI is clear: Few banks want to invest up to $500,000 to provide a service that presently yields nominal returns, experts say.

But a growing number of banks, including First Union, are taking the financial EDI plunge anyway as a concession to large corporate customers who are increasingly demanding the service.

"If you are going to be in the cash management business, EDI is going to be a big part, because the customers are moving in that direction," said Rick Hollar, First Union's senior product developer. "Strategically, more and more banks are seeing that."

Late last year, First Union recruited both Mr. Hollar and Ms. Ogden from NationsBank Corp. and Boatmen's Bancshares, respectively, to bring more EDI experts to the bank.

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