First Union Corp. of Charlotte, N.C., said it has cut the cost of training its tellers almost in half with a CD-ROM program that lets trainees proceed at their own pace.

By eliminating its dependence on human trainers, the bank reduced the average cost of teaching a new teller from $1,581 to $850. The expense reduction means the new system will pay for itself in two years.

"The teller population is so huge that despite the high up-front development cost, cost savings fall into place," said Sarah G. George, business manager of the bank's training division.

The short-term benefits of the new system are clear. By letting tellers train themselves on a computer, First Union can find new jobs for 26 full- time teller trainers who previously taught about 4,800 people annually.

In addition, the new system reduces the average time spent training from 10 days to three, and trainees with experience as cashiers or other teller- esque jobs often complete the program even more quickly.

However, computer-based training is not without its drawbacks, experts said.

"Some of the technology-based training has not been as effective as people hoped," said Robert E. Hall, chief executive officer at Action Systems in Dallas. "It was not because the training wasn't good, it was because the organization was not prepared for change."

Carl Faulkner, managing director at Phoenix-based M One Inc., said: "I tried to develop some of that stuff in a previous life. The big problem is that it doesn't permit the ability to ask a question and to have the interaction with the instructor."

Omega Performance, a Sausalito, Calif., firm specializing in bank training, sees interactive multimedia as a key to the future. It has borrowed from the concept of flight simulation to put a "virtual bank" on a video screen, and is customizing the system for banks in several countries.

"This will permanently change the competitive landscape in financial services," William S. Hann, executive vice president of KeyCorp, said at the recent Retail Delivery '96 conference. KeyCorp is using Omega's system to deliver sales training to 10,000 retail banking personnel.

First Union executives said they think they have addressed the potential problems.

For trainees who have questions that cannot be answered by the computer program, the bank has set up a toll-free help line.

And by taking computer-based training bankwide, First Union is sending a clear message about standards.

Feedback has been good so far.

"It was pretty self-explanatory after I figured out which disk to put in first," said Tracey Baxter, a commercial teller in a Charlotte branch.

Pilot programs began over the summer in 17 North Carolina branches. Branches of the former First Fidelity Bancorp. are slated to begin adopting the program in the next few weeks.

First Union is looking to sell its program to other banks through a division called First University. And the bank is considering using the system to train other classes of employees.

A generic version of the training program is available through the Multimedia Learning Institute of Irving, Tex., which worked with First Union on the CD technology, for $15,000. Banks purchasing the program also pay a $150-per-student licensing fee.

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