American Express Co. launched an Internet-only banking service Thursday, taking aim at other ventures that have what Amex considers inferior brand recognition.

The service, Membership Banking, includes money market and checking accounts, certificates of deposit, bill payments, personal loans, and debit cards. It reflects American Express' desire to be a full-service financial institution and could pose a challenge to the proliferating number of companies pursuing virtual or branchless delivery strategies.

"We have a fabulous brand, and the Internet offers us the opportunity to launch into banking," said Alfred F. Kelly Jr., president of consumer card services for American Express.

Among those American Express is following into the on-line fray is, which was recently introduced by Bank One Corp.'s First USA credit card subsidiary.

In addition to the many other banks with self-contained Internet business units, Amex will also compete with Internet-only banks such as Net.Bank of Atlanta and Telebank of Arlington, Va. The latter has agreed to be acquired by the on-line brokerage company E-Trade Group.

"There is a lot of competition," said the PaineWebber analyst Gary Gordon. "But American Express has a brand name that will help them."

The idea for Membership Banking-the logo spells it "B nking"-was hatched about eight months ago, Mr. Kelly said.

Ruediger Adolf, American Express' senior vice president of strategic planning and business development, will be running the day-to-day operations. He reports to Mr. Kelly and to Harvey Golub, chairman and chief executive officer.

Mr. Golub said in a recent interview that he was spending most of his time focusing on Internet-related offerings.

"The Internet represents the new playing field," he said. "I believe the value of brands will become more important (on the Internet). People won't be comfortable investing on-line with a company they've never heard of."

Membership Banking is trying to making a splash with aggressive pricing, including rebates of up to $72 a year for automated teller machine surcharges. Customers who are charged for using ATMs will be eligible for four $1.50 rebates a month.

Among the other perks are money market accounts with yields of 5% and interest-bearing checking accounts.

Amex sees the rates as a way to "deepen its relationships" with customers, Mr. Kelly said. "We will leverage the American Express name, and we think it will overcome the barriers" keeping people from banking on- line.

Though Membership Banking does not invoke the American Express name, its Web site can be reached via American Express' home page. The initial marketing, which will include direct mail solicitations and advertising on the Internet and elsewhere, will rely on the Amex identity as well, Mr. Kelly said.

"We don't want to send a message that Membership Banking is only for our cardmembers," Mr. Kelly said.

This is not the first time Amex has attempted to win market share in the virtual world.

In 1996 the company introduced a telephone brokerage service called American Express Financial Direct. The business was eventually moved to the Internet, offering mutual funds, annuities, and money market accounts. In 1997, Amex folded Financial Direct into its Financial Advisors unit.

Mr. Kelly said that venture was not "as successful as we would have liked," but he added that Membership Banking is not meant to replace it. "That was primarily a brokerage service, and Membership Banking is" broader.

The banking venture gives American Express an outlet for debit cards, which were previously offered only in pilot tests, Mr. Kelly said. These cards are seen as the ultimate relationship banking product for consumers; 60% of U.S. checking account customers hold one, according to The Nilson Report, an Oxnard, Calif.-based industry newsletter.

American Express has "talked about the need to get bank customers and get involved with debit cards," said Mr. Gordon of PaineWebber. Membership Banking customers may use their cards at 94% of the ATMs in the United States at no fee through arrangements with top regional networks such as Star, MAC, Honor, NYCE, Cash Station, and Pulse. In addition, American Express has 4,000 ATMs of its own.

The initial targets of Membership Banking will be the one million Amex customers who have signed up for American Express Online, which lets them pay bills and monitor their Amex accounts on-line.

Centurion Bank of Utah, which holds Amex's credit card receivables, will hold the Internet operation's deposits.

Membership Banking does not currently offer credit or charge cards, but Mr. Kelly said, "This is version 1.0. We will continue to grow and enhance this over time."

Credit card industry investment banker Robert K. Hammer of Thousand Oaks, Calif., said he views Membership Banking as "a way to take existing customers and pump other retail products through that network. It is a way of boosting revenue without buying brick-and-mortar."

One difference from, said the analyst Brook Newcomb of Forrester Research in Cambridge, Mass., is that the Bank One affiliate offers products from other providers. It is making referrals to mortgage companies and has alliances with insurance companies.

By contrast, Membership Banking is offering only Amex products. "It has been said that Wingspan is going to run before it walks," Mr. Newcomb said. If Amex products cause any difficulties on the Internet, it will be "seen as an American Express problem," he added.

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