American Express Co. has expanded its menu of investment services geared to clients who don't use brokers - and industry experts say bankers should take notice.

At a press conference this week, the company said its American Express Financial Direct program, launched in May, has been expanded to include:

*An on-line brokerage service for customers who want to trade stocks and bonds over the Internet. Customers can research individual securities, purchase mutual funds and annuities, see how the stock market is performing, and read financial news.

*Two hundred no-load mutual funds, including selections from Dreyfus Corp. and Janus Funds. The company is also selling its Strategic Funds, clones of the IDS Funds, managed by American Express and sold through its American Express Financial Advisors unit.

*A one-year FDIC-insured CD with a 5.90% annual yield, 75 basis points above the average rate set by Bank Rate Monitor, according to the company.

Consultants say the offerings, combined with check-writing privileges, make the New York-based card company a formidable competitor.

"What you have is the emergence of another player with muscle and a brand-name, which represents a threat to the banks, besides Fidelity Investments, Charles Schwab & Co., and Merrill Lynch & Co.," said Burton Greenwald, a mutual fund consultant in Philadelphia.

American Express Financial Direct's offerings are the same as those sold by top brokerage houses and mutual fund companies, which have already put traditional bank products on their menus.

American Express says it isn't trying to go after bank customers specifically. It claims it is just trying to keep up with Fidelity, Charles Schwab, and Merrill Lynch by offering a broad array of services.

"We're not competing with specific banks A, B, and C," said William J. Heron, president of American Express Financial Direct. But "at the end of the day, financial services companies - banks or otherwise - will succeed if they serve all their customers."

In setting up Financial Direct, American Express began to exploit its roster of 20 million card customers to reach investors who don't want a broker's help. The move is an aggressive expansion beyond its American Express Financial Advisors unit, which employs more than 1,000 investment representatives nationwide.

Banks also are trying to catch up to their competitors by seeking to serve the self-directed investor.

NationsBank Corp., Charlotte, N.C., announced last month plans to open a Charles Schwab-like supermarket, a discount brokerage offering no-load mutual funds. At the same time, Charles Schwab has begun offering NationsBank's funds.

And Citicorp is mulling plans to open its own version of a mutual fund supermarket, according to a source close to the bank.

Cleveland-based KeyCorp said it too will explore the self-directed investor market. That's something KeyCorp will look at in response to things like American Express Financial Direct, said Jack Kopnisky, president of Key Investments Inc.

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