As electronic banking networks continue to consolidate, TYME Corp. is asserting its autonomy.

A pioneer among shared automated teller machine systems and long secure in its home state of Wisconsin -- where ATMs are commonly called TYME machines -- the company is making plans to expand into new territory and broaden services to the Internet.

Besides setting its terrestrial sights on Minnesota, the Brown Deer, Wis.-based network is exploring the idea of becoming an Internet service provider for financial institutions, and possibly their customers.

Under president James H. Martin, TYME has virtually saturated Wisconsin. It handles more than 8 million ATM and point of sale transactions monthly. TYME is far and away Wisconsin's leading network, with more than 17,000 ATMs and POS terminals there. Its member financial institutions hold more than 90% of the consumer deposits in the state, Mr. Martin said.

For the past two years, TYME has worked with consultants to evaluate options, including selling the network or merging with another. Ultimately, the board of directors chose expansion -- first in Minnesota and later perhaps in Illinois and Michigan, where some of its banks own a few ATMs.

"The staff's marching orders are to grow this business," Mr. Martin said. TYME has a "strong and viable future remaining an independent network."

As ATMs have proliferated, regional electronic banking networks have grown handsomely though shrinking in number. Much of the early consolidation was driven by smaller networks that found they needed more transactions to operate profitably.

More recently, networks have followed their biggest bank members into the superregional category. Banks that belong to two or three regional networks after acquisitions have encouraged the networks to consolidate.

Minnesota's market is led by three electronic banking networks: Fast Bank, which is owned by Minneapolis-based U.S. Bancorp; Instant Cash, owned by San-Francisco-based Wells Fargo & Co. since its merger with the former Norwest Corp. of Minneapolis; and Express Teller, owned by Minneapolis-based TCF Financial Corp.

Mr. Martin said it is an opportune time to establish a presence in Minnesota. TYME is hoping to take advantage of the turbulence caused by the last few years' megamergers. As the dust settles, some smaller banks could get left out in the cold, he said.

"There are a lot of unanswered questions that imply some uncertainty to the future of those networks in that marketplace," he said.

TYME, which is owned by 400 financial institutions, touts its strong ties to smaller banks. Fewer than 10 of its 600 participating financial institutions have assets exceeding $1 billion.

"Out of an (elected) board of 15, we've got nine directorships that represent the small to medium-sized financial institutions," Mr. Martin said.

The network plans to market its nondiscriminatory pricing, cost-effective access, and full range of products available to all institutions.

There is a "real lack of organizations that can address the needs of community financial institutions," Mr. Martin said. "The small to medium-sized financial institutions are what have made us successful, and that's the type of institution that we feel we can service."

Still, the network has set conservative growth projections for Minnesota. It will not try to cover the entire state right away, Mr. Martin said. Of 350 financial institutions targeted in the state, TYME aims to have 35 signed up within three years.

Milwaukee-based Firstar Corp., a TYME stockholder, has switched its 40 ATMs in Minneapolis and St. Paul to TYME from Instant Cash and plans to add 60 machines in the area by yearend.

Mr. Martin said the real sign of success will be getting financial institutions not affiliated with TYME stockholders to participate.

First State Bank of LeCenter, Minn., about 40 miles southwest of Minneapolis, has recently signed a contract with TYME, and the network has three other "very good possibilities" for contracts, he said.

"At this point, we're very pleased with the reception that we've gotten," Mr. Martin said. Year-2000 conversion issues have made banks reluctant to make changes right away, but the network is trying to build relationships now that will bear fruit by February or March, he said.

TYME has hired former Norwest Card Services executive Peter Leschisin to develop the Minnesota market, particularly the Minneapolis-St. Paul area. He is one of three "relationship managers" at the network; the others cover northern and southern Wisconsin.

"Pete certainly came to us with the credentials that are going to help us in Minnesota," Mr. Martin said.

Because the ATM card processing industry is mature, regional networks are under pressure to prove their relevance to the banks that own and hire them. Offering new types of services -- particularly ones that relate to the Internet -- is one survival tactic, and Mr. Martin said TYME is evaluating Web options.

One possibility is to play host to transactional Web sites for financial institutions, and others are under consideration.

"Most of the networks focus simply on the consumer side," Mr. Martin said. "We think there are some real opportunities to provide services to banks on the commercial side."

Still, TYME faces stiff competition in Minnesota, said Ann Schmitt, a former U.S. Bank executivewho is now a senior associate at Dove Associates Inc., a Boston consulting firm.

U.S. Bank, formerly First Bank of Minneapolis, and Wells Fargo both have strong correspondent bank businesses in Minnesota, and their relationships with financial institutions run deeper than their network ties, she said.

Additionally, with U.S. Bank's recent acquisition of Pittsburgh-based Mellon Network Services, a transaction processor, the former may be poised to bring new and innovative offerings to the state, Ms. Schmitt said.

"It's going to be incumbent upon TYME to really come in and differentiate itself from other competitors that are already entrenched in the market," she said. Since the banking market in Minnesota is not growing noticeably, the networks there must rely primarily on stealing financial institutions from competitors.

David W. Lott, director of Collective Dynamics LLC, an Atlanta consulting firm, said transaction routing costs are crucial in a bank's choice of networks. TYME must offer its services at the right price to lure banks away from their current networks, he said.

"I would say that there's an opportunity there, but it's not a slam dunk," he said.

Alan P. Pohlman, executive vice president at Carmody & Bloom Inc., a Ridgewood, N.J., consulting firm, said TYME may also be looking over its shoulder at NYCE Corp. of Woodcliff Lake, N.J. That ATM network giant recently acquired Michigan-based Magic Line Inc. and may be a more formidable competitor in the Midwest, Mr. Pohlman said.

Mr. Martin said he would not be surprised if NYCE tried to move into Wisconsin. So far, it has pushed no farther than Illinois.

Concord EFS Inc.'s MAC network, based in Wilmington, Del., is a tough competitor in Wisconsin, Mr. Martin said, but "we don't normally lose when we get into a competitive situation."

Mr. Pohlman said the Minnesota initiative is definitely in keeping with TYME's interest in staying independent. "Networks that have not sought to expand have eventually been acquired," he said.

Though size offers some protection against consolidation, Mr. Lott said, Minnesota is a relatively minimal expansion. "It's not like taking the whole Northeast," he said.

TYME has strong ties with its loyal members, Mr. Martin said. Unlike Magic Line, which was owned by a small group of financial institutions, TYME has broad ownership, and it would take a two-thirds vote to approve a sale or merger. He said these structural characteristics are common to only three other networks -- Houston-based Pulse EFT Association; Johnston, Iowa-based Shazam; and Lincoln, Neb.-based NetWorks.

"It's a lot easier to get seven organizations to agree to do something than it is to get 400 and some," Mr. Martin said. "This corporation will not merge or be sold unless its stockholders agree that it's time to do that, (and it would) have to be an awful good deal before it would happen."


BOSTON -- The SUM ATM Program, a Massachusetts automated teller machine surcharge-free alliance, is to be made available to financial institutions throughout the Northeast and Puerto Rico.

Effective in early October, NYCE Corp., the Woodcliff Lake, N.J., ATM network that administers the program, plans to open it to NYCE member financial institutions in Connecticut, Delaware, Maine, New Hampshire, New Jersey, New York, Pennsylvania, Rhode Island, Vermont, and Puerto Rico.

The SUM program was begun last October in response to the introduction of ATM surcharging in Massachusetts. It was initiated by the Massachusetts Bankers Association and is endorsed by the Community Bank League of New England and the Massachusetts Credit Union League. The program currently includes 1,369 ATMs that offer service surcharge-free to the customers of 226 participating Massachusetts banks and credit unions.

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