BankAmerica Corp.'s top retail banking officer declared Friday that the industry is in a battle for the hearts and minds of profitable customers-and he said his company is determined to win it.

"We are rapidly losing our relationship-if we ever had one-with the customer," H. Eugene Lockhart, president of BankAmerica's global retail bank, said in a speech to 600 industry executives. Unless banks start to see things from their customers' perspective, "I don't think the industry has a hope of achieving the relevance it hopes to achieve."

He offered prescriptions for how banks can reconnect with their customers. BankAmerica, he said, has embarked upon a highly focused campaign to understand and meet the needs of customers who are increasingly stressed out and strapped for time.

The challenges are basic but vexing, Mr. Lockhart said. For example, customers who have a mortgage, a credit card, and a savings account with BankAmerica have three different account numbers.

"Why do we do this?" Mr. Lockhart said. "We need to be integrating our service channels."

His bluntness captured the mood of American Banker's annual symposium on best practices in retail banking. Representatives from companies including First Union Corp. and Wachovia Corp. described steps they are taking to meet fast-changing customer needs at a time of intense competition.

BankAmerica, for its part, is studying customer preferences and recasting the retail strategy around needs-based selling. A BankAmerica executive who spoke after Mr. Lockhart said the company recently sequestered 40 executives for four weeks to "define the client experience."

The San Francisco-based banking company is also studying ways to revamp the core checking account and is mobilizing a corps of 1,250 relationship managers to home in on attractive retail customers and small businesses.

The effort is clearly taking a toll on the rank and file, Mr. Lockhart said.

"I look around BofA and there are a lot of tired people," he said. "A lot of people are attempting to cope the best they can with the rate of change."

Observers said the dramatic changes envisioned by Mr. Lockhart are well worth pursuing but will not be easy to execute.

"The short-term risk is 'metal fatigue'-the risk that your organization cannot accommodate the changes," said Anat Bird, senior vice president of Norwest Corp. and co-chairman of the conference. "But BankAmerica does recognize that there's a need for significant morphing, and they're willing to do what it takes to get there."

"For the last 10 years, banks have been product-focused,"said Thomas Brown, an analyst at Donaldson Lufkin & Jenrette and Ms. Bird's co- chairman. "We have to get everyone on the same page about being customer- focused."

As part of the effort to become more customer-focused, BankAmerica has stepped up its focus group interviewing. Describing a recent session he attended in Los Angeles, Mr. Lockhart recounted how one customer said, "When I think of BofA, I think of nothing."

"We spend $300 million a year making her think of nothing," Mr. Lockhart said with obvious dismay.

In an interview following his speech, Mr. Lockhart said banks must offer services that customers need while convincing them of their value-and without losing sight of the bottom-line.

A recently concluded study of BofA checking accounts exemplifies this approach. Later this spring, BankAmerica is likely to consolidate three of its seven basic checking products into one higher-priced offering for high- transaction customers, Mr. Lockhart said.

"Will we experience attrition from this? Sure," Mr. Lockhart said. "But we need to be compensated."

Marion R. Foote, BankAmerica's head of relationship marketing, said in a separate speech said the checking study should yield benefits for both customers and the bank's profitability.

"The core checking account is something that costs us more to make and deliver than our customers value it at," Ms. Foote said. "We all focus on the next frontier, but I think that product is a gold mine."

Ms. Foote conceded the bank has its work cut out for it.

"It's sad," she said. "If I weren't there working on trying to fix it, I probably wouldn't be a client myself. But we have a sense of urgency that won't quit. This is a mission."

Another top BankAmerica official, vice chairman and chief financial officer Michael E. O'Neill, touched on other aspects of strategy at the NationsBanc Montgomery Securities financial services conference last week in Marina Del Rey, Calif.

He said the company is focused on growth, but selectively.

"We have been somewhat inactive in the acquisition arena and that has suited us well," Mr. O'Neill said. "The business has been extremely competitive."

He added that it is open to selling virtually any part of its business "if the economics are there."

"We're much more interested in product expansion than geographic expansion," he said. Credit card and asset management are two retail areas that are slated for growth.

Divestiture plans would be dictated by the view that "if you're not No. 1, 2, or 3 in something, it's incredibly hard to make adequate returns," Mr. O'Neill said.

Over the past two years, institutional trust and retail operations in the Midwest and Texas were eliminated while the company grew in areas like merchant services, global capital markets, leasing, and brokerage.

Karen Talley contributed to this article.

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