Seated behind a one-way window, Robert W. Newton watched one person after another type at a computer keyboard and tried to read their body language. Did their eyes flicker? Fingers fumble?

Over two weeks, the BankAmerica Corp. executive observed more than 60 people for an hour each, trying to detect any minor twitch that could signify discomfort with his company's evolving home banking product.

"It seemed like thousands," sighed Mr. Newton, vice president for product development, referring to the number of consumers who road-tested the system.

The tests are but one part of the exhaustive research behind BankAmerica's PC-based home banking products, which were announced along with other components of the San Francisco company's electronic banking program earlier this month.

Like many financial institutions, BankAmerica lets its customers pay bills and transfer money between accounts using personal computers.

But it breaks from the rest by allowing customers to choose whether their transactions will travel over the Internet (through the bank's World Wide Web site), or over America Online Inc.'s computer network.

The San Francisco-based bank also gives its customers the ability to download bank account information to the Meca Software Inc. program, called Managing Your Money, that helps manage personal finances.

"Our whole desire in bringing this new product to the market was to bring customers choice in how they access their home banking service," said Catherine Graeber, senior vice president and director of marketing for BankAmerica's interactive banking unit.

"We took the approach that it was best to launch all these simultaneously, so it was really up to the customers," Ms. Graeber said.

BankAmerica customers can use the new services interchangeably, and can supplement them with a bill payment via telephone service.

The suite of home banking offerings is perhaps the most powerful any bank has made available.

BankAmerica is the first to offer transaction capabilities through America Online, and it is one of a handful of banks that let people bank on the Internet.

The making of a fully transactional Web site and related set of home banking products took one year and involved more than 200 guinea pigs inside and outside the bank.

It started in June of 1995, when the bank created a new division, the Interactive Banking Unit, and staffed it with 200 people.

Most of the staff was hired to perform back-office functions, like customer service support for PC home banking and pay-by-phone services. But the leadership was charged with developing a new set of products from scratch.

Rather than getting bogged down in philosophical niceties, the first thing the group did was to create what Mr. Newton calls "a fully operational prototype."

"We started with the collection of functions that we thought we would want to deliver as a product, and we built a blue-screen model," Mr. Newton said. "It was divorced of any graphics or anything that might distract from the understanding of how to use the system."

Bank employees took the bare-bones version for a road test, then graphics were added to make the product more attractive and appealing. A full data base was also added, so that testers could actually sit and execute transactions. Then the working model was taken on the road.

Mr. Newton spent two weeks with consumers at branches in Northern and Southern California, asking them to perform tasks on the system and watching to see where they got stuck.

"We would ask them, 'Find your balance on March 23d at the end of the business day,' and they would have to navigate through and determine if that was in their current information or their historical file," Mr. Newton said.

After each tester was finished, bank officials used the feedback to make adjustments.

"We learned what was working and what didn't work, and we could immediately change the system on-site for the next tester," Mr. Newton said.

The experiment brought to light the need for an entirely new function that planners had not anticipated: a button that instantly gave customers their balance no matter where in the system they were working. The feature is called "Quickbalance."

"That was something a large number of testers asked for, so we created that halfway through the test," Mr. Newton said. "It was something that our remaining testers really enjoyed."

The product also was simplified so customers had to jump through fewer hoops to perform a transaction.

"Customers felt we were prompting too many times for the same questions," Mr. Newton explained.

Since the most common questions raised by the testers were about privacy, the designers made sure that information about security popped up frequently. They also added an icon in the shape of a lock that appears on- screen whenever a customer enters a "secure" area.

"They liked seeing the information about the security, and they felt it was important for us to communicate that," Mr. Newton said.

After the system was fine-tuned, it was subjected to further experiments among bank employees. Then, just before the launch, the bank brought its outside road-testers back to try the system for a second time.

While Mr. Newton was watching eye movements and finger dexterity, his colleagues were simultaneously conducting focus groups to figure out how to price and market the product.

"One of the things we clearly heard from consumers was 'keep it simple, keep it easy for me to navigate, and keep it easy for me to understand my choices,' " Ms. Graeber said.

Ultimately, the designers chose to emphasize text over graphics and to include lengthy explanations of how to use home banking and how much it costs.

The bank is offering three months of home banking free. After that, there is a charge of $6.50 a month to customers who do not maintain certain kinds of premium checking accounts. Customers who order the bank's customized version of Managing Your Money pay a one-time $9.95 surcharge, and access to the services is unlimited.

"Consumers didn't like the idea of a limit on how long they use it or how many transactions they can make," Ms. Graeber said.

With more than 50,000 merchants and other service providers already on- line as bill payment recipients, bank officials say their system is as comprehensive as they come.

"People can pay everyone from their day-care provider to their dentist," Ms. Graeber said. "Because we were able to keep the payment processing in- house and we didn't have to use an external processor, we didn't have to pass on transaction fees to the customer."

Except for some initial design work, BankAmerica designed and executed most of its home banking system on its own.

Netscape Communications Corp. provided help with the Internet link, and Destiny Software, a two-and-a-half year old company in Philadelphia, provided the technology necessary to hook BankAmerica's system to America Online.

"In electing to pursue multiple channels, BankAmerica's approach differs from many banks that are focusing strictly on the Internet," said David B. Tang, vice president of sales and marketing at Destiny.

As a part owner of Meca, BankAmerica also is promoting a new version of Managing Your Money that allows customers to tend to their finances through a direct modem link to the bank.

But even customers who use rival personal finance products, such as Intuit Inc.'s Quicken or Microsoft Corp.'s Money, can use them in conjunction with BankAmerica's Web site and America Online's service.

How have the new services fared? The bank is mum on numbers, but said that its newly enhanced Web site was getting more than twice as much traffic as before.

Most noticeable was the interest from outside the bank's service area.

"We definitely are getting new customers banking with us out of our geographic area," said Ms. Graeber.

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