To meet customers' needs in on-line and other direct channels, financial institutions must get past their historical tendency to be just transaction-processing factories, said Jack Antonini, executive vice president of First Union Corp.

"As an industry we're very good at processing transactions," Mr. Antonini said in a keynote speech to the Bank Administration Institute's direct banking conference in San Diego. "We're very good at getting volumes through."

"But today customers' desires and needs are changing," he added. "They want quick response times, minimal hassle, and a bank to be available whenever they need it. They want seamless services over multiple locations and channels."

He told his audience to "look at each customer encounter as more than a single transaction" and to take to heart the research that shows a person who has more than five relationships with a bank is a lot less likely to leave than someone who has just one.

"Relationship customers are more loyal," Mr. Antonini said, pointing out the difference between McDonald's, a transaction-oriented company that knows nothing about its individual customers, and a neighborhood restaurant where the chef knows people by name, as well as their likes and dislikes.

When banking contacts are made by telephone or in other ways not face- to-face, a combination of transaction and relationship is important. Banks need to keep the product set simple while giving the customer choice and convenience, said Mr. Antonini.

"You need to gather and leverage customer information and back it up with outstanding service," he said. "You really need a pervasive, cultural commitment to have outstanding service."

He said these ideas are embodied in the FutureBank approach that First Union plans to have rolled out to all 2,700 branches by yearend.

Mr. Antonini came to First Union of Charlotte, N.C., last August after two years with the monoline credit card company First USA Inc., now part of Banc One Corp. Before that he was president of USAA Federal Savings Bank, San Antonio, a prime example of a bank with no branches that relies on mail, telephone, automated teller machines, and, increasingly, personal computer contact with customers.

He recalled dealing at USAA with a "Valentine's Day Massacre," a Presidents Day-Valentine's Day weekend when 13,000 MasterCard cardholders were not authorized for purchases because of a network glitch invalidating their account numbers.

Overnight, USAA sent new cards to each affected customer via Federal Express and credited $50 to each account. The thrift also offered to communicate with any merchant to explain the problem on behalf of its cardholders.

The incident cost USAA $1 million, but Mr. Antonini said it illustrated "how to recover from a huge mistake. A situation that could have been disastrous turned into 1,500 letters from people saying they would be customers for life."

USAA built its direct bank, he said, by treating people "the way we would like them to treat us."

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