After struggling for years, banks are starting to make a big mark in mutual funds management.

At the end of 1998 banking companies were managing 17% of all mutual fund assets in the United States, up from 10% just five years ago.

Equally telling, 47 banks were each managing more than $20 billion of assets, up from just one bank in 1993, according to data from Lipper Analytical Services. The $20 billion mark is considered a sign of serious commitment.

Many banks say they are already reaping the rewards that come with size. And few are planning to let up.

"The growth is just beginning," said Sarah E. Jones, managing director in Chase Manhattan Corp.'s global asset management and mutual fund group. "Banks have the self-confidence to feel that we're credible players."

Chase's fund family ended the year with $43 billion under management, up from $5 billion five years ago. And Ms. Jones predicts the total will hit $100 billion by 2000.

Plenty of others are also shooting high. KeyCorp, which closed the year with $16.5 billion under management, plans to hit $50 billion within five years, said Kathleen A. Dennis, a senior managing director with Key Asset Management. Just five years ago, the Cleveland banking company barely managed $1 billion.

To be sure, these banks and others are still a long way from the upper echelons of the fund industry. Fidelity Investments, the industry leader, managed some $691 billion of fund assets as of Dec. 31, according to the Investment Company Institute. Vanguard Group was the No. 2 U.S. asset manager, with $435 billion under management.

But banks have unquestionably made big strides since the early 1990s. Back then, most were dismissed as bit players that lacked the commitment, skills, and culture needed to succeed in the burgeoning funds industry.

Gradually, those doubts have faded.

"What's changed is our need to have to justify our existence,"said Ms. Dennis of KeyCorp.

Five years ago the fund group had to fight for the attention of the company's distribution channels, such as branches and retirement management units.

"They said, 'Tell me why you're better than Fidelity, better than Putnam,'" Ms. Dennis recalled. "Now that we have the performance, it's easier."

Increased size also makes it easier for fund management units to reinvest profits and expand beyond their geographic markets, said W. Christopher Maxwell, a principal and investment consultant with Maxwell Associates, Rock Hall, Md.

"It is extremely expensive to compete outside your footprint," Mr. Maxwell said.

Some banking companies, like Mellon Bank Corp. and Citigroup, already are in the mutual fund major leagues, with well over $100 billion under management. Others are clearly on the way, propelled by acquisitions, growth of sales forces, and programs to distribute funds through third parties.

"Banks that are north of $20 billion are the ones that have made the decision they want to be players in the fund business," Mr. Maxwell said.

The future is less clear for banks that have $3 billion to $10 billion under management, Mr. Maxwell said. But it is by no means hopeless. For example, he said, these banks could forge strategic alliances with one another to market funds.

"The more intelligent banks will take a creative way to go after this business," Mr. Maxwell predicts.

Certainly, many banking companies have set their sights on asset management.

"Banks are still banks and the drivers of banks are still deposit products and loan products," said Robert L. Ash, a managing director at Fleet Investment Management. "But right underneath that is an emerging recognition at most large banks of the importance of asset management and the revenue stream it provides."

Fleet acquired Columbia Asset Management in 1997 and has aggressively marketed its proprietary fund family, the Galaxy Funds.

Chase, in its growth plans, is betting partly on its extensive U.S. distribution network, which gives the company access to 80,000 brokers. The bank will also look to the developing investment markets of Japan and Europe, Ms. Jones said.

KeyCorp, meanwhile, plans to leverage its October acquisition of neighboring brokerage firm McDonald Investments. That has doubled Key's brokerage force, to roughly 700 representatives. The banking company is also forging external distribution relationships.

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