Through acquisitions and other strategic moves, banks have been trying for years to hit back at competitive threats from securities firms and mutual funds, yet always seem to come up short.

Now, through a combination of new thrusts and historical strengths, they may finally be in a position to dissuade customers from taking their investment dollars to a Merrill Lynch or a Fidelity Investments.

Banks begin with customer loyalty. Only 5% of the people responding to the 1999 American Banker/Gallup Consumer Survey said they did most of their financial business with nonbank brokerage firms and mutual fund companies.

By contrast, 51% do so with a commercial bank.

Though the bank number is down from a peak of 59% five years ago, it still represents far more leverage for cross-selling and other loyalty- and relationship-enhancing initiatives than any other class of institution enjoys. And banks' reputations for stability and service quality may stand them in good stead against the upstart on-line brokerage firms, which, the survey indicated, have yet to garner much in the way of primary customer relationships.

Five percent of financial households - those with at least one type of account that makes them eligible for the Gallup questioning - said they have used an on-line brokerage service. Only one of those 54 people said an on-line broker served as his primary "bank."

Commercial banks offering brokerage services connect with a vast majority of customers in person or by telephone, where selling and advising can be most effective. Only 9% of survey respondents said they used on-line access for bank securities services.

Banks may lack the glitz of the new wave of electronic brokers, but they have some hold on the public.

In a recent poll of 767 on-line investors by NFO Interactive Inc., 38% said they might go to their current broker, bank, or insurance company for an on-line trading service, if offered. American Banker/Gallup found that 22% of bank customers were interested in on-line services from their principal institutions - an opportunity that has been barely tapped.

In the NFO survey, 40% said they would consider opening a bank account with their on-line trading source. Also, 24% said they would like to consolidate all financial activities with their primary on-line provider.

"The advantage banks have is the (customer) relationship," said Richard Smiley, president of UBOC Investment Services, the brokerage arm of Unionbancal Corp., San Francisco. "It's an opportunity to introduce other services."

In recent years, banks have sought to become bigger in both brokerage and asset management in an attempt to prevent customers from taking their holdings elsewhere.

In 1994, Mellon Bank Corp. of Pittsburgh acquired Dreyfus Corp., a well known brand name in asset management.

First Union Corp. of Charlotte, N.C., has bought both fund management capability and the capacity to distribute products. It has rung up an impressive string of acquisitions in the investment area, including the company now known as Evergreen Funds in 1993, and the Richmond-based investment bank Wheat First Butcher Singer in 1998.

First Union has also agreed to acquire Everen Capital Corp., a Chicago- based regional brokerage house, which would bring to 6,259 the number of brokers operating under the First Union umbrella.

But banks have their work cut out for them.

Many have the capacity to provide all of what nonbanks like Merrill Lynch & Co. and Charles Schwab & Co. offer, but they fail to cross-sell effectively, said Neil Bathon, president of Financial Research Corp., a fund consulting firm in Boston.

"It is frustrating to see banks so under-realize their potential," Mr. Bathon said. "They have all the pieces. If they get them to work together, they would be able to compete."

"Theoretically, this should be a no-brainer for banks," said Robert L. Ash, managing director with Fleet Investment Management, a division of Fleet Financial Group, Boston. "Theoretically, banks have the broadest touch of any financial institution."

But commercial banks have been slow to view the customer as a single focal point with multiple product needs, Mr. Ash said. Rather, bank departments have been pitted against each other, and they have lost market share as a result.

"Twenty years ago, banks and savings and loans held 60% of customer assets; now that's at 25%," said Richard V. Downen, president of Bank of America Corp.'s brokerage unit.

"Customers have obviously voted with their feet," said Les Dinkin, managing principal of NBW Consulting Group, Westport, Conn.

A lot of consumers may look at banks as their primary financial relationship, he said. "The question is, what are they using them for?"

Only 2% told Gallup that they regard a fund company as their principal financial institution, and 3% said the same about a brokerage firm. Mr. Dinkin said those institutions are more likely than banks to garner the bulk of client assets.

The response by Bank of America Corp., Mr. Downen said, is to examine customers in their entirety, determine their needs, and refer them to appropriate parts of the organization.

'We find that a lot of our customers don't realize all the things we do," he said.

But if the banks' perspective is changing, so too is that of the customer, said Mr. Ash of Fleet.

"The traditional bank customer never viewed the bank as having the ability to provide investment advice," he said. Bank acquisitions of securities firms, like Fleet's deal for Quick & Reilly in 1998, have helped change the customer's viewpoint.

However, banks have to be careful when mining their traditional customer base for investment prospects, said UBOC's Mr. Smiley.

"We're talking about different products," said Mr. Smiley, who noted that education is a must for bank employees and for customers.

Despite the obstacles, "slowly but surely banks are starting to take a look at cross-selling," Mr. Ash said. But "it hasn't been done anywhere flawlessly yet."

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