where it counts the most - in the minds of the American public. While Congress and industry lobbyists continue to haggle over charter differences, Glass-Steagall Act reform, and other issues, the consumers who responded to the 1995 American Banker/Gallup survey have pretty much gotten on with life on a level playing field. They still tend to vote with their feet and deposits in favor of commercial banks over other intermediaries, and they tend to view banks as more solid and trustworthy than many of the nondepository upstarts. But there are clouds on banking's horizon in the form of lower market shares and a public that, like the financial industry itself, "is not compartmentalized anymore," said Allen R. DeCotiis, president of Payment Systems Inc., Tampa. Commercial banks still hold a majority of "primary" household relationships, at 53%, but that's down from 59% last year, the survey said. A total of 8% said they do most of their financial business with a provider other than a bank, thrift, or credit union - almost two points higher than in 1994 and well above the 4.4% Gallup found in 1991. Mutual fund companies alone registered 2% in 1995 and only 0.5% in 1991 - small numbers with limited statistical significance, but clearly indicative of the trend. A quarter of those who designated a nondepository as their primary provider named a mutual fund; 19% cited a stockbroker and 22% a mortgage company - probably reasoning that it gets the biggest payment of the month. Almost half of the mutual fund users and 19% of all the nondepository users had household incomes above $75,000. "We grew up with the lines blurred," Mr. DeCotiis said. "The product mixes are blurring together. Consumers will buy anything from anybody." "Surveys show it's still convenience that decides the customer's choice of financial institution," said David Van L. Taylor, group executive at the Bank Administration Institute in Chicago. "But the definition of convenience has changed dramatically," he added. "It's not just branch locations. It's increasingly remote access, on-line access, and how are banks going to hold onto their customers in that very different world?" Mr. Taylor and others say bankers must respond by strengthening their brand identities and girding for battle on what may be the most level of all fields - the electronic superhighway of the Internet and other interactive computer networks. Otherwise, the banks may end up haunted by the old adage that they should have been more careful about the future they wished for. Consumers already appear to be disregarding any technical distinctions between commercial banks and savings institutions. Perhaps burying the legacy of the savings and loan bailout once and for all, customers gave banks and thrifts virtually the same satisfaction ratings this year. Six out of 10 people said they were very satisfied with their principal financial institution, be it a bank or thrift. The banks held steady on this score, while thrifts were up five percentage points. Credit unions widened their perennial lead in service quality, with 77% of their principal relationships "very satisfied." This was up by five points, returning almost to the 78% peak of 1991. When asked to make comparisons, about half of bank customers with exposure also to thrifts called them equal in service quality, trust, and confidence. Credit unions were a shade behind in the same kind of comparison, scoring much like mutual funds. For example, 39% of bank customers had more trust and confidence in the banks than in mutual funds, and 35% had more trust and confidence in the banks than in credit unions. Banks and mutual funds were considered "the same" by 32%, banks and credit unions by 34%. These findings closely tracked a similar set on the question, "Is the quality of service you receive from the banks you use better or worse" than from the other types of institutions? Compared with rival mutual-fund providers, banks may not be as strong as they appear, warned Geoffrey Bobroff, president of Bobroff Consulting, East Greenwich, R.I. As relative newcomers, the banks are doing well attracting first-time buyers, he said. He asserted that the challenge will be to keep the buyers as they become better educated and more familiar with big-name fund families and performance figures. The brand identity will be crucial, and most banks have yet to make that mark, Mr. Bobroff said, adding: "The continuous changing of their names isn't helping." Finance companies and insurance companies enter the brave new world at a disadvantage. Banks were deemed better by 52% who had used finance companies and 45% who used insurance companies, with mortgage companies close behind at 44%. In each case, no more than 16% rated banks worse. "Thrifts once were seen as more folksy and trusted, and finance companies had a lower-class image, but what you see happening in banking is happening all over," said William Gregor of Gemini Consulting, Cambridge, Mass. "With all the marketing bucks being spent by Fidelity (Investments) and Charles Schwab, for example, I wouldn't be surprised if many people think Fidelity is a broker and Schwab a mutual fund company." The convergence of the bank and thrift images may be another sword with two edges. Les Dinkin of NBW Consulting, Westport, Conn., sees "a plus for the banks" if they are on a par with an industry that had a tradition of more personalized service. "Banks' efforts to increase service quality seem to have paid off," he said, even as thrifts have aspired to be like banks by dropping "savings" from their names and hiring ex-commercial bankers to transform their cultures. Great Western Bank in California and Florida, once Great Western Savings and Loan, has centered its retail strategy on checking accounts in an effort to be perceived as a full-fledged consumer bank. Great Western this year lured A. William Schenck 3d from PNC Bank Corp. to be the chief retail executive. As an exclamation point, he recently stoked up the credit card machine. A rival, Glendale Federal Bank, has been getting "tremendous response" to its "attack ads" against the big California commercial banks, said chairman Stephen J. Trafton. He told his annual meeting in October that the full-service strategy "over time will make a substantial contribution to the bank's margin and build a fee-income stream that will enhance and protect our future earnings." In the wake of megamergers, "we will continue tapping the rich vein of dissatisfaction consumers and small-business people have with the state's large commercial banks," Mr. Trafton said. Dime Savings Bank calls itself just "The Dime" in much of its advertising, said David J. Totaro, senior vice president and chief marketing officer. "In New York we are one of the largest consumer banks," he said. "Our competition is Chemical, Chase, and Citibank, whereas 10 years ago it might have been (the savings banks) Greenpoint, Greater New York, and Crossland." Even after creating a product line comparable to any bank's, the Dime still has a traditional streak. "A bank has to play to its strengths," which include the "distribution network that provides for personal contact with the good number of our customers who will need and want it," Mr. Totaro said. Washington Mutual in Seattle, the biggest thrift company outside California, has been buying up commercial banks, but mainly to penetrate the small-business market. Chairman Kerry Killinger said he will take a "dual-brand" approach - keeping the bank identities, such as Enterprise Bank in Bellevue, Wash., to serve businesses; and Washington Mutual for the consumer bank. United Services Automobile Association, the San Antonio-based insurer, saw no dilemma in deciding in 1983 to enter the credit card business with a thrift - USAA Federal Savings Bank. Jack Antonini, the thrift's former president who is now vice chairman of First USA Inc., said it was such a "nonissue" that USAA never had an image problem during the thrift crisis and never considered shortening part of the name, as many others did, to FSB. "From the consumer's standpoint, I don't think anyone perceives a difference any more," said Charles Bartling, president of the Financial Institutions Marketing Association in Chicago. "The great debacle led a lot of thrifts to change their names, but for good reason. 'Bank' has strong, solid, conservative connotations." Meanwhile, banks seem to be holding their own in cross-industry competition, at least on the intangibles. For example, of the 29% of commercial bank customers who also patronize brokers, 42% said they have more trust and confidence in the banks, 22% had more trust and confidence in their brokers, and 36% saw no difference or gave no answer. "Trust has traditionally been higher in banks than in brokers, insurance agents or, for that matter, used-car salesmen," said Mr. Gregor, senior vice president of Gemini Consulting. He said the public is wary of businesses that pay their employees by commission and easily turned off by "nasty sales tactics." "The obvious strategic opportunity for banks is to use financial planning and a relationship strategy, rather than the product sales strategies that many of the nonbank competitors use," Mr. Gregor said. A measure of that opportunity is the fact that one-third of customers are interested in getting financial planning services from their banks, but only 7% say banks are their primary source of information or advice. Twice as many rely on friends and relatives, and on the press and broadcast media. (See Investment Products section.) Despite the lack of experience, 30% said bank's information or advice is better than others', 22% said it is the same, 31% said it is worse, and 16% didn't know. "Customers want ongoing advice, but they do not want to be sold," Todd A. Robinson, chairman of LPL Financial Services in Boston, said in a recent business magazine "advertorial" on mutual fund wrap accounts. "I hear most often from customers that they like the ability to go to one familiar place to do their business, whether it be auto loans, investments, or home financing," said Peter Benzie, president of Chase Manhattan Investment Services in New York. "If they've had a good experience with their checking, their savings, and their mortgage, then customers will at least look at your investment alternatives." There are signs the nonbanks are getting better. Of the 8% who said they did most business with other than a bank, thrift, or credit union, 54% were very satisfied, up from only 48% last year. But the small statistical base makes it difficult to ascertain a clear trend. Nonetheless, of those 8% who primarily used a nondepository, 24% discerned a service-quality improvement in the last year, while only 8% complained of a worsening. The thrifts' split was 16% to 4%, the commercial banks' 19% to 10%. Credit unions left them all in the dust, at 39% to 6%. It was statistically significant that 25% and 22% of bank customers in a position to compare, respectively, said brokers and mutual funds have better service. Among those with $75,000 or more in household income, 33% said brokers were better than banks, and 27% gave the nod to mutual funds. On the market share table, which may be more a "share of mind" than "share of wallet" measure, there was only one significant statistical move - down, among the banks. Households doing at least some business with a commercial bank fell to 75% from 80%, while the primary-relationship subtotal slid six points to 53%. Even if banks and thrifts are lumped together as if fully consolidated in the consumer's mind, their combined share of principal relationships fell to 73% from 77%.

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