NEW ORLEANS - Bankers at the National Consumer Credit Conference sponsored by the American Bankers Association were warned that they had better start operating more like finance companies or lose market share.

Such companies have increasingly been making home equity loans and "B" and "C" mortgages. They "are booming because they are meeting the needs of customers that have been spurned by banks," said James C. Clymer, vice president of Dial Bank, a Norwest Corp. subsidiary based in Sioux Falls, S.D. "They do their homework." Patrick Doran, senior vice president of PNC Bank, Pittsburgh, urged bankers to change the way they approach consumer lending - or face "dying on the vine."

"I think the old cliche, 'If it ain't broke, don't fix it,' is passe," Mr. Doran said. "You have to be prepared to adjust."

Banks need to change more, he said. Banks and thrifts are losing market share in nearly every area of consumer lending. In outstanding revolving consumer loans, for example, banks had a 49% share in 1993, down from 59% in 1983, according to First Manhattan Consulting Group.

"Success has never seemed more elusive" than it does today, he said. Mr. Doran's solution: Specialize.

Specialization "seems to be a proven route to growth," he said.

Banks should not try to be financial supermarkets, catering to all customers, he said. Instead, they should focus on products that they service well and that are profitable.

"We have to be more adept at finding those products that mean something to consumers," Mr. Doran said.

And will banks succeed?

"I am not pessimistic," he said. "But I do think we are going to have to find some way to grow our success and not just rely on the cost side of the equation."

Leonard A. Zych, president and chief executive of Chemical Financial Services Corp., Cleveland, said that lending to borrowers with damaged credit is a specialization more banks should consider.

Chemical Financial now is making B-quality and C-quality second mortgages.

"To a certain degree, there has been a blurring of who is the bank and who is the finance company," he said.

But he said banks have some advantages over finance companies. Besides cheaper sources of funds, Mr. Zych said, banks that buy B-to-D loans from other lenders can offer advantageous cross-leveraging with other bank products and services.

But he warned that the need for risk-based pricing in this market, a relative novelty for banks, is crucial. Banks should not price merely to create more volume, he said.

Another opportunity for change: the way banks deliver products to customers. Paul G. Henry, executive vice president at Creative Solutions Group Inc., Atlanta, cited opportunities on the Internet, with telephone systems, interactive television, and personal computers.

What banks must realize, he said, is that customers will no longer accept "bankers' hours." Customers want to bank when they want to and, to a lesser degree, where they want.

"The branch is in decline," he said. "I will not say it" is dead; "it has declined."

Some at the conference resisted the rush to change. At lunch Monday, a banking lawyer, software company executive, and two bankers discussed the changes proposed by the day's speakers. They said the ideas were good and they would consider them.

But a New Jersey banker hedged. There is a reason banks are not finance companies, he said. Banks have carefully cultivated a strong, trustworthy image. He asked whether he should risk that reputation in order to make credit-impaired second mortgages just because they are a hot product.

No one in the group could offer a definitive answer.

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