"The branch isn't dead," says Dick Kovacevich, Norwest's enthusiastic and philosophically committed chief executive officer. "Of course," he adds, "that depends on where you are."

Norwest believes that in rural America people still find it easy and convenient to go to the bank. There is very little waiting time; bank employees

know most of their customers by their first names; and an intimate personal relationship exists between banker and customer.

Meanwhile, in metropolitan areas, many people are looking for alternative distribution networks, and therefore, branches should be supplemented.

"The key word is supplement, not replace," says Mr. Kovacevich. "While the branch network will continue to be very important to us in the future, we already have 24-hours-a-day customer service by telephone and also are exploring to add home video and home banking and other distribution channels to supplement our branch distribution."

Norwest believes not only that the branch isn't dead but also that it can be an important cornerstone in the company's relationship orientation to the customer.

Much evidence supports that belief, including the fact that banks distribute 22% of all mutual funds today, up from 7% only three years ago.

Mr. Kovacevich believes the need for physical contact is more important at the lower end of the economic scale and in more rural, less concentrated urban areas. What might be true in very large and crowded markets is not so in sparsely populated markets.

In major metropolitan areas, the community feeling is very important. New York City and Chicago, for example, are conglomerations of hundreds of very small communities and are banked based upon that reality.

"While I understand where you're coming from," I told Dick, "the writing is still on the wall. Home banking is an idea whose time has finally come. What do you plan to do about it?"

"Home banking is not here quite yet for most of our customers," said Mr. Kovacevich. "In fact, one could argue that the phone -- not the PC -- has emerged as the medium of greatest convenience for most Americans who don't have the time to visit a branch.

"We don't have to predict what will happen 20 years from now. If change does occur to result in alternative distribution systems faster than I think, it will still occur initially in markets outside the Midwest and in larger metropolitan areas. We will have time to respond if the pace of change is different from our assumption."

Mr. Kovacevich is puzzled at some banks' attempts to drive customers away from the branch. A lot of banks not only believe in alternative distribution but also promote it.

They are trying to encourage their customers pot to come to the bank but to use the phone, automated teller machines, or other channels. They say it saves them money and that's good. "We totally disagree with that," said Mr. Kovacevich.

"How many retailers do you know who think it's a good idea to keep people from coming to their stores?" he asked. "We believe that, if people go to our store, we can sell them something in addition to their transaction needs."

That which you expect you must inspect.

"Do you really measure cross-sell accurately?" I asked. "So many banks pay lip service to it but do not implement it effectively."

"Cross-sell is a key part of our business and a key-statistic to us," he replied. "We measure it at the end of every day by store and by sales person. We now have about 3.6 relationships with each customer, about double where we were five years ago and double the industry standard."

Norwest wants to outlocal the nationals. It has a group of community banks that share a philosophy, delivery style, and relationship orientation.

Additions throughout the system fit its style and philosophy. The Texas expansion program, for example, is focused on west and central Texas, and Norwest has not acquired any banks in Houston or Dallas.

"Our strategy is better suited to non-metropolitan areas," Mr. Kovacevich said. "We start in the countryside when we enter a new market. Values and vision articulation isn't difficult to us, and people attracted to working with us are consistent with its philosophy. It is fully integrated throughout the company."

Ms. Bird is a partner at Financial Management Advisors, a New York-based consulting firm, and author of "Supercommunity Banking: A Superstrategy for Success."

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