The consolidation whirlwind that has reduced the ranks of electronic banking networks by almost two-thirds in recent years appears headed for Chicago.

The Windy City's dominant automated teller machine network, Cash Station, is reportedly close to completing a merger agreement with the Magic Line network, based in Dearborn, Mich.

Figuring prominently in those discussions is Stephen S. Cole, the outspoken president of Cash Station, who is one of a handful of people being considered for the top spot in the merged company.

Mr. Cole's name has been mentioned in network executive searches before. He was rumored to be in the running for the presidency of the NYCE network, run by New York Switch Corp., Hackensack, N.J., and for the top job at Plus, a national ATM network owned by Visa U.S.A.

Not an Outsider This Time

But unlike those negotiations, in which he was an outsider, Mr. Cole is considered the front-runner to be head of the mega-network that will serve the region that has been his professional home for the last 15 years, experts said.

"Mr. Cole is an ideal front guy for a network of that size - the guy you would want to have dealing with the financial institutions," said Richard Speer, chairman of Speer & Associates, an Atlanta-based consulting firm. "He's very qualified to run a merged Cash Station and Magic Line."

The position promises to be a powerful one. A Cash Station/Magic Line merger would result in a network of more than 6,000 ATMs concentrated in Illinois, Indiana, and Michigan.

According to Bank Network News, an industry newsletter, such an organization would rank fifth in size among the 50 or so regional electronic banking networks in the United States.

Since NBD Bancorp, a Magic Line owner and member, runs a significant ATM transaction processing business, the new network would be likely to handle its processing in-house, rather than contracting with a third-party processor.

Merger Fits Philosophy

Mr. Cole declined to comment directly on reports of Cash Station's talks with Magic Line. But he did allow that a merger with another network in the region is completely consistent with his network's philosophy.

"We think we have a solid franchise that makes a very logical partner with other franchises in the region," said Mr. Cole. "We also have a vision that says the consolidation has to happen and we need to get bigger and more agile with our technology."

The hope, of course, is that creating a larger network with improved economies of scale will make technological improvements easier.

Unfortunately, the road to achieving that scale is not a simple one. Since bankers participating in ATM networks are usually direct competitors, they often disagree as to the best direction the network should take.

Soothing Political Tensions

Having spent his electronic banking career in the Midwest, Mr. Cole is well suited, observers said, to soothe the political tensions that inevitably arise at a merged network.

Mr. Cole, a 1976 graduate of Lake Forest College in Illinois, began his career at the First National Bank of Chicago.

In 1979, he took a sales position with the bank's then-fledgling Cash Station network and rose to president in 1986. His hope is that he will remain there for some time to come.

"I tended then as I do now to think of Cash Station as my first born," said Mr. Cole. "Once you get electronic banking in your blood, it's very hard to get it out."

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