Centura Banks Inc. has gone the route of branch closings and staff reductions as it fought to control costs after the merger that created it in 1990, but it has also invested heavily in the "Centura Highway," its phone banking service.
As part of an effort to expand its remote banking system, Centura, which is based in Rocky Mount, N.C., has hired Mark B. Gamble away from American Express Co. to head up management of the Centura Highway. He had been director of credit operations for American Express in Jacksonville, Fla.
The March hiring came after a series of moves by the commercial and consumer bank to develop an innovative home banking system based on cutting-edge technologies.
And the push for automation and remote banking at Centura complemented efforts to reshape its conservative image.
The $4.2 billion-asset bank is expanding into financial services and picking up market share in North Carolina through acquisitions and placement of ATMs in retail stores. It has redesigned branches, hired consultants, and encouraged employees to rethink the way they operate.
The bank is also offering new products, such as Pocket Check, a debit card that can be used as a credit card is to buy products or obtain cash.
The effort to change Centura's image can be traced back to the bank's creation in 1990. Before Centura, there had been two banks in Rocky Mount: Planters and Peoples. The two banks - each with about $2 billion of assets - agreed to merge with neither becoming the controlling partner.
A year later, Centura began consolidating and streamlining operations. To cut costs, it eliminated 300 of its 1,770 staff positions through layoffs and early retirements. It shut or sold 23 branches and acquired 43 new ones through mergers with small savings and loans.
Offering remote banking services was another way for the bank to reduce operating expenses, since the phone service is much cheaper to operate than a branch.
Centura launched its home banking arm last summer with creation of the Centura Highway, a system the bank claimed would be as revolutionary as the move to automatic teller machines 15 years earlier. Centura Highway was built on an earlier and simpler system that let customers verify balances and interest rates. That system received 8,000 to 12,000 calls per day.
The bank has installed $1.5 million worth of equipment to create its highway, including telephone switching equipment, fax machines, and voice- response technology. The system constantly updates representatives on how many calls are holding, to let the bank re- evaluate its staffing needs.
The service lets customers open accounts, apply for loans, order checks, and stop payments on checks. Expansion of the system will soon allow customers to buy and sell stocks, mutual funds, and other investment products.
The system combines automated touch-tone components with live-voice services. Live support is available from 8 a.m. to 8 p.m., weekdays, with automatic functions available 24 hours a day. It is also possible to leave messages at any time for a customer representative.
Customers who call the service receive a touch-tone menu of possible transactions. Some transactions, such as opening new accounts and applying for loans, always involve talking with a live bank representative.
However, inquiries on the status of accounts, deposit and loan rates, and stop payments can be made via fully automated services. Customers have the option, however, of speaking to a live representative for any transaction.
Applying for a loan or opening an account should be faster through the highway than at a branch, according to Centura representatives.
Centura is also experimenting with voice-operated, automatic response systems. However, for now, it is stressing the importance of keeping live agents available for the customers.
"Many organizations forget about the customer and leave out the actual agent," said Mr. Gamble. "We have a good response system, but the live agents must be there to answer questions." To reach an agent, callers can press "0" at any time between 8 a.m. and 8 p.m. weekdays.
A few months before opening the highway, the bank embarked on a major effort to update and improve the technology in its branch offices. In May 1994, it announced that Electronic Data Systems would install a wireless network of PCs and client/servers throughout the bank's 150-plus branch network. The project incorporated Windows NT and AT&T's waveLAN wireless communications product.
The objective was to speed and streamline operations by reducing paperwork and giving tellers instant access to any customer's financial profile.
The bank is trying to present itself as a hip, modern institution. It remodeled branch offices and ran a television commercial that features a six-foot mechanical dollar that eats potato chips and lounges around in a swimming pool.
Management saw home banking - and installing Centura automatic teller machines in 95 local Wal-Mart and Sam's Club stores - as a way of actively pursuing new customers rather than waiting for them to come to branch offices to open an account. The Centura logo is prominently displayed on its ATMs, in an effort to encourage Wal-Mart customers to open accounts.
The bank's efforts to rework itself and streamline operations seem to have paid off. In 1990, shortly after the merger, its stock was selling for $13.75 a share. The stock closed out 1994 with a high of $25.25 and was trading recently near its 52-week high of $27.375.
There is a strong future for Centura's phone-based, branchless banking, according to Jim Beams, a consultant at the Tower Group, a Wellesley, Mass., consulting firm that specializes in bank technology.
The Tower Group forecasts 30% growth per year in personal home banking over the next few years. However, Mr. Beams cautioned that it would be a very long time before consumers would do the most sensitive transactions, such as signing for a loan, by remote means.
"There's nothing you can't do remotely," said Mr. Beams, "but for certain things, it will take a long time for consumers to leave the branches altogether."
Mr. Beams also stressed that remote banking by PC has a certain edge over telephones because PC users are more accepting of new technologies. "Because they aren't technophobic," he explained, "they are more comfortable with branchless banking."
However, the Tower Group expects 32% of customer interactions to be done by telephone by the year 2000, compared to 18% by electronic means such as computer and screen phones. Remote banking as a whole is expected to grow steadily.
Centura Highway currently handles about 10,000 phone calls per day and is available to all the bank's customers. Callers can conduct almost any transaction the bank offers by telephone, including all traditional bank services.
In the future, Mr. Gamble said, he hopes to expand the highway's role.
"Anything you can buy at the branches you can buy through the highway. However, our branches aren't really into insurance and securities at present," he said, "but we will go well beyond that in the next year."
Centura is measuring itself against financial services companies with the intention of expanding into a full-service financial institution. New services will soon be available on the Centura Highway.
"USAA delivers insurance product over the phone, and Fidelity does the same thing with very complex investment products," said Mr. Gamble. "People have been doing it remotely for years very effectively - not just in banking."
"The banking industry is going through more dynamic change now than it has ever faced," said Mr. Gamble. "The banks that react aggressively will find a niche in an industry that is being taken over by nonbanks."
While Centura is looking into home PCs, screen phones, and other home banking solutions, for now it is stressing the telephone as the main implement of remote banking.
"There's always a risk when you're on the leading edge of change that you could develop something that will have to be modified," said Mr. Gamble, commenting on projects by the card associations that stress PCs and screen phones as important tools of remote banking, "but there is more danger in sitting around and waiting."