Chase Manhattan Corp. is embarking on an overhaul of retail banking systems that officials say will break new ground in branch automation, marketing capability, and customer service.

Reaching for technology leadership in keeping with its newfound status as the largest U.S. banking company, Chase will have what it calls a unified back-office platform delivering data and services through thousands of personal computers and other devices.

In a sign of its commitment for the long haul, Chase will introduce terminals that read smart cards.

Chase and primary system vendor NCR Corp., along with subcontractors like smart card technology provider Intellect Electronics Inc., are expected to announce the plan today. Deployment in more than 500 branches, the largest such network in the New York area, is expected to be completed in the third quarter next year.

The companies confirmed the project was imminent but would not discuss its cost. Informed sources estimated it at $40 million to $50 million - big by industry standards and necessary for Chase to deliver on the promise of "mass customization" that senior executives have said would be the payoff of Chase's merger this year with Chemical Banking Corp.

"It's a significant commitment from a dollar and work-effort perspective," said Robert Wilson, vice president of branch and service delivery systems at $323 billion-asset Chase.

The merger made Chase "the largest bank in the nation," Mr. Wilson said. "We want to be the best bank in the nation."

He called the consumer banking overhaul "laying groundwork," or "a good foundation," as in building a house. The technology, he said, would accelerate and improve the development and delivery of products and services, increasing revenue and growth.

NCR, which won the contract over IBM and others, will supply 10,000 personal computer workstations, 1,100 server computers, software, and other equipment, as well as installation and project management.

"Branch automation is a key business for NCR in the financial industry," said Phil Kasper, assistant vice president, consumer delivery systems for the Dayton, Ohio, company. The agreement with Chase "validates our position," he said.

Robert Landry, technology analyst for the Tower Group, Wellesley, Mass., characterized the sale as "one of the top 10 orders in the country" and the "continuation of a good relationship" between NCR and Chase.

The relationship grew out of Chemical Bank, where NCR delivered a branch automation system three years ago. The NCR-Chemical tie dated from NCR's work with Manufacturers Hanover Corp., which Chemical acquired in 1991.

Included in the new network will be 4,000 PIN pads - devices into which customers key their personal identification numbers. Made by Intellect Electronics, the PIN pads will allow customer account information to be called up at teller stations with the swipe of a card. The routine use of cards inside branches is expected to encourage automated teller machine usage. As it does, Chase would transfer tellers into sales and customer service jobs.

Sales automation software is to be provided by CFI Proservices, Portland, Ore.

Terminals in branches on the Upper West Side of Manhattan will have smart card readers for a test Chase is planning next year with Citicorp, MasterCard International, and Visa U.S.A. Consumers will be able to load cash onto the computer chips embedded in MasterCard Cash and Visa Cash cards.

Terminals in other branches will be upgradeable for smart cards.

"Chase is making a firm commitment" to chip technology and "devoting a lot of resources" to the trial, said Chase's Mr. Wilson.

While some technology-savvy banks, including BankAmerica Corp. and the former BayBanks Inc., have installed terminals for customer identification, Chase's smart card readers will be a first in branches, said Mr. Landry of Tower Group.

That was a coup for Intellect, an Australian company that opened offices in San Jose, Calif., in August 1995. Competing against global terminal makers like Verifone Inc. of the United States and Hypercom Inc. of Australia, Intellect has an international marketing relationship with NCR and is consummating one for the United States, said Geoff Gander, vice president of sales and marketing.

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