Chemical Banking Corp. and BayBanks Inc. have talked with Tandem Computers Inc. about using the technology company's advanced-telephone system for home banking.

This could mark a return to home banking for Chemical, which also has held talks recently with American Telephone and Telegraph Co. about using its Smart Phone, which incorporates a computer and display screen into a telephone.

Chemical, one of the first banks to develop a home banking system, axed the project, called Covidea, several years ago. A joint venture with AT&T, Covidea delivered home banking services to customers via a small terminal. That program got a poor response from customers.

Contacts Are Months Old

Both Chemical and BayBanks talked with Tandem officials last week and have had contacts with them for months. The talks are preliminary, according to Tandem officials.

Tandem is not developing a screen telephone itself but is developing a platform for advanced telephone services in conjunction with several software vendors. Tandem, based in Cupertino, Calif., has set a target date of Oct. 1 to begin on-line demonstrations of its system.

Tandem has one of several projects to develop a telephone home banking system for the U.S. market. The vendor has been marketing the system at 10 places in Japan, using telephones made by Japanese companies. Outside Japan, Tandem plans to work with multiple hardware vendors, including Philips Industries, Eindhoven, the Netherlands.

In such an agreement, Philips would market the telephone technology, and Tandem would provide the on-line transaction-processing system to handle customers' transaction. Vicorp, based in Boston, will provide software for balance reporting and funds transfers.

Huntington, Citicorp Efforts

This project would compete with one under development between AT&T and Huntington Bancshares Inc. The two are jointly developing an enhanced telephone for home banking, which the companies intend to market to other banks. But roll-out of the system has been delayed while the companies develop new functions for the telephone.

Citicorp is testing a device from Philips that offers bill-paying, account balances, and home shopping services. But the two-year program has been slowed because of the high cost of making the telephones, according to sources familiar with it.

Tandem is working with software vendors who would provide applications - such as bill payment or home shopping - that would run on Tandem computers. The Tandem hardware could act as a gateway between smart telephones and information providers such as Dow Jones.

Tandem computers are "fault-tolerant," meaning they have duplicate processors that can be used in the event a component fails.

Multiple Uses Desired

"Right now, banks are just testing the concept," said Michelle Barnes, manager of emerging-market development at Tandem, "but over time, as they grow and expand to thousands of users, they're going to need a lot of flexibility."

Ms. Barnes said her company has talked to one bank that is interested in offering cash-management services - with data on interest rates and certificates of deposit - to its private banking customers.

"No one believes that home banking by itself will support the infrastructure of smart telephones," Ms. Barnes said. "The price points haven't dropped to where they can hit the mass market."

For example, Tandem has installed enhanced telephones that act as theater ticket outlets in a chain of Japanese convenience stores.

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