Banks have been developing alternative delivery channels with a kind of Field of Dreams logic: If you build it, they will come. But what if too many people are buying the cheap bleacher seats?

While automated teller machine transactions and calls to automated voice response units have grown dramatically, banks are still under pressure to reduce the cost of delivery further because so many customers remain unprofitable.

That explains First Chicago Corp.'s decision in April to alter its fee structure to prod more customers to use phones and ATMs instead of going to the branch.

But the national press coverage - which tended to highlight that fees for teller transactions could reach $3 - exposed the downside of emphasizing the stick over the carrot.

They've got more of a public relations challenge - if not a nightmare o than they do a financial challenge, said Steven Schroll, an analyst with Piper Jaffray in Minneapolis. Citicorp tried it in the past and had to give up on it. Maybe First Chicago will have to also if the negative press and the negative connotation that that sends to their broader customer base.

To me, that's a public relations coup for every other Chicago-area bank, said David S. Berry, director of research at Keefe, Bruyette & Woods Inc. in New York.

Still, industry analysts and some bankers are applauding the bank's move.

What I've heard from a number of other bankers since then is that most of them agree with what (First Chicago is) doing, said Mr. Schroll. And if they control that right, and market the program properly, they won't lose nearly as many 'good' customers as I think a lot of people believe.

You've got the worst 20% (of the customer base) in terms of transaction behavior being responsible for over 50% of the labor intensive transactions, observed James McCormick, president of First Manhattan Consulting Group. And those people are going to start to have to pay to do that. That's going to change their behavior and lower the net number of transactions.

By the year 2000, Mr. McCormick predicted, the number of traditional branches in the United States will be down by at least 25%.

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