NationsBank Corp. and Boatmen's Bancshares expect to be realizing $335 million in post-merger cost savings by 1999 - a projection highly predicated on technology.

About half the cost reductions would come from improved bargaining power with suppliers, and from what NationsBank termed consolidation of service companies and delivery system optimization.

Analysts said the anticipated annual cuts - rising from $140 million in 1997 and $295 million in 1998 - are attainable, given these companies' demonstrated resources, skills, and expertise.

But the experts stressed that the banks must not get so caught up in the savings game that they ignore more important issues, such as retaining customers.

"Longer term, NationsBank is hoping to gain on the revenue side," said Robert E. Hall, chief executive officer of the Dallas-based consulting firm Action Systems. It therefore must identify and focus on the 3% to 5% of customers that contribute the lion's share of Boatmen's profits, he said.

These customers are the most likely to get poached by Boatmen's competitors as the bank launches into system conversions and business-unit consolidations.

"If you lose even a small number of the key ones that really affect the value of the enterprise ... what you get as an acquirer can be diminished," Mr. Hall said.

Most of the biggest banking companies are investing heavily in the information systems and data bases required for more sophisticated target marketing. One consultant, who asked not to be quoted by name, expressed doubts about NationsBank's level of preparedness. He said it is buying Boatmen's before proving it can enhance its own profitability.

NationsBank treasurer John Mack acknowledged the importance of technology in "segment(ing) the customer base." Speaking Friday to analysts in New York, he said technology was "one of the selling points of NationsBank to Boatmen's."

No one from NationsBank or Boatmen's was immediately available to address whether Boatmen's had installed advanced customer segmentation and profitability systems. If not, Mr. Hall and others said, these systems should be a top priority.

Other aspects of technology expected to be consolidated promptly include three processing areas -item, automated teller machine, and credit card.

NationsBank's relationship with credit card processor Total System Services Inc. of Columbus, Ga., should allow it to absorb Boatmen's workload without burdening internal operations.

However, NationsBank may find it rougher going elsewhere.

"The areas that will be toughest to manage are the ones in which Boatmen's has a proprietary application, and by our accounts they have a proprietary deposit system," said William Bradway, a consultant with Tower Group of Wellesley, Mass.

NationsBank, which would have more than $230 billion in assets after the merger, is in the midst of converting systems in nine states to a deposit system from Alltel Information Services Inc.

"There's a backlog there that Nations has already scheduled, and they'll need to provide a lot of resources to convert a portfolio as big" as that of $41 billion-asset Boatmen's.

Project scheduling could be affected by a number of factors, including whether the company has major applications that are not "year 2000 compliant," said Mr. Bradway. He was referring to the widespread limitations in software that could make it difficult to process transactions accurately after Dec. 31, 1999.

Experts noted that NationsBank has had several high-visibility snafus in ATM and demand deposit operations. But the bank has grown in technological sophistication in the last year, and some experts feel that will help smooth the Boatmen's transition.

"It's well known that NationsBank has invested millions in their model bank," said Mr. Hall, referring to the integration of data base and delivery system needs for the future. NationsBank officials said Friday they remain on schedule to implement the model bank - including at Boatmen's - by 1998.

"That's going to be a very powerful system," Mr. Hall said. "But at the end of the day, there must be competence in targeting and growing the income streams such that the technology pays off."

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