Few nonbanks, and no technology companies, have made as many incursions into the financial industry as Electronic Data Systems Corp.

Through aggressive salesmanship and acquisitions, the Plano, Tex.-based computer services company has built a billion-dollar business in technical corners of the financial industry that were once banks' exclusive domain.

And even though some bankers fret about a computer company treading on so much of their turf, EDS has a squadron of loyal customers that are tickled to do business with the vendor.

"I have tremendous admiration for them," said John B. McCoy, chairman of Banc One Corp., of Columbus, Ohio, which both competes with EDS and is one of its biggest customers.

Other Avenues

EDS is best known as an outsourcing company - the firm founded in 1962 by former International Business Machines Corp. salesman Ross Perot, who later sold the vendor to General Motors Corp.

But EDS does a great deal of business outside traditional outsourcing, including consulting, systems integration and electronic funds transfers.

EDS had net income of $636 million on revenues of $8.2 billion last year. About an eighth of the revenues came from the financial industry, primarily from outsourcing, check sorting, ATM switching, and credit card processing services for about 5,000 banks, thrifts, and credit unions.

In these areas, EDS' influence is considerable.

2 Top Thrifts Are Clients

Among other ventures, it runs computers and check sorting machines for the country's third- and fourth-largest thrifts, World Savings and Loan Association in Oakland, Calif, and First Nationwide Bank of San Francisco.

EDS also runs the computers of two large commercial banks, First Fidelity Bancorp., Lawrenceville, N.J., and Signet Banking Corp., Richmond.

A contract inked earlier this year to install 4,000 automated teller machines in 7-Eleven stores will make EDS the country's second-largest owner and operator of ATMs, after BankAmerica Corp.

GM's MasterCard Venture

EDS is also the country's fourth-largest processor of debit transactions, a business built on EDS' 1989 purchase of an ATM switching unit from Automatic Data Processing Inc., of Roseland, N.J.

EDS also runs the computers for GM's new MasterCard program. This deal has made EDS the country's fourth-largest processor of credit cards for banks, with 7.5 million accounts. EDS also authorizes some 900,000 MasterCard transactions daily, more than any other company.

"EDS is a leader in the whole bank services arena," said Coley Clark, group executive of EDS' financial industry unit, which employs more than 7,000 people.

Not surprisingly, EDS has gotten this large by making many of its bank customers extremely happy. Among them - State First Financial Corp. of Texarkana, Ark., which has been an EDS client for more than 20 years.

"We think its a great relationship, and wouldn't change it for anything," said Howard M. Qualls, president of the $720 million-asset holding company.

Above and Beyond

First Fidelity is also among its satisfied customers. Executive vice president Donald C. Parcells praises EDS for its flexibility in dispatching - at no extra cost - more than four times the initially agreed-upon number of technicians to handle a data center consolidation.

But, despite its successes, EDS is also dogged - company officials say unfairly - by a reputation for bullying customers.

And while such criticism could be expected from computer executives that lose their fiefdoms to EDS, sometimes it comes from EDS' staunchest allies, like Banc One chairman Mr. McCoy.

In a speech earlier this year at an IBM-sponsored bank technology conference, Mr. McCoy chided EDS for using hardball negotiating tactics over restructuring an outsourcing contract in Texas.

In a Corner

The contract called for EDS to run computers for units of MCorp that Banc One acquired in 1991. Banc One thought the contract was too expensive, and wanted out, Mr. McCoy said.

But EDS officials vetoed those plans, by threatening to dump computer tapes on Banc One without allowing for an orderly transition, Mr. McCoy said.

EDS and Banc One officials later said that Mr. McCoy's account was inaccurate.

"John would probably like to take that back," said Donald L. McWhorter, president of Banc One, who was directly involved in the talks with EDS. "EDS never said they would pull the plug or any such thing," Mr. McWhorter added.

Still Friends

Apparently, the tough negotiations over that contract haven't tainted the two companies' relationship with one another.

For example, Banc One signed a five-year contract in 1992 to have EDS run computers for Banc One's entire Texas franchise. Banc One is also teaming with EDS and Norwest Corp. of Minneapolis in a $100 million, 10-year project to build and install sophisticated new banking software, called the Strategic Banking System.

Nonetheless, Mr. McCoy has a warning for potential EDS customers.

"You've got to cross your t's and dot your i's," Mr. McCoy said. "You shouldn't do something on a handshake with them."

Dispute with NationsBank

Rumblings of another dispute have also emerged, in this case, between EDS and NationsBank. Similar to the Banc One situation, this dispute concerned the termination of an outsourcing agreement EDS had with National Bancshares Corp. of Texas, which NationsBank acquired in 1990.

To resolve the dispute - which was never made public - NationsBank and EDS agreed to private arbitration.

M. Arthur Gillis, a bank technology consultant in New Orleans, said he was called in to testify on the reasonableness of a threat EDS made to be uncooperative in delivering vital computer tapes to NationsBank. NationsBank, through a spokesman, Ellison Clary, declined to comment on the arbitration. But Bobby Grisham, the EDS executive who oversees the vendor's business with big banks, said that Mr. Gillis' account was wrong.

EDS never threatened to be uncooperative in delivering computer tapes, he said. Instead, the dispute centered on how much EDS should be paid.

Mr. Grisham added that arbitration resolved the issue fairly.

Mr. Grisham said that EDS continues to enjoy a good relationship with NationsBank, and does some consulting work for the bank.

Mr. Clary concurred: "We view EDS as a company with a lot of capability, and that's why we do business with them."

Lester M. Alberthal Jr., who took over as EDS' chairman and chief executive after Mr. Perot left in a highly publicized dispute with GM management, said that criticism that EDS bullies customers, while inaccurate, is nothing new.

He said the reputation stemmed partly from EDS' early corporate culture, imbued by Mr. Perot, where the company embraced a militaristic work ethic, and was "hard charging" and "egotistical."

Mellowing Trend

But Mr. Alberthal said that over the past decade EDS has softened the edge.

"I and every executive in our company are very focused on customer satisfaction," he said.

Mr. Grisham added that EDS regularly helps banks end outsourcing contracts of acquired institutions without dispute.

"We couldn't be in business if we beat up on customers," Mr. Grisham said.

But in its ATM and credit card processing businesses, EDS continues to raise the eyebrows of those who view the company as a competitor.

Formidable Threat

EDS has emerged as a formidable threat to such banks as Synovus Financial Corp. and Banc One in the credit card processing business, and, in the ATM business, to Electronic Payment Services Inc., a joint ATM processing venture of Banc One, CoreStates Financial Corp., PNC Bank Corp. and Society Corp.

"Some see EDS as a tremendous competitor in this industry," said Richard Lyons, executive vice president of Internet Inc., Reston, Va., which runs the Most ATM network.

Yet, despite the potential for conflicts of interest, the vendor appears to not be suffering from its forays.

"The competition doesn't concern us at all," said Banc One's Mr. McWhorter. "For a long time we've realized that its not a perfect world where we've got no competition."

Yet EDS is sensitive to concerns customers may have about competing with the vendor, Mr. Alberthal said.

"All professional service companies have to deal with this," he said.

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