Financial industry consulting has become a growth business for a transformed International Business Machines Corp.

Revenues in IBM's financial consulting division grew by about 30% last year, although specific figures were not available, and executives said they expect the division to quadruple in size over the next four years. About 500 of the 3,400 employees in the worldwide consulting group are dedicated to banking and finance.

IBM's consulting group, of which financial consulting is a subset, generated $730 million of revenue last year.

As it recasts its historical hardware and mainframe computing orientation, IBM has made a concerted effort to strengthen consulting revenues, as shown by its efforts to take on new people.

In one recent, high-profile move, the unit attracted David Partridge from Towers Perrin in San Francisco to head its retail banking efforts in the United States.

"We're growing, and our key responsibility is to have the right executives and leadership in the right place," said Jeffrey M. Lynn, vice president of the worldwide banking, finance, and securities division of IBM's Consulting Group.

"We're trying to add targeted industry skills to run our quickly growing practice," said Mr. Lynn, whose former company, Finexc Group LLC, merged into IBM consulting in 1995. (Another part of Finexc's business, which sponsors peer group forums for super community bankers, is still owned by Mr. Lynn's former partner, Anat Bird. Ms. Bird recently joined Norwest Corp. as a senior vice president.)

Mr. Lynn said Big Blue continues to hire new executives for its financial consulting business. It currently is seeking to add people with expertise in capital markets and payment systems.

The banking industry has always been a steady source of income for IBM, and last year was no different. Bank and thrift purchases of hardware, software, and services contributed about $13 billion of IBM's $76 billion in 1996 revenue.

The computer giant is increasingly emphasizing service businesses. It formed the consulting group in 1991, which IBM said has grown into the world's 10th-largest consulting group.

The financial services consulting group mainly serves midsize to large banks, Mr. Lynn said. More and more, it finds itself engaged overseas.

"We hope to pull together a truly global consulting practice," said Mr. Lynn, whose responsibilities were recently expanded to include global operations. This means he will split his time between North America, Europe, Latin America, and Asia.

IBM has the multinational presence to deliver services worldwide, and the company also is well-prepared for the increasingly technical nature of most consulting projects, Mr. Lynn said.

"Unlike 15 to 20 years ago, very few key decisions don't feature technology prominently for pricing or marketing distribution," Mr. Lynn said. "All decisions now need technological strength behind them."

One of the most important issues confronting bankers is the "year 2000 problem," Mr. Lynn said. Solving it will involve a lot of expensive coding work that Mr. Lynn said would strain bank operations and constrain product development.

Out of necessity, some projects will get short shrift as bankers must fund fixes for 2000. But areas that cannot afford to be left behind are customer relationship management and electronic banking, Mr. Lynn said.

Because it views these as strategically important for banks, IBM is focussing its consulting efforts on them.

"We also help clients think through business cases, say, for smart cards, the delivery of their payment systems, or risk and profitability measurement," Mr. Lynn said.

Mr. Lynn assured that the consulting group does not only recommend goods and services made by IBM.

"We understand that most clients will opt for a multivendor business solution," he said. But he noted that most of his largest clients already use IBM computer platforms.

IBM consulting does business with about two-thirds of the top 25 U.S. banks. It also consults at large nonbank companies such as American Express, GE Capital, and Merrill Lynch.

"Consulting is a natural business for IBM to be in," said Sheldon Grodsky, director of research at Grodsky Associates Inc., South Orange, N.J.

"It has an enormous asset in brain power-people who are well-trained in computer systems and getting better-and it certainly has the reputation," he said.

As consolidation continues and competition heats up, banks are likely to need more help from third parties, observers said. IBM's growth reflects this.

"Demand is very strong, which is a nice business problem to have," said Mr. Lynn.

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