Though he may be one of the last to admit how much technology has changed his life and his job, Edward E. Crutchfield Jr. has turned into one of the banking industry's most effective technology advocates.

The First Union Corp. chairman just embarked on his second year as chairman of the Banking Industry Technology Secretariat with unanimous support from his peers at other major banking companies-both for his leadership and for what the BITS staff and committees accomplished in recent months.

When the Bankers Roundtable, the association of big-bank executives that created BITS in 1996, held its annual meeting this month, the technology spinoff "was pretty much front-and-center over two days," Mr. Crutchfield said, with obvious pride of authorship.

"A wide open, town-meeting-type discussion" about BITS with the full roundtable membership rated a "10 on a scale of 1 to 10," he added.

BITS-with projects under its belt in such areas as technical standardization and fraud reduction, and with plans to hone industrywide strategies while lowering shared costs-thus lives for another year.

Yet the man at the head of the board table, when asked in an interview if his exposure to BITS and the technology issues it brought to the fore had changed the way he approaches his day job in Charlotte, N.C., responded: "Not much."

He claims to spend no more than half a day a month on the Secretariat's business and to rely for most matters technological on his chief information officer, Austin Adams. Yet First Union's chief executive officer has been won over and is spreading the religion.

As he sees it, the banking industry has held its ground against Microsoft Corp. and other perceived competitive threats. It has gotten Microsoft itself and other such outsiders to recognize that "they have to deal with us on our own terms, or they don't play."

"Hanging together on the issue of technology has been totally BITS' doing," Mr. Crutchfield said last week.

That made him more than happy to be chairman, a role he expects to relinquish in a year. His job description: "To be the link between the technology people and the CEOs who are not technology experts, to bridge that gap, to hold us together as an industry when dealing with the Bill Gateses of the world, the Checkfrees, anybody who thinks they might be able to come in and pick off pieces of our businesss."

The budget was cut by 25%, to $3.9 million, but to Mr. Crutchfield and others, that is part of the good-news story. Even matters of strategic importance and survival must reflect the cost sensitivities of dues-paying members, and BITS was never supposed to take on a self-perpetuating, trade- association kind of life.

Mr. Crutchfield said BITS has a "useful life" of uncertain duration. For now, the actuarial calculations seem entirely favorable.

He and the staff under chief executive officer Catherine A. Allen now routinely present cost-benefit analyses that go a long way toward explaining the support BITS has been enjoying.

If some Bankers Roundtable members question where their dues assessments go-and they have done so-Mr. Crutchfield goes to what he calls "the heart and soul of the matter."

For example, BITS' work on a fraud reduction program and the automation of certain check-clearing functions, or "electronification," will cost BITS members about $1.1 million. But the industry can anticipate projected annual savings of up to $3 billion when the programs are in place.

BITS said a typical $10 billion bank would save $1 million in the first year, $5 million in the fifth. First Union, 24 times that size, would save $8 million to $9 million in Year 1, $33 million in Year 5.

"We are getting hundreds of dollars of return on pennies spent," Mr. Crutchfield said.

But there are, in these assumptions, what economists call network effects. They require maximum participation to maximize the shared benefit, and that leads to another part of the job that Mr. Crutchfield takes seriously.

"I don't like a lot of meetings, organizations, or even trade associations," he said. "But I have a heightened awareness of the importance of everybody playing. It is not just a one-bank issue, and this is one of the few times in the banking business that (cooperation) is an important factor. There is an incentive for everyone to play."

Ms. Allen, a one-time Citibank executive who took leave from her own consulting business two years ago to run Washington-based BITS, credited Mr. Crutchfield for getting these points across and winning people over.

"He has a matter-of-fact, down-to-earth style that helped us shape the communications and the cost-benefit analysis to what the CEOs needed," she said. "Ed puts it in common language."

"He has totally embraced not only the vision but the mandate to make it happen," said William Randle, executive vice president of Huntington Bancshares in Columbus, Ohio, who was involved in the BITS organizational phases in 1995 and is one of the next-level bank executives in the secretariat's advisory group.

"To be able to sit around a table with these big-bank CEOs, explain the issues, and get unanimous approvals means we've come a long way since 1995," he added.

Mr. Crutchfield pondered the rare moment in banking history that gave rise to BITS. Industry consolidation enabled a relatively small number of industry leaders to "make things happen," he said, yet a maze of payment systems and clearing houses could not be restructured or streamlined without buy-in from institutions of all sizes and interests.

Then there was what he and other chief executive officers on the BITS board-they include Hugh McColl of BankAmerica, John Reed of Citigroup, and the previous BITS chairman, Frank Wobst of Huntington Bancshares-have come to regard as the 1994 "wake-up call," when the Internet started to be talked about as a business channel, and Microsoft chairman Bill Gates called banks "dinosaurs."

Over the following year and a half Mr. Wobst, Chemical Banking Corp. and Chase Manhattan Corp. vice chairman Edward Miller (who has since moved on to the insurance industry), and other influential, technology-savvy bankers laid the groundwork for BITS.

They required board members to be in one of the top two positions at their banks. And they reached out to other constituencies, giving board seats to representatives of the American Bankers Association and the Independent Community Bankers of America, who are both from small banks.

ABA director Charles Waterman of South Holland Trust Co. in Illinois and the ICBA's David Hayes of Security State Bank in Dyersburg, Tenn., were part of the unanimous bloc backing Mr. Crutchfield and BITS.

"Those players feel they are a part of things," said Mr. Adams, Mr. Crutchfield's technology lieutenant and a BITS advisory group member. "There is a greater recognition by smaller banks that their needs may not be the same as the biggest banks' and that there may be a need to realign the utilities."

Mr. Adams was referring to one of BITS' current agenda items, the "shared utilities" project, which begins with an assessment of all the clearing houses, networks, and payment associations that banks support. A more rational infrastructure could save the industry billions.

"If you have more than 100 check-clearing centers, and you only need two, that is something that will get the attention of the top 10 banks' CEOs real quick," Mr. Crutchfield said.

With the project only about a quarter complete, Ms. Allen has less to say about shared utilities than about things further along or completed, such as the Interoperabill and IFX specifications for electronic bill payments and data transmissions in on-line banking.

At the recent meeting in Naples, Fla., the BITS board endorsed a "privacy decision tool" that banks would be able to use to test the business and cost impacts of various privacy protection policies.

BITS is also well on the way to establishing, with assistance from Science Applications International Corp.'s Global Integrity subsidiary, a "security lab" for testing and certifying on-line transaction systems, Internet browser software, and the like.

Ms. Allen said companies such as Microsoft, Intel Corp., and Sun Microsystems Inc. have offered to contribute to the security lab because of the bankers' unified front. "It made outsiders see there is power here and that the CEOs are together," she said.

Looking back at the galvanizing "dinosaur" quote, which Mr. Gates gave to Newsweek in July 1994, Mr. Crutchfield said that the Microsoft visionary "allowed his rhetoric to get ahead of his ability to be a problem. Thanks in large part to BITS, we'll stick together and nobody will be able to jerk us around."

Mr. Crutchfield conceded that questions are looming over BITS' horizon. He wondered if "the convergence of banking, insurance, investment banking, credit cards, etc." will "sharpen issues" or raise different ones that may be out of BITS' current bailiwick.

The Bankers Roundtable, in fact, may soon be opening its doors to nonbanks. And there reportedly remain differences of opinion about BITS' long-term usefulness and the length of that useful life.

Mr. Randle, who worked at First Union before joining Mr. Wobst and Huntington a decade ago, said BITS has accomplished what it set out to do in "focusing on payment systems and creating a platform for open and interoperable systems and safe and secure e-commerce-not just for this country but on a global basis."

He suggested that BITS might have a revenue-generating future-perhaps beginning with the security lab-that might later moot any dues-funding issues.

BITS "has a full plate for the next year," Mr. Crutchfield said. "If it was just make-work, we'd disband it. But we are probably several years from that point."

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