First Union Corp. can rightly claim to be the first - and only - cyberbank.

Thanks to some quick thinking and fancy legal footwork, the Charlotte, N.C.-based banking company registered "cyberbank" and "cyberbanking" as service marks in 1995.

They are valuable pieces of intellectual property that could become priceless in a wired world. And they underscore First Union's resolve to be on the leading edge and stay on it.

"Cyberbanking is our concept of computer-driven banking for consumers and merchants on the Internet," said senior vice president Fred M. Winkler.

As it happens, First Union has been "taking a little more time" than other technology-driven banks to offer full-scale transactional services on the Internet, Mr. Winkler said. Wells Fargo Bank, for one, opened its Web site for banking business last year.

First Union does have a relatively comprehensive site that is attracting 10,000 to 20,000 hits a day. Its 350 pages include a modest shopping mall, weekly economic reports, and bank product information. By summer, customers will be able to check balances and monitor transactions on-line. By yearend, they should be able to conduct most banking transactions on the Internet, including fund transfers and bill payments.

"When our product is rolled out, it will be more robust" than others, Mr. Winkler vowed. "Everything that First Union offers can and will ultimately be made available on the Internet."

But the fast-growing superregional's cyberambitions do not stop - or start - there. It is going to unusual lengths to spread the word.

First Union's annual report listed its World Wide Web address (www.firstunion.com) on the cover. And tucked inside was a compact disk that, if plugged into a CD-ROM player, revealed the entire text of the annual report; showed a colorful, narrated movie about the company; and provided a connection to the flourishing Web site.

Gimmicky? Perhaps. But it was a first, noted Dean Witter Reynolds analyst Anthony R. Davis, one of many who place the bank among a "technology elite."

"Clearly, First Union is one of the leaders," said Catherine Murray, who follows the company for J.P. Morgan Securities. "They're in the vanguard in applying technology to banking on the Internet and stored-value cards."

Indeed, the cyberbank's attentions are focused on smart cards at the moment.

First Union this month is to issue its first large batch of smart cards in Atlanta, aiming to circulate a million by the time the Olympics begin in August. (See accompanying article.)

"Basically, it's our effort to replace cash transactions that are $10 and less," said Mr. Winkler, the bank's head of card products and a veteran of AT&T Universal Card Services and Citibank.

The small-transaction arena, Mr. Winkler said, is "the only area of payments where financial institutions have found it difficult to compete." Cards with value stored in their chips, which can be transferred instantly to a merchant at the time of purchase, "will let us compete with cash and provide a very convenient tool for the consumer."

Ultimately, they can do for cyberspace what debit cards and automated teller machines did in the physical world.

"We see smart cards being the access device for most alternative remote delivery channels," Mr. Winkler said. "One of the primary benefits of smart card technology is that you will be able to load your chip's stored value at home."

That continuum linking the Internet, consumers, merchants, and physical access devices - cards - is what "cyberbanking" is all about. The Atlanta smart card program is just a small part of a heady, long-term vision.

Consumers will be able to use any of the cards issued by three banks - the others are the Georgia operations of NationsBank Corp. and Wachovia Corp. - at any participating merchant location. Along with Visa International, major vendors for the trial include BellSouth Corp., Diebold Inc., and Schlumberger, the French-owned smart card manufacturer.

First Union believes the stakes are high, for its own future and that of chip technology. It hopes to gain a marketing edge by distributing its cards before its rivals do.

"We're first with the product in the sense of rolling out a major effort," Mr. Winkler said. "We've solved major technology issues that other financial institutions are going to have to work on.

"I'm not sure how much of a lead that gives us because we don't know where everyone else is," he added. "But being first means we're able to play a major role in how the technology rolls out. We can guide it, as opposed to being forced to use something that somebody else built."

NationsBank is also angling for an advantage. As an official Olympics sponsor, it has exclusive rights to sell its cards at Olympic venues, which are expected to have two million total visitors. (Wachovia's entry into the smart card games appears more modest).

While NationsBank has not announced where or how it will be following through with smart cards after the Olympics, First Union has made clear it will continue offering them in Atlanta and expand into other major cities in the East.

NationsBank and Wachovia will only be selling disposable cards - which customers cannot use after their initial value has been spent - but First Union will also issue reloadable cards. Customers can replenish them at ATMs up to a limit of $500.

First Union is not just targeting tourists.

"We're trying to market both products to Atlanta residents - both our customers and people we want to be our customers," Mr. Winkler said. "We hope the convenience of both types of cards fits a variety of market segments."

"Stored-value smart card technology is going to make major inroads in the next five years," the banker said. "The rest of the world is already quite heavily into stored-value smart cards, and the U.S. is really bringing up the end of the trail here."

Customer loyalty and fee revenue "are up for grabs in this competition," said Washington-based electronic banking consultant Clifford L. Brody. "In effect, what the banks are doing is competing for the entire transaction circle.

"It's a heavy capital investment, but if they come up with a system that the merchants like, they've got a winner."

But the Visa project has critics. MasterCard officials have said Visa had to scale back earlier cash-card ambitions because it could not deliver all the necessary technology to Atlanta in time.

Jerome Svigals, a banking technology consultant in Redwood City, Calif., has called the U.S. rollout half-hearted.

"The way they're doing the mechanics of stored value at the Olympics leaves something to be desired," he said. "About 300,000 of the cards are basically upgradable for the ATM, but they're doing it in the crudest way possible" by including both a magnetic stripe and a memory chip on each card.

Mr. Svigals sees the Mondex electronic wallet system, currently being tested by National Westminster Bank and Midland Bank in England, as superior. "Mondex has a much better set of economics," he said.

Despite its widely praised technology and features, including the ability to transfer money between any individuals holding Mondex cards, Mr. Winkler called the system "closed and proprietary." Visa's system is "broader-based" and has a more powerful brand name.

Mr. Winkler foresees the day that First Union customers will be able to do all their banking on the Internet and to download value directly from their computers to the chips on their smart cards.

"We see smart cards being the point of access device for most alternative remote delivery channels," he said. "One of the primary benefits of smart card technology is that you will be able to load you chip's stored value at home."

First Union was among the very first banks to boast a home page on the Internet; today, its 350-page Web site gets between 10,000 and 20,000 "hits" - or visits - a day.

The site includes a modest shopping mall, weekly economic reports, and information about bank products. By summer, customers will be able to check balances and monitor transactions on-line. By the end of the year, they will be able to conduct most banking transactions on the Internet, including moving funds and paying bills.

First Union "is taking a little more time" than other technology-driven banks in offering transactional services on the Internet, Mr. Winkler said. Wells Fargo, for instance, had its Web site open for business last year.

But Mr. Winkler vowed: "When our product is rolled out, it will be more robust. Everything that First Union offers can and will ultimately be made available on the Internet."

Internet banking and smart cards are just two of the "gee-whiz things" Mr. Winkler said First Union is working on. Another is its telephone center, a sort of one-stop remote bank.

"When it's completed, that call center will be the focal point for our customers to do any and all of their financial business on the telephone," Mr. Winkler said.

"Last year through telemarketing they opened 10,000 new bank accounts," said Mr. Davis of Dean Witter Reynolds. "And they are one of probably only two or three major multistate banks that have identical data processing systems up and running in all their markets."

This means that the bank's management information system makes up-to- the-minute calculations about product sales and revenues per square foot at each branch.

While bank officials will not say how much money they are investing in technology, First Union's annual report does state that the $200 million they will save this year in FDIC insurance premiums will be invested in technology.

"All of that together gives you a profile of a bank that is really pushing the envelope in a lot of different areas to present their products to customers," Mr. Davis said.

Mr. Winkler acknowledged the bank's growing technology emphasis. But he is not prone lofty philosophical justifications of strategy, preferring a more nuts-and-bolts explanation: "We want to be a player. We don't want to be a watcher."

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