The country's biggest bank wants to be its customers' best friend.

Executives at the "new" Chase Manhattan Corp. - they take pains to differentiate it from the old Chase and the Chemical Banking Corp. that acquired it - seem to revel in the sheer largeness of the enterprise.

Twenty-five million customers coast to coast. Three hundred and twenty-three billion dollars in assets. Sixty-eight thousand employees. Five hundred branches in New York alone. A bank that is No. 1 in the New York metropolitan market and among the top three in key businesses like auto lending, credit cards, global custody, and mortgages.

To build on that vast foundation, Chase turns to technology - to a $1.8 billion budget that it believes can buy "mass customization."

The vision is that each of the 25 million customers will be treated like the proverbial "market of one." A mortgage borrower, say, would not receive a blanket credit card pitch with a "tell us about yourself" application, but a personalized inquiry that acknowledges the existing relationship and takes into account the prospect's age, family configuration, and spending habits.

"1997 will be the year of 'know your customer,'" said Michael Hegarty, vice chairman in charge of deposit and investment products. "What we're looking to do is use technology in a customer-centric manner. We want Chase to be a world-class, information-based marketing company that is technology-enabled."

The venerable Chase name has never been associated with technological innovation. Its predecessor Chemical had more of a technology edge, but nothing like that of New York rival Citicorp or other current pacesetters like Wells Fargo and BankAmerica.

Even with its massive scale and automation capability, Chase does not necessarily seek an innovation prize. It is charting a middle-of-the- road course through a frontier that other banks are more aggressively clearing.

Plans for 1997 include a New York City test of the MasterCard-Mondex smart card system, an enhanced product for banking by personal computer, and a more lively Internet site.

By contrast, Wells Fargo already has a Mondex pilot; Citibank has been a leader in PC banking and retail automation generally; and Wells and BankAmerica both offer account services over the Internet's World Wide Web.

To be sure, Chase executives are enthusiastic about alternative delivery channels and their potential. Even chairman Walter Shipley likens branches to "railroads," saying they will continue to hold importance but will see many of their roles and functions overtaken by technological advances.

But a lot of the excitement at Chase seems to be about the "back end" of technology that enables the bank to manipulate and capitalize on what it knows about customers and markets. To that end, Chase plans to install $85 million worth of desktop computers - about 10,000 of them - in its branch network in 1997.

"Frequently, people think about technology in terms of how you can automate what you used to do," said Donald L. Boudreau, the vice chairman of consumer credit, whose responsibilities include consumer businesses across the United States and the commercial banking business in New York. "That's important to think about, but not as important as thinking through what technology is going to enable in the future.

"Every aspect of our business, every element of our business, is in fact being altered by technology, and increasingly that's information technology - the ability to get it, to use it, to analyze it to make decisions to better serve our customers."

Mr. Boudreau oversees the bank's credit card operation (the third largest, with 17 million accounts) and cites it as an example of where technology can make a difference.

"We now mail 12 million statements a month," he said. "We have the ability, when we produce the statement for your household, to will make an offer that is geared directly to you."

Intelligence culled from a credit bureau might indicate that a customer carries another issuer's card. This customer's next statement might include an incentive to drop that card and consolidate with Chase.

Promising further refinements, Mr. Boudreau added, "If we understand you go to Florida every spring and you like the Palm Beach area, we're going to give you a package of dining discounts in that area - as opposed to offering you a trip to Seattle. You'll say, 'Gee, they understand me.' "

This may be one of those payoffs of size. Chase executives say they have the breadth and depth to meet all the financial needs of existing customers while attracting new ones.

Mr. Boudreau called it "delivering the brand promise down to a household level."

Chase employees are becoming happily immersed in the culture of bigness, and outside observers view that positively. Goldman, Sachs & Co. analyst Robert B. Albertson said the "sheer, raw size of their plant" is Chase's outstanding feature. He also gave high marks to retail marketing.

"They probably have created a systems and information processing capability second to none in the American financial services industry," Mr. Albertson said. "That gives them an advantage, or provides a barrier to entry to others, in certain products and services. Big is now good, not bad, in banking."

Charles B. Wendel, president of Financial Institutions Consulting in New York, said Chase has "as much information about their customer base as any bank should have."

But Mr. Wendel and others said neither the volume of customer information nor the dollars being thrown at technology will guarantee supremacy.

"A lot of banks have good technology and don't use it well," Mr. Wendel said. "Chase has a tremendous market opportunity because of their power in the (New York) metropolitan area. It's a question of what they do with it, how they make the organization work to cross-sell and sell deeper."

Another concern among analysts is competition from monoline companies - the specialists in attractive lines of business where Chase expects to hold on to sizable market shares.

Chase enjoys better name recognition than a mortgage company like Countrywide or a credit card company like First USA, but it still must compete with those companies as well as with the likes of Citibank and Bank of New York.

David S. Berry, analyst at Keefe, Bruyette & Woods, said Chase is not invulnerable.

"I think size will work in their favor, but I'm not sure that size will be as compelling as it seems to be," he said. "In niche areas, companies just seem to have come out of nowhere." First USA, which has grown to $20 billion of card loans, "was not on the radar screen four or five years ago."

The Chase executives say they have what it takes to beat back the focused competitors. Mr. Hegarty said the banking environment is far more hospitable than when real estate and Latin American debt woes dogged money- center banks in the 1980s.

"When we were kind of in the penalty box, people like Countrywide, Merrill Lynch, and Fidelity staked out parts of our turf," Mr. Hegarty said. "Today we're coming back and we're going after those things.

"We're advantaged because we have a critical mass of customers and we have superior technology across a broad customer base," he added. "With technology, we have the ability to integrate that information at the point of sale to create a seamless brand called Chase."

"Mike's point is a powerful one," Mr. Boudreau interjected in a recent interview. "If you look at a lot of the monolines, they're all trying to broaden their spectrum of product. We already have most, if not all, of what they're trying to broaden to.

"There is nothing that a new player, a nontraditional provider, can do or aspire to do that we can't do. And we can do it better, more comprehensively, and probably quicker. That's why we're so optimistic."

Another point the Chase leaders pride themselves on is the smoothness of the recent merger. Chemical went through the process before, notably the 1991 combination with Manufacturers Hanover Corp., and Mr. Shipley leaned on his vice chairmen - with senior vice chairman Edward Miller as chief orchestrator - to consummate the 1996 "merger of equals" even better.

"I think these guys will have written the book on how to do it right," said Matthew Chapman, chairman of CFI Proservices Inc., the Portland, Ore., software company.

Chase selected CFI and NCR Corp. of Dayton, Ohio, as lead suppliers of the ambitious information-sharing network in branches.

Mr. Chapman said the initial conversion took about six months. "In terms of larger bank installations, this was done with a tremendous amount of speed," he said.

In keeping with the "mass customization" credo, the system puts "the branch manager in a position to decide what are the appropriate products for a particular community," Mr. Chapman said.

Retail banking executives said they did not lose any perceptible market share as a result of the merger.

"We set out a guiding principle that this is our merger, not our customers' merger," said Mr. Hegarty, who is also a member of Chase's policy council. "In a world where customers have a tremendous amount of choice, we don't want to give them a reason not to bank with Chase Manhattan."

At the height of the post-merger integration, Chase went forward with "a mass issuance of debit cards," Mr. Hegarty said. He called that "a big deal."

"Our customers can now electronically access their checking account at 12.5 million locations around the world, and that makes life easier for them."

Mr. Boudreau said those debit cards are "part of an evolution" toward a more complete set of remote banking capabilities.

So far, one of Chase's bigger advances is the ability to carry out automobile financings on-line. Through a network of kiosks in auto dealerships, Chase can arrange loans in 10 minutes or so, Mr. Boudreau said. Plans call for enhancing the service next year and putting it on the Internet.

Security concerns have tempered the enthusiasm about full-service banking on the Internet - one issue where Chase and Citibank are on the same page. Mr. Boudreau and Mr. Hegarty said 1997 will not be the year Chase opens its Web site for bill payments, account transfers, and other features that Wells Fargo, BankAmerica, and about 40 other banks have introduced.

"In terms of the Internet, Chase is going to have a robust set of pages that will cover the breadth of our product capability," Mr. Boudreau said. "We'd like to get in '97 to the point of being able to do some application-receiving on the Internet."

The biggest U.S. bank places far more faith in direct dial-up banking by personal computer - something the old Chemical pioneered with, and suffered for, in the 1980s. Sometime next spring, Chase expects to introduce a souped-up version of its proprietary home banking service.

It has about 60,000 customers doing PC banking - roughly half what Citibank has in the New York area.

Citibank offers the service free. The Chase executives said they are likely to charge a small monthly fee, except to preferred customers. They are hoping for 200,000 to 300,000 users by yearend 1997.

"We will be turning up the marketing heat on home banking," Mr. Hegarty vowed.

Lawrence W. Cohn, an analyst at PaineWebber, said Chase has "a real opportunity" with its second-generation product.

"They have just sort of tagged along until now, in part because they've been distracted by the merger and haven't been able to put the resources into keeping up," he said. "Citibank has a whole lot more home banking customers, but they also have a real antique of a product."

Mr. Cohn is also among those eagerly awaiting the smart card trial that Chase and Citibank will stage late next year on New York's bustling, largely affluent Upper West Side.

The objective is interoperability. Merchants will be able to accept either Chase's Mondex cards or Citibank's Visa Cash cards on the same point of sale terminals. Consumers, who have yet to voice demand for stored value or electronic purse cards, will get to choose among systems, brands, and uses.

Because chip cards can hold a lot of information, Chase executives believe customers and merchants will regard them as an improvement over cash.

"Consumer goods manufacturers like Procter & Gamble spend about $7 billion a year on coupons," Mr. Hegarty said. "A stored value card could replace couponing as a way merchants maintain customer loyalty or get customers to switch from one product to another. So we think that is going to be quite attractive, as we evolve."

For Mr. Hegarty and Mr. Boudreau, the cooperation with Citibank is somewhat ironic. The two men met seven years ago through their banks' membership in NYCE Corp., the regional electronic banking network originally formed by several New York-area banks to respond en masse to Citibank's formidable ATM strategy.

Mr. Boudreau, past chairman of NYCE, worked at both the "old" and "new" Chase; Mr. Hegarty, who just took over as NYCE chairman, rose through Manufacturers Hanover and Chemical.

"We came together in our first board meeting right away," Mr. Hegarty recalled. "When Don started talking about his vision of the future and I started talking about my vision of the future, we started connecting. Stylistically, we think alike and do a lot of the same things."

"In the old days, people walked into a branch and whatever the product of the day was, that's what got foisted upon them," said Mr. Boudreau, explaining their vision. "With the ability to understand the relationship and to understand customers holistically, we can go give them the right products. Everyone doesn't need a passbook savings account.

"We can understand their needs and go get them the appropriate offering. It becomes a much more effective marketing and service environment, because instead of selling, you're adding value for the customer."

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