Retail bankers are putting their money where their mouth is in using technology to enhance customer relationships, but the long-held promise of home banking may take a while to be fulfilled, according to a recent study.

The study, sponsored by the American Banker and Andersen Consulting, is based on a survey of 53 of the country's 150 top banks. The survey was sent out earlier this year, and the findings will be made public in November.

The study largely confirmed what consumer bankers have been saying - that they are reaching out to current and potential customers with automated services and more specialized marketing to retain and intensify their relationships. The findings also indicate that although. the emphasis is moving increasingly away from the traditional branch system, the long-heralded dawn of home banking still seems fairly dim on the horizon.

The two business issues that most banks focused on were enhancing the in-branch or off-site automated interfaces with customers - 32% spent more than $25 million in this category - and understanding and controlling the total relationship with customers across different products, or cross-selling - 34% spent more than $25 million on this aspect of business.

Both these spending trends point to the growing importance in bankers' minds and budgets of reaching out to customers through remote sites, forging stronger ties, and gaining more revenue through cross-selling.

Yet, for all the buzz about home banking and its place in the new order of customer-related banking, more than half of those surveyed (51%) spent less than $5 million on home-based computer or cable delivery capabilities. Almost none of the bankers said they allotted more than $25 million to expanding this technology.

"There's still very low interest in home banking," said Daniel R. Pfau, a partner at Andersen Consulting. "Banks are mere focused on technology with a more immediate payback like telephone services."

Indeed, the survey respondents expressed a belief that there would be fairly rapid growth among telephone service users over the next few-years - jumping from 17%7% now to an anticipated 32% by 2000. Meanwhile, they expect that customer usage of electronic, primarily computer-based, services will remain fairly stagnant -- easing from a current 7% usage rate to only 8% in six years.

Electronic-based services may skyrocket after that point, but retail-side executives seem reluctant to bet the bank too soon. However, many large banks are, at the very least, experimenting with computer- or cable-based service alternatives.

U.S. Bank of Oregon, an $11 billion-asset unit of U.S. Bancorp, has introduced a PC banking service that already has "several thousand accounts," according to John Eskildsen, the president and chief executive of the bank.

"It's not a big deal right now and we're not spending large amounts on it, but the day will come," Mr. Eskildsen said. "I

believe [home banking services] will happen before 2000."

But right now, he said, the bank is putting significantly more toward its telephone services and supermarket banking initiatives.

And with banks going to consumers, consumers have less need to go to the branch, driving down the overall expenditure for upgrading the branch teller systems.

Almost half of those surveyed, 47%, spent less than $5 million on automating or improving their bank tellers' productivity and efficiency

This does not necessarily represent a move away from brick and mortar as much as a change in the way consumers and bankers alike view the branches, Mr. Pfau said.

"They're turning from the branch as a transaction center to the branch as a sales center," Mr. Pfau said. "So banks are looking at platform automation there as opposed to teller systems."

This has given the banks even more of an opportunity and an incentive to increase their cross-marketing efforts. Most banks have already leveraged their customer information files, Mr. Pfau said, but many still need to link these C1Fs into their trust and mutual funds areas. This move, he said, will help banks make the most out of cross-selling by strengthening their customer relationships and aid them in fending off the bank and nonbank rivals that threaten their marketplace, especially in the face of the new interstate banking regulations.

Bank of Oregon, for one, has invested "well over $50 million" on its customer information services technology, according to Mr. Eskildsen.

This, too, has drawn the attention and the budget away from maintaining the standard retail systems - document storage and processing payments and deposits. The study found that 48% of the banks are spending less than $5 million on improving their data storage and research and a full 62% are under that limit for payment and deposit processing.

These banks are still building onto their legacy systems but do not want to replace them, Mr. Pfau said. Instead the retail bank's main focus is understanding its customers and thereby improving its bottom line.

"This is about improving their profitability," Mr. Pfau said. "And banks are doing a pretty good job of building those CIFs."

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