Armed with advanced phones and personal computers, bankers are mounting another assault on the home banking market.

Such campaigns are nothing new. In the 1980s, many home banking projects were launched - and came to grief.

What is new is the growing number of bankers who say they have finally figured out how to make money offering electronic services to consumers.

Their approach diverges from the rationale originally used to justify the now ubiquitous automated teller machine: offering convenience to sharply reduce branch costs.

In the case of the ATM, this reasoning sounded better than it played out. As has been well documented, ATMs, first installed mainly in branch locations, failed to significantly reduce overhead at most institutions.

Now, more than 15 years after the first significant ATM installations, bankers are starting to charge more aggressively for the use of machines that are more strategically placed in shopping malls and convenience stores. ATMs are starting to pay off.

Selling Tool

The question many are raising is how home banking can shorten the wait before financial benefits begin to appear.

Several institutions, including Huntington Bancshares of Columbus, Ohio, and Barnett Banks Inc. of Jacksonville, Fla., believe they have the answer to this question: Instead of simply shaving costs, use the convenience of electronic delivery systems to sell more products and services.

Home banking services, whether by phone or personal computer, "are based on the premise that location is the most important part of convenience," said Paul Lambert, system manager in product delivery and development at Barnett Technologies, Inc. "And convenience is what stimulates usage."

|Channel-Driven Strategy'

William M. Randle, a senior vice president at Huntington, agreed. "The idea is to match the 30% or 40% of people who find banking inconvenient with a deliverv channel that we find most efficient," he said. "It's a channel-driven strategy, not a product-driven strategy."

While Huntington and Barnett may agree on the theory behind home banking, the two banks' approaches to the business differ greatly.

Huntington has taken a lead role in researching and developing home banking products in conjunction with technology vendors.

Following the logic that the infrastructure is already in place, these products have tended to focus on the telephone rather than the television or the personal computer as the initial delivery mechanism.

Huntington believes that by participating in the development of its screen phones it can better ensure that the technical standards surrounding home banking will not hinder its progress in this area.

"We'd like to maintain some control over our destiny as it relates to the payment system," said Huntington's Mr. Randle, "as opposed to turning it over to someone who doesn't know as much about as we do."

The bank's screen phones will contain Intel 386 processors and run software that will eventually be adapted to personal computers.

The participation in research and development efforts does not come without risks.

Huntington had a highly publicized falling-out with its original screen phone development partner, American Telephone and Telegraph Corp.

The canceled project cost the bank an estimated 10 million, and Huntington has now resumed development on advanced telephone with New Jersey-based Logical Time Inc.

Exposure to such risks is exactly what Barnett hopes to avoid. It takes no part in developing home banking products.

Rather, the bank is prepared to adapt its internal operations to whatever standards are necessary to make use of the products that technology companies develop.

Preserving Flexibility

"Rather than depend on a critical mass' acceptance of one device, we've invested our resources in developing a device-independent platform," said Barnett's Mr. Lambert.

"We have taken the position that we are a provider of banking services, and that major companies out there can better develop and manufacture the products" to deliver those services.

Neither Barnett nor Huntington would project when and where profits from home banking would appear, though both banks pointed out that current users of home banking services tend to be in their most profitable customer segments.

Huntington expects to begin testing its new screen phone product with 100 users by the end of the year.

Barnett's screen phones and its PC-based banking over the Prodigy network have about 5,000 users in all.

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