Almost every purveyor of financial services has talked at one time or other of targeting America's middle class, as if it was some vast, untapped mineral reserve.

But while others talked, Household International Inc. acted: It has spent more than a century perfecting its pitch to the average Joe.

The Prospect Heights, Ill., financial services conglomerate is best known as the parent of Household Finance Co. The nation's largest consumer finance firm, it has lent money to middle-income consumers since 1878. In 1976, it bought a thrift charter, then spent 10 years fine-tuning its approach to the deposit side of the business.

Today,the offerings of Household's various business units run the gamut of consumer financial products, from mortgages to credit cards, brokerage services to insurance. All are aggressively cross-marketed among its enormous customer base.

Household's thrift subsidiary, Household Bank, chartered in Newport Beach, Calif, bills itself "America's Family Bank." In an era of wholesale consolidation in the savings and loan industry, Household Bank has grown to $9.6 billion in assets, with 170 branches spread over seven states, making it the nation's 14th-largest savings institution.

Nevertheless, Household executives still refer to the bank as a start-up operation rather than a mature institution with a stable balance sheet.

"We're trying to leverage the infrastructure we have, which is managerial and operational. We're looking for branches, customers, deposits, and to a lesser extent loans," said Antonia Shusta, group executive in charge of Household's consumer banking and mortgage operations, a position she has held since 1990.

"They've built a nice banking franchise at a very low cost" said Michael R. Hughes, a financial services analyst with Merrill Lynch & Co. in San Francisco.

Mr. Hughes said that it is difficult to ascertain the performance of the bank apart from the corporation, but noted that it is a low-cost operator with solid underwriting standards. He added that the bank's deposit base represents a "very cheap, very stable" source of funds to support other lending activities.

While it's taken 10 years to build the deposit-taking business, Household took a major step into the banking big leagues last year when it teamed up with General Motors Corp. to offer the GM MasterCard, which quickly became one the most widely held credit cards in the country.

But Household has built the bulk of its business through the purchase of thrift branches and deposits, usually in federally assisted transactions. Over the past five years, the company has made 17 acquisitions, while simultaneously selling branches in Northern California and Colorado.

Once a deal closes, Household relies on its operations staff to rapidly convert the acquired institution to common products and systems, usually in less than 90 days.

"We find that the faster we convert to our system and get the products standardized. the faster we stabilize customer issues," said Dinah Keefe, vice president of bank marketing and development.

A corporate subsidiary called Household Financial Network supports the technology needs of the bank and the company's other businesses, which include HFC as well as mortgage, credit card, brokerage, and life insurance companies.

The closely related nature of Household's core businesses allows HFN not only to rapidly assimilate Household Bank acquisitions, but also to create the economies of scale that make technology consultants and Wall Street analysts salivate.

For example, the bank and HFC use the same installment loan, general ledger, and credit scoring software.

"HFC has this incredible wealth of information about credit utilization from their customer base, and they've been able to develop credit scoring models that have proved highly predictive," Ms. Keefe said. "The bank has been able to hitchhike on a number of those models."

Various types of item processing for the corporation also are centralized in three regional data centers. "We share resources, which really reduces our costs," said Kathy Mikos, director of banking systems for HFN.

"Our philosophy is to choose the best-of-breed host applications" from third-party software vendors, Ms. Mikos said. "The pieces we need to create [internally] are generally the interfaces" between software applications. Some data processing chores are also outsourced, like automated teller machine processing, mortgage servicing, and student loans.

But HFN adds a "front end" to many of these core applications, in the form of local area networks that were installed in each branch starting in 1990. "Our goal is to have the front end mask any differences of the systems on the back end," Ms. Mikos said. "It doesn't matter where the host is. The network allows us to mask that to the user in the branch."

This client-server architecture has two advantages for Household. The LANs "have a very attractive cost per branch, which is important because we're in a heavy acquisition mode," Ms. Mikos said. And application development on the LAN platform is shared among Household's banks in Canada and Britain, even though those institutions use different back-office accounting systems.

HFN is also testing a plan that would introduce parallel processing computers - machines use multiple microprocessors working together - into the regional processing centers. Such an arrangement would reduce the workload on HFN's International Business Machines Corp. and Amdahl Corp. mainframe computers and improve overall system performance, according to Ms. Mikos.

Although she ostensibly serves as the liaison between bank management and the HFN technology staff, both sides have taken steps to keep communication open. "We've pulled our technology people onto the management team, so they participate in all the discussions on the business," said Ms. Shusta.

Mutual understanding is clearly important, and Ms. Shusta started a policy whereby a bank executive is assigned to oversee each systems development project. "What we're saying is, you're the manager, you're in charge, you're accountable, and you cannot blame your technical support," she added.

Charles Colip, president of Household Bank's midwestern division, was the first executive to oversee such a project, the implementation of a new on-line teller system in 1991.

"From a user perspective, it was the first time I never really had to sell a system or a change," said Mr. Colip. He credits the fact that users were heavily involved in the project, working with developers to determine the overall look and feel of the system.

"To really have the best use of technology and information, you need the people who face the customer every day involved in that process," Ms. Shusta said.

The bank asked its tellers to choose between two systems under final consideration. The tellers' pick was different from that of management.

Who won? The tellers. "We needed people who were going to beat on the keys every day decide what was going to be the choice," Mr. Colip said.

"The [previous branch] system required a two-week training class, and when the tellers came out they were only running at a 40% efficiency," Mr. Colip added. "With the new system there are only three days of training, and they're running at 75% efficiency." A multimedia training course under development will cut off-site teller training to a few hours.

A development project for platform automation using similar techniques should be completed by the end of the year. "Our first priority was to get the best systems in place across the board," Ms. Mikos said. "Now that's almost finished, and we're looking at the next moves."

Besides the parallel processing pilot, other projects under development include on-line delivery of more information to branch managers and an integrated customer information file.

"We have today a multitude of [customer information] files that don't necessarily communicate, and as a result there is duplication," said Mr. Colip. With the new system, called Precision, changes to customer information in the bank's files will be updated automatically in the files of the bank card company, the life insurance company, and so on.

"Our focus is on managing relationships," said Ms. Keefe. "Customers know they have a Household Bank credit card. They don't know it's a different system. They shouldn't have to know that."

Overall, Ms. Shusta has attempted to bring a greater appreciation of technology to bank employees.

"In the newer businesses, we set up computer literacy standards for all our people," she noted. "Nothing too earth shattering, but what we were saying to people is, you have to have a certain proficiency and a certain comfort level with this."

The bank's management conferences also include "technology fairs," with displays from both outside vendors and HFN's research and development arm. "Some of these were obviously business types of applications," Ms. Shusta said. "But we also showed Nintendo and Sega [video games] so people could see the difference between eight-bit and 16-bit graphics.

"We wanted people to understand that technology isn't something you just come to the office and have to face. It changes how you work and how you live."

The most recent technology fair generated 650 suggestions from bank managers for business-related applications. But this thirst for the latest thing is tempered by a conservative banking culture that values a person-to-person approach.

Walk into a Household Bank in say, Columbus, Ohio, and you're likely to see platform personnel working with customers as both reference a color video monitor, using what Ms. Keefe calls a "needs-based" selling approach.

Other than that nod to automation, Household's products and approach to its customers are deliberately low key. Instead, it applies the traditional savings bank formula - simple, market-priced products, extended hours, and personalized service.

"They've been successful in marketing to what is an underserved [consumer segment], one that is somewhat down-market from the white-collar middle [class], which is very overserved," said Mr. Hughes of Merrill Lynch.

"There are probably banks that have a lot fancier versions and flavors of things that we do," Ms. Keefe said. "We think what diffentiates us is our approach to helping consumers select correct products."

She said Household customers are also not inclined to use the latest self-service technology. "What the customer wants is that human contact. If you take a look at where we've invested in technology, it's been to enhance and support the technology delivered to a customer via a human being," she said.

Household management found that out the hard way when it introduced its family bank concept in Baltimore several years ago. "One of the things we made a big investment in was interactive video and lobby ATMs," Ms. Keefe said. "There was a novelty factor to it, but if people take the trouble to come into the lobby, they want to talk to a person." Both projects were eventually discontinued.

"It's got to start with the customer, rather than taking some preconceived notion of what the bank should be and ramming it down their throat," Ms. Keefe added.

But management isn't shy when it comes to peddling other Household products to bank customers. Ms. Keefe said a significant portion of the bank's customers carry Household credit cards. Branch employees are licensed to sell insurance products from Alexander Hamilton Life Insurance Co. of America, and brokerage services are also available in the branch from Hamilton Investments, both Household subsidiaries.

In general, though, the conservative approach also extends to the markets Household chose to enter. Except for its expansion in Southern California, where it already had a presence, Household moved into markets like Columbus, Baltimore, and Terre Haute, Ind.

"We felt these were good middle-market opportunities," Ms. Shusta said. "These were not |hot' states and they were also places we felt economically would probably be a little more stable than other areas of the country."

Although the company considers the bank a start-up venture, Ms. Shusta said her primary goal is to build something that will be viable over the long term. "This is a chance that comes along maybe once a career," she said.

"One of the things we continually struggle with is the external perception of what thrifts are. Thrifts in this country have a horrible reputation because of the S&L crisis," Ms. Shusta said. "The industry's changed. It's professionalized. There's a lot of diversity. They are people who are looking at the business much differently, because it's a different world."

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