Deregulation in the telecommunications industry has U S West Inc. working harder for banks' business.
To appeal to financial institutions, the Denver-based Baby Bell has unveiled call center software; outsourcing support; voice communications; data, voice, video, and Internet applications; and support for automated teller machines, point of sale terminals, smart cards, home banking, and video kiosks.
Colorado-based U S West is confronting increasing competition from newer entrants to telephone and data services, such as cable and utility companies. According to Mentis Corp. of Durham, N.C., 42% of banks said they have been approached by nontraditional providers selling telecommunications services.
"The phone company used to be the only choice," said Mentis research analyst Martin Molloy. "Now different players can play, and so no single telco dominates the market as a primary provider of telecommunications solutions."
Banks are among those beginning to realize that nontraditional providers can often provide a single service or product more cheaply than a larger company, Mr. Molloy said. "The key for a large telco is to go after the other providers and take away their competitive advantage."
Banks with more than $4 billion of deposits are expected to spend an aggregate $3.7 billion on telecommunications services this year, up from $3.5 billion in 1997, according to Mentis. Banks with less than $4 billion of deposits are expected to spend $328 million this year, up from $300 million.
"U S West is definitely going after banks," said Mr. Molloy. "It sees an opportunity and it can't hurt to go after that market."
U S West has been prepping its network to handle ever-increasing flows of data in addition to the usual voice traffic.
U S West began building a high-speed frame relay network for data needs in 1992, and in 1995 expanded it beyond its 14-state operating area.
"We have a very large data network, data-oriented products associated with the Web, and a host of data/voice integrated applications," said Mary Elston, senior market manager of U S West financial services marketing. "U S West had a good sense that data would be a huge influence in the telco market, and that has proved to be the case."
U S West intends to "maintain its strength in the voice arena and grow its leading-edge capabilities and make sure that voice and data are integrated," Ms. Elston said.