In the quest to get more value out of branches, Union Bank of Norway is making more progress than most.

Though there are about half as many branches per capita in Norway as in the United States, Union Bank of Norway four years ago launched an am- bitious effort to pare costs while getting to know each of its 900,000 retail customers better.

The result-important in an age where customer loyalties are often only as solid as the next best deal on the Internet-is cheaper delivery of high- quality, down-home service.

"We want to turn this bank into a million banks-one for each customer," said Tom Kranoy, director of information technology at the $17 billion bank.

Other banks have accomplished parts of what Union Bank of Norway did, but few if any have done so encompassing a branch transformation.

"I can't think of any bank that has made the commitment to doing something with this level and breadth of capabilities," said Bill Bradway, research director at Meridien Research, Newton, Mass.

Converting five of its 350 branches a week, the bank is up to 150 so far. Customers who enter the revamped branches insert their bank cards into a queuing kiosk that identifies them and dispenses a numbered ticket to hold their place in line.

As they wait their turn, a data warehouse gets to work gathering up account information and sending tailored marketing messages to video screens in the lobby.

Tellers get all the information they need to greet customers by name, follow up on any marketing material they may have been sent, and suggest new products.

The personalized service, combined with sales training for the tellers, is making a difference. In one branch, Mr. Kranoy said, sales increased 90% from 1995 to 1998.

This branch also reduced its tellers from five to three, and increased its "sellers" from two to five. It added two employees designated as relationship builders.

"With products and prices the same ... the only real difference between banks will be the way we meet and treat our customers," Mr. Kranoy said in an interview during a recent conference sponsored by NCR Corp.

With 92% of activities automated, Union Bank of Norway also is emphasizing convenience. There are no paper forms to fill out for deposits, withdrawals, or loans. New accounts can be opened in one to two minutes.

The goal of getting paper out of the process means even signatures are electronic, with customers signing a digital screen with a stylus. The automation is saving Union Bank of Norway $10 million a year on forms alone, said Mr. Kranoy. With less paperwork, staff has been reduced by 20%.

Also lowering costs is the bank's decision to freeze investment in its core systems, focusing instead on the automated teller machine, telephone, branch, and Internet channels. The bank spends less than $1 million a year to maintain its core system, which Mr. Kranoy said is far less than before.

The bank may be unusual in its continued emphasis on branches at a time when more of bankers' attention goes toward alternate, self-service channels.

Mr. Kranoy said that soon Union Bank of Norway will take the same automated systems it created for the branch and use them for ATM, telephone, and Internet services.

"We first wanted to understand all the processes in the branch and then apply the same rules and practices in cyberspace," Mr. Kranoy said.

In the end, the Norway bank hopes to achieve "channel integration," with a common system supporting all its distribution methods. That would lower its costs compared with those of other banks, most of which are still saddled with separate systems underlying each channel.

Union Bank of Norway spent $20 million developing and piloting the system, which it originally jointly owned with NCR of Dayton, Ohio. NCR has since bought all the rights and is selling it as a channel integration product, with business rules built in.

Some U.S. banks are revamping their branches. In its Future Bank project, for example, Charlotte, N.C.-based First Union Corp. has upgraded 400 of 2,400 branches so employees can spend more time selling.

There has also been a widespread move to open compact branches in grocery stores.

But in a sign that Americans are looking elsewhere, the research firm Mentis Corp. of Durham, N.C., said capital investments in branch automation are decreasing 5% a year, while investments in banking and bill paying by personal computer and Internet are increasing 35%.

"We believe in the branch," said Mr. Kranoy of Union Bank of Norway. "A few times in life, it's good to talk to your banker. In these few moments, we need to be there."

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