Katharine F. Needham is one of the chief experts on electronic banking in the nation's capital, but she uses a very low-tech trick to break the ice with bankers.

For years Ms. Needham has loosened up executives by asking them to place a cork from a wine bottle in the well between each thumb and index finger. They then have to try and shift the corks from one hand to the other. It sounds simple, but some of the smartest bankers end up locking their hands together in failure, she says.

Her trademark trick serves as a reminder that bankers who underestimate their nonbank competitors may end up humbled.

"It is something banks need to pay attention to," says Ms. Needham, senior director of the Banking Industry Technology Secretariat, which was formed in 1996 by the Bankers Roundtable to ensure banks maintain their central position in the payments system.

Microsoft Corp., First Data Corp., and other high-tech players are developing bill processing and payment products for the Internet that may cut banks out of their traditionally exclusive role as payment makers.

Banks have to guard their territory closely because they derive between 25% and 40% of their noninterest revenue from automated teller machine fees, automated clearing house charges, lock-box fees, and other payments- related services, she emphasizes.

"There is definitely a sense of urgency," she says. "Bits should have been formed five years ago."

Ms. Needham, whose nickname is "Kit," serves as the right hand of Bits chief executive officer Catherine A. Allen. Ms. Needham oversees the group's task forces on uniform technical standards, security, and competitive threats from nonbanks besides acting as a public liaison.

Her two most pressing duties are coordinating Bits' efforts to merge competing software standards for home banking and to develop guidelines for on-line bill processing services that are favorable to banks.

Ms. Needham and a group of bankers are crafting guidelines for Internet systems that deliver and pay bills that can compete with a similar product being developed jointly by Microsoft and First Data. The group will vote on a proposal the week of Dec. 15, and the guidelines are expected by early February, she says.

While Bits initiatives are highly technical and bore some bankers, colleagues say that Ms. Needham possesses the optimal combination of bank know-how and people skills to rally bankers to the cause.

"She has the depth and breadth of experience in the payments area and standards that few people have," says Thomas J. Greco, associate general counsel at the American Bankers Association. "She does have a knack for taking this complicated subject matter and explaining it to a broader banker audience."

One of the reasons Ms. Needham works so well with bankers, observers say, is her first-hand knowledge gained from 10 years at Riggs National Bank here.

Her banking career began inauspiciously. After graduating from the University of Maryland and moving to Hawaii, the Baltimore native took a teller job with the Bank of Hawaii that lasted six months.

Ms. Needham describes her performance as "awful," noting that she transposed numbers and once horrified her manager by asking the bank's chairman for identification.

She returned to the East Coast and took a job overseeing efficiency studies for Riggs. She later helped Riggs establish its ATM network, rose to vice president of business systems analysis, and obtained a master's degree in systems and technology management from American University.

She joined the American Bankers Association in 1981 and became that group's operations director and payments systems guru. The ABA loaned her to Bits in February, and she joined the group permanently in June. "This is the subject area I love," she says. "I have always been interested in it."

Ms. Needham lives in Chevy Chase, Md., with her husband Cliff, and their 12-year-old daughter, Lauren.

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