KeyCorp last week opened the first of its ballyhooed niche branches, an office catering exclusively to small-business customers.

The $1.1 million center, located in a renovated KeyCorp bank branch in Columbus, Ohio, is outfitted with specialized computer programs and reading material and staffed by four relationship managers.

The facility is the harbinger of the Cleveland-based bank's two-year plan to segment its branch network according to four specific customer types: emerging affluent, senior citizen, mass market, and small business.

KeyCorp, already a leader among regional banks in the small-business market, expects the niche branches to strengthen ties with current customers and attract new ones.

"Small business is an area where we can make a difference and have proven success," said Sandy Maltby, senior vice president of the small- business-services segment at $66 billion-asset KeyCorp. "We want to make banking at Key easier for our customers."

As of June 30, 1995, the bank had $3.7 billion in business loans smaller than $1 million, second only to NationsBank Corp., Charlotte, N.C.

Ultimately, about a quarter of Key branches will be devoted to small business.

Located on the north side of Columbus, an area thick with small businesses, the branch offers a bevy of services for entrepreneurs.

The branch includes several high-tech gadgets. Entrepreneurs can use an information kiosk called KeyResource to chart business performance through "what-if" scenarios and help determine what financial services are necessary for the future, Ms. Maltby said.

The branch also houses KeyAdvisor, an interactive software program a business owner can use to perform different business analyses.

Lehman Brothers analyst Michael L. Mayo was guardedly optimistic about the branches' chances.

He praised KeyCorp's concentration on the small-business segment, but said the initiative will work only if the bank executes its strategy well.

"Right out of the gate you would expect to see some results," he said. "The relevant question is whether that is sustainable.

"The verdict's not going to be in the near future," he added. "It could take a year or two."

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