NYCE Corp. has won a contract to process automated teller machine transactions for Marine Midland Bank.

The deal exemplifies the drive by NYCE, the regional electronic funds transfer network based in Woodcliff Lake, N.J., to do more than just switch and settle card transactions.

Home banking, off-line debit card processing, and ATM driving are some of the areas where NYCE and other networks seek to differentiate themselves.

Under an agreement announced this week, NYCE will handle transactions for all of Marine Midland's 420 terminals. NYCE will provide terminal driving, gateway access, and other support for the Buffalo bank, which is a subsidiary of HSBC Holdings PLC, London.

The deal will bring to more than 1,100 the number of ATMs in this part of NYCE's business. Among the other banks in the program is Citizens Financial Group Inc., Providence, R.I.

Dennis F. Lynch, president and chief executive officer of NYCE, hailed the agreement with Marine Midland as "significant." He said as mid-tier banks look to farm out ATM processing, NYCE is looking to capture their business.

"We think this is a customer segment that is opening up, and we think it is one we are well positioned to go after," Mr. Lynch said. "For a long time, many banks thought (ATM operations) were very intimate and proprietary to their retail banking environment."

Not any more for Marine Midland. John A. Hamilton, executive vice president of information technology, said the outsourcing would give the bank more flexibility and allow it to focus on other priorities such as year-2000 conversion.

Mr. Hamilton said NYCE's "reliable technology, strong customer service" and experience argued in favor of the move.

The strategy also will facilitate the $32 billion-asset bank's integration of ATM systems if it buys other banks or thrifts, Mr. Hamilton said. Marine Midland, for example, purchased First Federal Savings and Loan Association of Rochester, N.Y., last year.

NYCE, long one of the top regional ATM switches and brands, entered the member-processing market in 1994 after upgrading its hardware and software.

It has been competing against larger processors of electronic funds transfers, including Electronic Data Systems Corp. and Deluxe Corp.

Marine Midland's "selection of NYCE for an end-to-end EFT processing solution underscores both the bank's commitment to the service and our ability to deliver it effectively," Mr. Lynch said.

Though Marine Midland is a part-owner of NYCE, the network was not a shoo-in for outsourcing, observers said.

"This is the first owner of NYCE that has agreed to allow the network to drive its terminals," said Alan Pohlman, executive vice president of Carmody & Bloom, Ridgewood, N.J. "That in itself is a bit of a breakthrough."

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