After helping Bank of Montreal develop an on-line loan approval system, American Management Systems Inc. of Fairfax, Va., is hoping to sell the software more widely.

The system, launched last year in three phases, has enabled the Toronto- based bank to offer mortgages, credit cards, and student lines of credit instantaneously over the Internet.

Though there are many on-line lending systems, Bank of Montreal's is one of the few that automates credit decisions and renders immediate verdicts.

"Bank of Montreal is clearly one of the visionaries, and we are trying to create a product offering real-time credit for the mainstream banks," said Gerald E. Tylman, vice president of the technology firm.

"We think this is how lending should be done on the Internet," he said. "Why can I buy a book in two seconds flat, but can't get a turnaround on a loan in 48 hours?"

The American Management program was named the top on-line banking milestone of 1997 by the Seattle-based newsletter Online Banking Report and nominated for a Computerworld-Smithsonian technology award. The Bank of Montreal site may help propel the product, called Credit Express.

The software, which the technology company said it expects to start offering in September, might help financial institutions provide their customers with a Web-based graphical interface to apply for loans. Bank lending officers would be able to provide customer service through a module written in the Java programming language, enabling it to be run from any current Web browser.

Of the loan types available, Bank of Montreal rolled out mortgages first, then added MasterCards. The bank decided to launch student lines of credit later in the year to accompany a popular Web-site feature about student loans.

The "Brain Money" section of the Web site was "one of our most active, because students tend to be early adopters of new technology," said Jane Weatherbie, vice president of personal lending services at $208 billion- asset Bank of Montreal.

The site generates loan application volume equivalent to nearly 100 branches, said an American Management spokesman. More than 90% of the consumers who begin loan applications finish them.

The bank recently added the ability to obtain credit card account information and announced a personalized area of the site for its Mbanx direct bank. The feature, called "My View," offers personalized articles, advertisements, and financial tools to registered users. It was created by Bowne Internet Solutions, a subsidiary of Bowne & Co. of New York, formerly known as Quadravision.

"Although Bank of Montreal has received much attention, it is not likely that there is a sudden surge of credit consumption," said William Bradway, research director and senior analyst at Meridien Research Inc., Needham, Mass.

On-line lending would only "shift credit origination from what it could have been doing in the call centers, the branches, or through an indirect third party facilitating a major-ticket purchase," Mr. Bradway said. "Some folks are going to ask, 'Can we do that through our call center?'"

Whether the loans are processed over the Internet or telephone, industry officials agree that speed is important.

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