Microsoft Corp. chairman Bill Gates told a banking audience for the umpteenth time Wednesday that his company has no intention to enter their business, then proceeded to show how Microsoft is getting more and more under their technological skins.

Speaking to some 9,000 people at the Bank Administration Institute's Retail Delivery Conference, Mr. Gates laid out an ambitious strategy to give financial institutions "the tools they need" to survive and prosper in a world dominated by the Internet and electronic systems that build up around it.

Central to the strategy is a computing framework called Windows DNA- Distributed interNet Applications-that Microsoft is tailoring for financial services. The DNA FS version, unveiled Wednesday, is the first of a series of adaptations Microsoft will offer various industries.

Mr. Gates stressed the risk- and cost-reducing aspects of DNA, saying that a complete electronic banking platform encompassing branches, call centers, and nontraditional delivery modes like the Internet "can be achieved with very inexpensive building blocks."

He said banks will have maximum flexibility to choose among available technologies and vendors, with Microsoft's tools enabling them to reach customers using banks' brand names. "The financial institution gets to control the platform and control the channel," he said.

Bill Burnham, electronic commerce analyst with Piper Jaffray of Minneapolis, said Microsoft is methodically staking out a position in the banking market and "striking right at the heart of IBM," the long-dominant industry computer vendor. At the core of Microsoft's business is the NT operating system and other software that can run on relatively inexpensive server computers rather than older mainframes.

Ted Spooner, chairman of Corillian Corp. of Beaverton, Ore., a home banking software provider and one of the development partners in DNA, said the streamlined technology enables him to deliver a system at prices beginning at $50,000, one-tenth what larger-computer alternatives might cost.

Similarly, the Microsoft Internet Financial Server Tool Kit, the Internet banking system that officially went on the market Tuesday, costs a bank $10,000 or an independent software reseller $2,000. Microsoft reported progress in signing users of the tool kit, including Nationwide Building Society of Britain and Bayerische Vereinsbank of Germany.

CoreStates Financial Corp.'s home banking system, designed with Intelidata Technologies Corp. and an unaffiliated consulting firm, CorePoint, was demonstrated Wednesday and is 60 days away from going live, said CoreStates senior vice president Linda Weber.

DNA was the centerpiece of a sophisticated display of technology on the first morning of the biggest banking conference of the year, with Mr. Gates speaking from Redmond, Wash., on a giant video screen via satellite and several Microsoft banking customers on stage demonstrating some of their advances.

One of the bankers, KeyCorp vice chairman Patrick Swanick, confronted the controversy about Microsoft's alleged designs on the banking industry: "Is there a risk in working with Microsoft so closely? We don't think so."

Mr. Gates acknowledged Microsoft has some Internet business ventures like Investor, an investment site that some bankers view as a threat. But he said Investor is more of a "financial magazine" that is popular because of its software features, and banks can piggyback on it for promotional purposes.

"There is nothing about Investor that banks should view as overlapping with anything they do," Mr. Gates said. He added that Microsoft intends to stay focused on the highly demanding software business and noted that it earns far greater revenues from core products like Windows NT, Office, and Back Office.

Mr. Swanick reported that with Microsoft and other vendors KeyCorp has economically developed home banking and Internet services and will be a pilot participant in the MSFDC bill payment venture that Microsoft is launching with First Data Corp.

KeyCorp's KeyBank and Wells Fargo Bank will be the first banks to offer MSFDC's on-line bill presentment service to home banking customers, Microsoft announced. They will also participate as billers, as will Advanta Corp., Chase Manhattan Bank's credit card business, GE Capital Services, and a host of utilities.

"Our intention is that banks will be the primary distribution channel," said Warren Dent, senior vice president of MSFDC. "We're bringing financial institutions into the billing industry in a way they are not involved now."

"We're putting together an array of services to make it easy for our customers to be delighted," said KeyCorp electronic commerce group vice president Gregory Martin. But the relationship "does not preclude us from looking at other solution providers."

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