Decades ago, with the prescience that often characterizes writers of science fiction, one author envisioned a world in which everyone lived within an isolated habitat, all his needs met through communications devices so sophisticated that there was no necessity to ever leave home.

Today we call that "cocooning," and if it has not yet reached the stage in which human contact is eliminated entirely, in many ways, it appears we are well along on that road. Nevertheless, 200 years after political philosopher Edmund Burke observed that "the march of the human mind is slow," that statement continues to resonate. For a very few, in what the "new bankers" now call the financial services industry, it's recognition of the slow pace of that march that's calling the tune. "There's a lot of hype around PC banking," explains analyst George Bicher at BT Alex. Brown. "It's a lot easier to go to the phone than to boot up your computer. Believe it or not, most people are still scribbling in their checkbooks."

While electronic access is growing, some geographic areas are more tuned in and hooked up than others; what might be an appropriate tactic for Wells Fargo, and high-tech Californians in Silicon Valley, or Citibank and the high-income employees in world financial centers like New York, is not in other parts of the country where the psychological and purchasing pace is more measured.

Thus, if the name of the game is making pots of money, then the winner may not be the banker with the most expensive technology, but the one with the most expansive sensitivity to his own customers. It's recognition of that critical attitudinal difference in his market areas, and a sure and certain refusal to be stampeded into the big ticket purchase of as-yet unproven corporate "toys," that informs the technology philosophy of Richard Kovacevich, CEO of Norwest Corp.

Kovacevich has an "extremely good understanding of the needs of the marketplace he serves," says Gene O'Kelly, national director, banking and finance, KPMG Peat Marwick. If Norwest's CEO has decided to move a lot more slowly than Wells Fargo or Citibank, as examples, it's because that decision "reflects his customer base."

"What technology allows you to do," Kovacevich explains, "is, in an affordable way, to provide 'high touch'," a term he defines as a way of providing information about customers to determine which products his sales reps will be able to sell them; to provide information for customers; and to offer multiple channels to fit within a broad spectrum of consumer preference.

Industry observers are intrigued by Kovacevich's slow- and-careful attitude, as well as by how positively such thinking has affected Norwest's bottom line. "He is," says one expert, "one of the most enlightened thinkers in banking."

In the disagreement about the economic efficiencies of on-line banking over the "touchy-feely" kind, could Kovacevich's technological conservatism really be right?

Citibank as a training ground

Oddly, for a corporation concentrating on the midwest and south, with some forays into western states, the battle plan to rescue the ailing middle American company was crafted by two executives from its often radically innovative West and East Coasts.

In 1985, Norwest was in trouble: International and U.S. agricultural loans had gone bad, and its mortgage banking business was afflicted. Security Pacific's Lloyd P. Johnson was brought in to head up the rescue operation; by 1986, he had recruited Kovacevich from Citicorp in New York.

Together, says Steven Schroll, senior financial analyst at Piper Jaffray, they accomplished "one of the great banking transformations of recent times," converting a traditional, regional, agriculture-influenced organization into a very diversified sales-oriented financial services company.

For Kovacevich, transformation was not an entirely new idea. A Stanford University engineering undergraduate, he switched to business, and managed to come in first in his 1967 MBA class. Beginning his career with positions in the toy and photographic industries, eight years later, in 1975, he joined Citicorp, bringing his sales and retailing skills-and outlook-with him into an entirely new field.

That transformation stuck: Citicorp was a very fast track, and within 10 years the new-minted banker had served as, among other positions, svp in the domestic consumer services group, head of the New York City banking division and as a member of the policy committee.

The pyramid, however, is narrow on the top. Passed over for the number two spot, Kovacevich was ready for another move when Johnson, looking for an aggressive successor, offered him the opportunity at limping, wounded Norwest. The two men began to slash and build; eventually, Kovacevich himself recruited other like-minded executives like evp Dan Saklad who "saw a tremendous opportunity to participate in a turnaround" by following an innovator with "superb leadership skills."

Kovacevich set about applying those skills both within and outside the organization, changing Norwest from a bank with a passive culture into an aggressive financial services company whose assets and efforts are diversified in such a way as to provide fail-safe floors against sector drops. The success story and the innovations are well-known, as is his "banking is dead" philosophy which holds that, to stay alive and prosper, banks have to evolve into full-service financial companies, offering a panoply of products to individual and commercial customers and impressing upon customers, in the process, the caring culture of days gone by. It's a "hands-on sales approach," says Edward Jones analyst Michael Ancell. "It's as close as they can be to the old days and still move into the next century."

Selling, of course, is a motivational art: if the consumer must be motivated to buy, the company rep has to be motivated to sell. For banks, traditionally accustomed to waiting for inquiries, active-rather than re- active-selling is a new idea. Not the least of Kovacevich's accomplishments is communicating that idea throughout the corporation. He has, says Korn/Ferry executive recruiter Richard Perkey, an "incredible ability to gain followship."

Others agree, noting that among Kovacevich's tactics to sell selling to Norwest's employees is the use of sales rallies that project the communicated energy of swept-away delegates on the political convention floor.

That is, say some naysayers, behavior that's "unbankerly." Perhaps. On the other hand, the "unbankerly" new banker is also, generationally, a new type of leader, becoming ever more visible. According to Martin Bauman, head of an executive recruiting firm bearing his name, Kovacevich's management style "is clearly in vogue"-particularly among younger executives. "Now with the knowledge worker-no one really knowing everything-(there's a) need to be a facilitator and leader, as opposed to being a demagogue," he says. "(This style is) very vital today, not only in banking, but across industry."

Modern management, Bauman says, calls "for people who can draw all their resources together," build a team, and get them to play together. By that definition, Kovacevich appears to be a superb example of the modern style. However, whatever the emphasis on person-to-person team-building and "high-touch" salesmanship, the fact is that the machine is here to stay. As a company, Norwest recognizes this, and some analysts are beginning to recognize that it does. "There's a misperception" about the company, Bicher insists. "They're not Luddites." If they prefer to deal with customers in branches where they can sell them multiple products, in reality, there has been an evolution there too: from branches, to telephony, to ATMs, to informational Web sites and PC banking.

A commitment to stay ahead of the pack

At an electronic check clearinghouse organization meeting in 1996 (ages ago in Web years), Norwest evp Jim Campbell, while insisting that technology is "a sales tool, pure and simple," also produced support for Bicher's analysis. "We said we'd never be on the leading edge of technology; we'd let our competitors spend big R&D money and then when we were convinced a critical mass of customers had decided to move in a specific direction, we'd jump in. Not any more. We believe we're moving to the front pack in technology. If you're not in the front pack today, you'll get trampled."

With a clear, certain understanding of his market, for Kovacevich, the "front pack" appears to be, for today at least, still largely internal. Among its most valuable tasks: building a data warehouse chock full of precious information about who will buy what and when. Norwest is also working to break down its own internal walls and to seamlessly integrate all its electronic aspects.

Internal work does not, however, preclude attention to the electronic beeping on the horizon, a sound heard even in the more conservative Heartland. And Kovacevich is listening. In 1998, a customer who punches in a PIN number at one of Norwest's ATMs will have his financial history read as he waits for the machine to respond. When it does, along with his banking transaction, he'll be offered the opportunity to have further information on other products delivered to him via a phone call from a Norwest representative. The company is also currently testing video conferencing at several Twin Cities locations. And as technology improves, Saklad says that Norwest will layer on additional electronic services as needed.

So, in the end, who's right? Is the supply-side technology of players such as Wells Fargo and Citibank going to entice an increasingly computer-addicted nation to do its financial business from homes and businesses from which they will not have to exit, or meet pesky salespeople? Or will selling "money" be an exception to this rule?

Old-time bankers were "friends." Kovacevich, a new type of banker and one of a new generation of leaders, is bringing back old wine in new bottles: old fashioned banking by adapting, not immediately embracing, the latest economic "efficiencies" of technology.

He doesn't know if the cocooning of America will completely overturn the old methodology in our financial lives. There may be a revolution in the millennium, comments Steven Schroll, "but in the practical business environment, it's evolution, not revolution."

Meanwhile, Kovacevich is taking it slowly, watching his own market carefully, building up his data bank, and, in the process, making friends among his customers. FB

Subscribe Now

Access to authoritative analysis and perspective and our data-driven report series.

14-Day Free Trial

No credit card required. Complete access to articles, breaking news and industry data.