Bankers wondering about the nature of the competition in the world of converging financial services may find some answers in Arthur V. Shaw.

A former Chase Manhattan Corp. executive, Mr. Shaw heads up Charles Schwab & Co.'s efforts to put its expanding array of financial services on- line.

His goals, in many ways, are similar to those of bankers: "What I am doing is replicating what we have done for 20 years and providing what Schwab offers in the new, convenient and very powerful medium called the Internet."

Like alternative delivery channels at banks, on-line services created by Mr. Shaw's team are designed to complement physical locations. Schwab, which has more than $182 billion of assets, operates about 240 branch offices.

But in other ways, the 37-year-old senior vice president is coming at the Internet from a perspective different from bankers'.

Experts said Schwab's 3.5 million active customers are more receptive to electronic delivery than typical banking customers. About 20% of Schwab's 108,000 daily trades are done on-line.

In addition, the San Francisco-based brokerage has a history of technological leadership that few banks can match.

"Schwab was an innovator during the first paradigm shift" in the discount brokerage business, said Rebecca Patton, vice president of marketing for the E-Trade Group, an Internet-oriented brokerage based in Palo Alto, Calif.

"Banks don't move quite as fast and are not as technologically savvy as Schwab," added Rob Rosen of Vertigo Development Inc., which makes personal financial management software used by banks.

As Schwab and other nonbanks increasingly target the banking industry's share of the consumer deposit base, it is becoming more important for banks to understand what they are up against, experts said.

Since the start of this year, Mr. Shaw's team has introduced Market Buzz and OneSource Online, two enhancements to the company's flagship site on the World Wide Web.

Market Buzz gives users access to a panoply of stock and market data. OneSource Online provides performance information on the 1,200 mutual funds that are part of Schwab's popular no-load supermarket.

These services join e.Schwab, the company's heavily promoted electronic brokerage service, and StreetSmart, a software tool for brokers and heavy traders.

Schwab executives said the company is focused on giving consumers a choice in the way they interact with the company. It offers the ability to trade over the phone and at physical locations. It also has developed a speech-recognition quotation service called VoiceBroker, which may be incorporated into trading services.

But Mr. Shaw sees the greatest opportunity in the company's Internet offerings.

Before assuming his current position two years ago, Mr. Shaw did a stint with Schwab's strategic planning department during which he concluded the company should "place a large importance in the whole growth of on-line investing."

Schwab's history with PC-based investing services dates to the Equalizer, a DOS-based program launched in 1984.

In 1993, the company launched StreetSmart, which now is one of the few brokerage software products available for both Windows and Macintosh- compatible computers. Schwab was the first brokerage on Microsoft Corp.'s Investor Web site, and also has a presence on America Online and the Compuserve services.

The most recent of its on-line offerings, the Schwab Web site, began offering stock trading capabilities last April. Since the beginning of this year, the site also has allowed the trading of bonds, U.S. Treasury bills, and mutual funds.

"The Web is a place where people who haven't invested before can get a good start," said Mr. Shaw, who added that Schwab's site is designed to appeal both to expert and novice investors. "It is empowering them with better information at cheaper prices."

Experts said bankers inclined to dismiss Schwab's success in on-line trading as tangential to their concerns would be mistaken. Schwab and others have clearly shown their interest in attracting deposits held by banks with their efforts to replicate traditional bank services, such as check-writing and electronic bill payment.

Diversification by nonbanks "makes solid strategic sense," said Edward L. Neumann, a consultant with Dove Associates in Washington.

"For the banks, it is a troubling trend. While discount brokers are increasingly offering expense management, very few banks have offered remote access to investments."

Citicorp and Wells Fargo & Co. are among the handful of banks that offer customers the ability to purchase stocks and mutual funds on-line.

Some banks, including Security First Network Bank, plan to introduce brokerage services this year. "We are a big advocates of the bundling concept, not just for brokerage, but for credit cards and loans," said Eric W. Hartz, president of SFNB/Atlanta. "You and I would love to come to one place to do everything."

But, even as observers wonder whether the banking industry in general is responding quickly enough to nonbank forays into their turf, nonbanks are looking for new ways to define themselves.

"The competitive framework has gotten much more complicated," said Zach R. Leonard, vice president of Interactive Programming at Fidelity Investments.

"Mutual fund and brokerage companies are redefining themselves as software providers, and software companies are redefining themselves as financial providers."

Brokerage houses "are as interested as being the trusted agent for the consumer as banks are," said Matthew Lewis, a spokesman for Checkfree Corp., a provider of bill payment and electronic commerce services.

As banks and brokerages vie for the same dollars, Ms. Patton of E-Trade raised what she believes are the most important questions for bankers: "Who will be the next Charles Schwab? Will they re-invent themselves or are there other players who will take leadership in a new segment of the market?"

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