The house lights dimmed and music started blaring. Smoke billowed out from the stage and red-and-white lights flashed onto an audience of thousands.

Despite the rock-concert atmosphere, complete with an emcee peering out from giant video screens like a live-action "Max Headroom," most of the audience in the Dallas Convention Center Arena was in suits.

Welcome to Retail Delivery '96, the new-wave Bank Administration Institute conference covering all that is new and exciting in financial services technology.

Having grown into banking's biggest convention, with more than 7,000 people and some 350 exhibiting companies, Retail Delivery made bold promises. Promotional brochures said it would go "beyond the buzzwords."

Frank Feather, the Canadian banking consultant in the Max Headroom role, said the event would "unlock the secrets of how to make real money off technology."

When the "virtual" Mr. Feather introduced Robert W. Gillespie for the keynote speech last Wednesday, the KeyCorp chief executive officer drew a laugh from the audience by declaring: "This may be the way to start shareholder meetings."

Mr. Gillespie and the master of ceremonies were the first of a parade of speakers referring to the dramatic change the industry is undergoing. Mr. Gillespie captured the spirit by describing how his company, the "New Key," is evolving in three directions: national consumer finance, corporate banking, and community banking.

His multimedia computer presentation took the audience through a virtual branch and displayed video clips of KeyCorp executives including Steve Cone, its renowned marketing strategist. Mr. Gillespie showcased a marketing campaign so unified that the voice of Anthony Edwards, the company's star ad spokesman, is also heard when consumers dial into KeyCorp call centers.


Branding is big in retail banking, nowhere more than at Banc One Corp. The point was reinforced by Kenneth T. Stevens, chief executive of Banc One Corp.'s retail group, who previously worked at Pepsico and its Taco Bell subsidiary.

"Strong brands get winning price-earning multiples," he said, which translate into easier entry into new markets and the ability to resist competitive attacks.

"Historically, banks didn't need branding because of location," Mr. Stevens said. "With the leveling of competition, the control of brand names will be essential."

He said banks' problems are typified by the jumble of logos on automated teller machines - a stark contrast to the clarity of Coke and Pepsi.


Despite such doses of high-level retail strategy, technology held center-stage. The enthusiasm about it was palpable, fueled by the appearances of executives from the Silicon Valley companies Intel Corp. and Sun Microsystems Inc.

Generally admonishing the audience to get on the highway before it's too late, both spoke to banking issues. Intel executive vice president Frank Gill demonstrated remote banking with interactive video; Sun CEO Scott McNealy was critical of bankers' willingness to turn technology management over to others.

"I can see a forestry company outsourcing information systems because their assets are in the ground," Mr. McNealy said. "But a bank's assets are information. Outsourcing (for banks) is a self-imposed lobotomy. It's like Budweiser outsourcing beer manufacturing."


At the closing session Friday, Mr. Feather came out from behind the big screens to discuss his own keys to the future. Foremost, he said, is the Internet - "the biggest thing ever in human history. It is not a technology, but a socio-economic system changing the way we live."

Yet some bankers still "don't get it," Mr. Feather said. They prefer to think of the Internet as a passing fad, like the videophone, or an important but slowly evolving technology.

Referring - though not by name - to Citicorp chairman John Reed and his prediction that full electronic banking would not be mainstream for 50 to 75 years, Mr. Feather dismissed it with a barnyard epithet. He suggested Citicorp is just trying to throw its competition off-balance.

Mr. Feather's counterprediction: Within 25 years, there will be no full- service branches or tellers in North America.

"Tens of thousands of branches will be closed, the entire distribution system will be rationalized," he said.


This was not a crowd in which to find many dissenting voices.

"I think a lot of banks still have their heads stuck in the sand," said Parker MacDowell, a Banc One officer in attendance. Just as people were skeptical when John F. Kennedy said we should send a man to the moon in the 1960s, bankers should adjust their mind-sets and start to realize that the future is here, he said.

Some people have managed to maintain a sense of humor amid the air of urgency.

Anne Morgan Moore, president of Atlanta-based Synergistics Research Corp., compiled "the top 10 buzzwords at RD '96:"

Customers want to be on-line, not in-line; Convergence; Bits and bytes can be cheaper than bricks and mortar; Do lunch or be lunch; Internet banking.

Also: Looking for something to do with a PC versus getting something done with a PC; Virtualizing; "Internet lite" and network computers; Web TV and High-Definition TV; Techno-savvy versus Techno-stress."

Ms. Moore said these buzzwords are now out: Reengineering; shifting paradigm; supertemplate; and displacement.


Working at one of the Microsoft's booths promoting Internet access was a "temp" who did not show the distinctive traits of a Microsoft employee. (For example, he couldn't recite the key differences between Netscape Navigator 3.0 and Microsoft's Internet Explorer 3.0.) He did know enough to demonstrate a parody site called "Microsnot" - identical in every way to his purported company's home page. Well, almost.

Under the logo, "Where do you want to go, toady?" was the "news" announcing Microsnot's acquisition of England, "a leading country." The company will continue to offer England's products in America with a few "minor" changes:

"English will no longer be made available on a Public Domain basis. All users of English must register with Microsnot. A trial version of English will be made available with a limited vocabulary."

Microsnot also announced new products including Internet Exploder, Windows NOT Server, and the Microsnot Bomb, a nuclear device.


On the periphery of technology, BAI released two research reports - one it did with McKinsey & Co. on the small-business market, the other with First Manhattan Consulting Group on "Marketing Excellence" - critical of the state of the art.

The small-business study warned that too many bankers are oblivious to how much their share of that business is eroding. The marketing report said that except for a dozen or so elite banks, the industry has barely begun the critical task of marshaling data bases to maximize profitability and retention of their best customers.

Michael F. Price, the shareholder activist and chairman of the Short Hills, N.J.-based Heine Securities Corp., said with bank stocks up 40% in less than a year, "a lot of opportunity is gone" for further gains.

His mutual fund firm, which played a role in getting Chase and Chemical together, is "not interested in mergers that are not intra-market."

Mr. Price and others on his panel of investment experts said it is often difficult to judge the effectiveness of investments in new technologies. They suggested technological announcements are not nearly as important as partnerships that lead to actual products.

Felice Gelman of Keefe Managers in New York said certain "red flags" can point to emerging problems within banks: constant changes in strategy, obliviousness to the ever-rising standards for returns on equity, and buying bank or nonbank businesses without a clear understanding of how to put them to strategic use.


This year's conference did not have quite the buzz of last year's in Atlanta, headlined by an appearance by Microsoft chairman Bill Gates. Some observers said the relative sparseness of alliance and partnership announcements indicated the time for merely talking about the Internet had passed.

"People were more action-oriented this year," said Gary Meshell, director of Price Waterhouse's financial services consulting group, who did have an alliance announcement - with Edify Corp.

"People were saying, 'We want to hire to implement and execute, not just to study,'" Mr. Meshell said.

Sybase Corp., a big name in data base technology, said it was chosen by Barnett Banks Inc. for a sales automation effort in the asset management division. The project is in a pilot phase, on its way to being rolled out to a 200-member remote sales force and eventually to the entire branch network.

Action Systems of Dallas demonstrated Mc Ranger, its new system for extracting and utilizing data in the interest of retaining the best customers. With a customer, Summit Bancorp. of Princeton, N.J., Action Systems showed how high-value accounts could be identified and marketed to.

Vertigo Development Corp. announced a partnership with Salem Five Cents Savings Bank and Security First Network Bank to offer personalized banking services through an application called One-on-One banker. The program analyzes a bank customer's financial data and makes recommendations about asset allocation to achieve specific financial goals.


Michael C. McChesney, CEO of Security First Technologies, the company behind the Security First Network Bank on the Internet, exhibited his characteristic impatience. He said bankers need to become more adept at using electronic mail in dealing wih customers.

He predicted that at Retail Delivery '97 in New Orleans, the hot item will be multimedia call centers that can handle and route telephone, E-mail and Internet video requests.

"The No. 1, 2, and 3 Internet devices are going to be the browser telephone, the browser television, and the browser PC," he said.


While most bankers and vendors dressed in business attire, a uniformed casualness was the rule at some of the megabooths, like those of International Business Machines, Checkfree, Microsoft, and Security First Technologies.

No one went further in this direction then IBM, where the old dress code of white shirts and ties has become history. Staffers last week wore shirts in five colors: black for PC/Internet banking, red for branch automation, yellow for smart cards, green for customer relationship management, and blue for network computing.

"At these shows there is so much going on that if you want to differentiate yourself, you have to be very clear about what it is that you are showing," said IBM spokesman Ian Colley. "The colors organize the booth and help people put everything in context."


Meca Software said it will rewrite its Managing Your Money software to make it compatible with the Integrion Financial Network's recently announced standard. It makes sense, considering five of Meca's six financial institution owners are part of the Integrion consortium of IBM and 16 banks.

"We would clearly like to see this unstandardized world become standardized," said Paul Harrison, chief executive of Trumball, Conn.-based Meca.

The company has now released bank-branded versions of its financial management software for NationsBank, BankAmerica Corp., Fleet Financial Group, and Royal Bank of Canada. It is in the process of customizing for First Union Bank and two others it has not disclosed. At its booth, Meca displayed a prototype of a new Internet-based approach.


With conference sessions starting at 8 a.m. and vendor booths closing at 7:30 p.m. each day, it was hard for the physically inclined to use their hotels' exercise facilities.

Mr. McNealy of Sun Microsystems received a special dispensation. A Hyatt Regency attendant looked in at 10 p.m. to find Mr. McNealy was not exercising alone, and asked, "What about him?"

The interloper was James Bruene, editor of On-line Banking Report.

"Oh, he's with me," Mr. McNealy said. Mr. Bruene had no complaints about his workout, his first meeting with the network computing mogul.

Jeffrey Kutler and Brian Tracey contributed to this article.

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