When Norwest Corp. launched an innovative interstate business deposit product last October, officials were confident they had something that would be a winner with customers.

What they weren't sure of was the response they would get from their own front-line bankers, who were tapped to help sell the new national product, but might lose local accounts to it.

"We knew it would be a real problem if they felt like they were losing business," said Peggy Roush, director of cash management services at the Minneapolis-based holding company. Nearly a year after it was launched, Ms. Roush's product is exceeding sales expectations. But she admits that her national sales force has had a tough time convincing local Norwest outlets to, in essence, give up part of their business for the corporation's greater good.

"To be honest, that has been one of our biggest challenges," she said.

As regional bank holding companies diversify their product offerings to compete with nonbank financial firms and boost their bottom lines, they are looking to their networks of local bankers to help sell those products. The problem is, national product managers sometimes find that they are competing with their own local bankers, who may resist the notion of losing a local customer to a centralized unit.

"Our bankers are our conduit to the marketplace. We can't do it without them," said Jim Campbell, executive vice president in charge of commercial banking services for $78 billion-asset Norwest. "It can be tough, but we need all of our bankers to understand how the products come together to make Norwest stand out from the competition," he added.

He's not alone. Across the nation, big regionals are subtly nudging their local bankers to, in the words of Banc One Corp. spokesman John Russell, "think and look local, but act national."

For years many of the biggest regional bank acquirers have leveraged the local flavor of their acquisitions as a key selling point for bankers and customers alike.

This month, U.S. Bancorp in Portland, Ore., began to restructure its retail operations, with the heads of six state organizations reporting to a central retail banking chief, Gary Duim. "We want to create a partnership with our local banks, where (U.S. Bancorp) looks more like one bank with the same products wherever we are," said Mr. Duim.

Last year, Banc One chief executive John McCoy announced the end of his bank's "uncommon partnership" program, which gave considerable autonomy to 88 local banks, in favor of a "national partnership" built on "common goals, objectives and processes." The Columbus, Ohio-based company wanted to compete more directly with brokerage firms and nonbank finance companies. Those companies typically have efficiency ratios of about 40%.

"In order to compete effectively with nonbank organizations, you've got to get your cost levels down, and you can't do that when you're operating 88 separate banks," said Mr. Russell. Equally important, he added, is the ability to "hire the best person in a product area" that comes when sales of specialty products are brought under one corporate roof. "You can't do that 88 times," he said.

At Norwest, which for most of the 1990s has espoused an in-house goal to "out-local the nationals, and out-national the locals," the idea is more entrenched. The company maintains a stable of experts in specialty areas like bankruptcy lending, employee benefits, and stock transfers. But as Ms. Roush's situation illustrates, having the national expertise is only part of the battle. Equally crucial is convincing bankers in Norwest's 17-state franchise, who might actually lose business to a national product, to pitch that product to their customers.

Specialists "can't make the external sale until they make the internal sale to the Norwest people," Mr. Campbell said. "They are the customer base."

Norwest's national product managers employ an array of promotions and offer in-house incentives designed to raise awareness and ease the potential sting of losing a local account.

"The closer you put the profitability of the relationship to where the customer is, the better chance you have of achieving success," Mr. Campbell said.

When Ms. Roush launched her interstate deposit product, which allows commercial clients with operations in more than one state to make deposits in one account, she blitzed local bankers with in-house newsletters promoting the product. She also shipped her staff out to each state to train tellers in dealing with those deposits.

Richard Westergaard, head of Norwest's specialized financial services group - a national family of specialty business products that gets 55% of its business from local bank referrals - is known for plying local Norwest bankers with rounds of golf and dinner to get them to promote his products. "Our role is to be perceived by all of the Norwest bankers as absolutely essential to their own business development," Mr. Westergaard said.

"We're not a competitor," he added. "We don't say, 'Hey that's an asset- based loan, give it to us.' We're there to say 'we can provide certain things that will help overall in the development of your relationship with that customer."'

Such efforts are backed by incentive payments - everything from hard- dollar referral fees to cutting local banks in on the first year's revenues - and instilling a customer-based approach in the sales force. "Sometimes we double-count the results. Whatever works," Mr. Campbell said. "Our philosophy is that it's better to give the credit to two people for getting something, than to give no credit at all by letting the competition (get the business)."

Mr. Engen is a freelance writer based in Minneapolis.

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