A recently formed joint venture is pushing into a business that has been slow to develop for financial institutions: using the Internet as a real-time, 24-hour-a-day vehicle for generating loan business.

Peter Schmitt, chief operating officer of Digital Dialogue Inc., said it has identified five community banks as potential pilot testers for its service. "We're targeting credit unions and banks -- institutions that are looking to provide different types of services to their members," Mr. Schmitt said.

Digital Dialogue, a venture between the Maxxar Corp., a developer of computer telephony integration for banks and credit unions, and Dialogue Marketing, offers four basic services: information collection, credit information, loan decisions, and call-center support.

"What's different here is that there is interaction on a real-time basis with someone over the Internet," said Michael McEvoy, a director at the Tower Group research firm. Tower Group estimates that outsourced consumer loans will more than double to $200 million in 2000, from about $91 million in 1998.

Where the Internet has its biggest advantage over call centers, Mr. Schmitt noted, is in allowing quick turnaround for documents and forms.

Using a phone switch and software from Interactive Intelligence Inc. of Indianapolis, "we can push pages through to an applicant -- say, a map showing a bank's branches, or current interest rates," he said.

Mr. Schmitt said the Internet's rise as a channel for closing loans has been hampered by applicant frustration with the length of the process and uncertainty over when someone would review and approve the application.

"We think this type of agent interaction can improve that," he said. "We need the human element behind the electronic interaction to make it fly."

His company's system works by directing customers who request loans from a bank's Web site to a Digital Dialogue site that looks just like the bank's. The applicant can "chat" with an agent over the Web. If documents must be completed, an agent can send them to the customer's computer.

Once the information is collected, the service retrieves a credit bureau report and scores the applicant using the institution's lending criteria -- in an average of 2.7 seconds, Mr. Schmitt said.

The score dictates whether the application will be approved or passed on for further review.

An added benefit may come from cross-selling. For example, when a caller applies for an auto loan, the agent can be notified, by links to the bank's database, that the customer does not have a credit card or line of credit with the institution, and pitch both products to the caller.

Digital Dialogue is charging a minimum of $1,800 a month or $25 per application with a minimum of 72 applications sold to the institution. By May it could offer customers real-time processing of home equity loans and mortgages, Mr. Schmitt said.

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