The alliance between Pulse, the nation's sixth-largest regional electronic banking network, and No. 17 GulfNet has the industry pondering the issue of network consolidation once again.

Pulse and GulfNet, covering seven states in the south central region of the country, have agreed to share resources without merging.

Pundits who had been predicting megamergers and the ultimate survival of only 20 superregional networks by the end of this decade now say cooperative strategies like the one announced by Pulse and GulfNet may well ensure the long-term viability of the smaller regionals.

"It's new, it's different, and people are interested," said Stephen P. White, a payment systems consultant with Dove Associates. "And I think a lot of the networks are talking about sharing resources now."

"I am one of the biggest proponents of eliminating the regionals, but that's not the route the industry is taking now," said Del Tonguette, president of Slidell, La.-based GulfNet.

"So, in the meantime, a partnership like this with a larger partner serves us well," he added. "I think other networks could be looking into this kind of arrangement."

Under the terms of the deal, Pulse and GulfNet will link their ATMs in a reciprocal sharing arrangement. They will also join forces for marketing, education, product development, and research.

The bottom line for both organization, say network executives, is increased volume. Currently, GulfNet switches approximately 2.2 million transactions per month, and Pulse switches 11.9 million. These numbers are expected to rise as soon as the reciprocal ATM sharing arrangement goes into effect, which is expected within 30 to 60 days.

"My philosophy is that we should stop marketing the (trade)marks and start processing the transactions," said Mr. Tonguette. "We have to make money, and that's the way to make money."

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