timing couldn't be better for the big banks trying to reach that market, according to recent survey findings by Payment Systems Inc. They indicate that businesses with less than $10 million in annual sales are - like retail banking customers, though at a slower pace - reducing their dependence on bank branches. At the same time, the Tampa research organization found that business owners are wary of dislocations arising from bank consolidation, interstate branching, and deregulation. But business customers generally like the consistent, "single-bank treatment" that electronic service methods can assure. And the market for on-line or telephone-based services is wide open. While 85% of small businesses still rely on branches - another 5% mostly use night depositories, 5% the telephone, and the rest personal computers, mail, and couriers - 55% said access to their banks via telephone or PC is important. Other indications of technology-based opportunity are that the 85% branch-dependence figure is down from 95% in 1991; 30% said they would rather use a screen telephone than visit a branch and 25% are neutral on the choice of screen phones versus branches; and the number of small businesses with modem-equipped PCs has risen over two years to 65% from 55%. A quarter of businesses with less than $1 million in sales, 36% of those between $1 million and $5 million, and 42% of those between $5 million and $10 million said the importance of bank locations had declined over the past five years. No more than 10% paid taxes electronically or took advantage of other on-line payment mechanisms, while 29% said they would if their banks made them available. To be sure, "the branch is still king," Sam Northrop 3d, senior product manager at Barnett Banks Inc., Jacksonville, Fla., said last month at the Payment Systems corporate services seminar where the survey was unveiled. He had data showing: *35% of small businesses are served daily at branches. *73% of the customers visit branches weekly. *77% of the visits are by the business owner. *6% use night depositories weekly. *4% use automated teller machines weekly. The upshot, at Barnett and other banks with its orientation, is to place the branch at the hub of an increasingly electronic delivery system. Barnett markets ATM access, the Barnett Connection cash management package, and the "Business Superphone," among other services. "Once customers get hooked into one of these services they don't leave," Mr. Northrop said. "It's a great way to cement a relationship." "When banks merge or go interstate, a lot of their focus is on large customers," said Linda English, group vice president at Payment Systems. "They must remember that small businesses have needs too, and they are valuable customers." The Payment Systems survey showed there is reason to be concerned about all commercial customers. Of 1,700 companies polled, including 950 in the small-business category, 15% either changed or diminished a banking relationship in the wake of a merger; 73% could point to no benefits resulting from bank mergers; and 25% complained that mergers hurt bank service quality. On the brighter side, 65% saw no post-merger problems and 43% said service improved. "While you focus on getting bigger and better, don't forget the customer," Ms. English said. "This is a chance to get in touch with them and explain how you're getting better, with more services and more locations."

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