Marketing skills took priority over banking experience when Sovereign Bancorp recruited the head of its virtual bank.

The Wyomissing, Pa., company hired Cliff Lavin, a seasoned marketer with experience in start-ups, to be president and managing director of 1st, which is scheduled for a September launching.

Mr. Lavin is charged with establishing 1st's presence in the growing field of virtual banks.

North Fork Bancorp. of Melville, N.Y., and Synovus Financial Corp. of Columbus, Ga., for example, have announced plans to create separately chartered banks that primarily use the Internet to reach customers. Larger organizations such as Bank One Corp. and American Express Co. also have started Internet banks.

"The future battle for financial services will be fought in marketing, not banking," Mr. Lavin said.

Accordingly, he said, 1st essentially will be "a marketing company."

He said he would pitch financial and other products to people based on their affiliations with various organizations.

He would draw upon skills honed as chief executive officer and managing director of Tenant Services, a division of GMAC Commercial Mortgage in Horsham, Pa., that develops programs to help building owners attract and retain residents. He also was vice president of marketing for General Electric Capital-Rescom, a telecommunications unit of GE Capital in Los Angeles.

Women's groups, university alumni, students, employees of the same company, and retailing outlets are all 1st targets. Products will be customized according to the needs and wants of members, Mr. Lavin said.

For example, alumni groups might be offered brokerage services and mortgage loans, but students could get offers for low-interest college loans and credit cards.

In keeping with the standards set by other Internet banks, all products and services would be available at a relatively low cost.

"Just because banks have always offered the same products and services does not mean that that is all customers want," Mr. Lavin said.

His plan appears to be in keeping with the financial industry's move into a market where the "consumer defines the product," said Laura M. Starita, a senior research analyst at GartnerGroup. Internet banks are at an advantage, she said, because unlike established institutions they are not hindered by inflexible mainframe systems, organizational structures, and cultural issues.

Marshall J. Kern, chief operating officer of Sovereign's Internet bank, declined to elaborate on the technical requirements for creating specialized offerings for groups of people with a common interest.

He said Fiserv Inc. of Brookfield, Wis., would supply software for the back-end and middle of the Internet banking platform, mostly through its Pittsburgh service bureau. From its Milwaukee-area site, Fiserv is to operate 1st using software from Atlanta-based Security First Technologies.

Unisys Corp. of Blue Bell, Pa., is to supply call-center and customer- service software, both of which will be run in-house.

Sovereign also is working with Schaumburg, Ill.-based Motorola Inc. on communications technology, about which Mr. Kern declined to elaborate.

Sovereign Bancorp, the $23.4 billion-asset holding company, announced the formation of its Internet bank in April. At that time, Sovereign president and chief executive officer Jay S. Sidhu said Fiserv's relationships with Security First Technologies and Checkfree Holdings Corp., the bill payment processing company, would "give us a head start into banking e-commerce."

Mr. Lavin said 1st would be introduced nationally and "all at once." Marketing will be kept to a minimum during the first few months, to make sure the systems are fully functional, he said. He did not comment on the size of the advertising and marketing budget.

However, Mr. Sidhu has said that Sovereign's 1999 investment in marketing and developing the Web bank would not exceed $5 million.

Originally, Sovereign's Internet bank was to be known as, but the company learned that this name is taken.

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