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With Little Fanfare, Banks Branch Out Into More Phone Transactions


For years, consumers have been able to conduct simple banking transactions--inquiring about their account balances or asking questions about their monthly statements--over the phone.

Now, with little fanfare, banks have significantly expanded those options.

Today, many bank customers can pick up the phone any time and open checking or savings accounts, pay bills, transfer money between accounts, order traveler's checks, invest in stocks or apply for mortgage loans.

The universality of telephones and the consumer-friendly nature of phone banking have led customers to such services without the hype accompanying the introduction of banking by personal computer or on the Internet.

"It's easy for techno-phobic customers to embrace telephone banking," said John Hall, an American Bankers Assn. spokesman. "Telephone banking is really taking off."

Nationally, transactions through bank branches will decline by a third by 1998. But banks expect transactions at telephone banking centers to increase by 50%, according to a recent survey by the ABA and Ernst & Young.

The explosion of telephone banking in the last few years has largely been driven by customers' demand for more convenience, advances in technology and competitive pressures from non-bank financial institutions, according to banking experts.

The result has been the addition of dozens of telephone services and more hours during which customers can transact their bank business, either through an automated voice system or with a bank employee.

"Almost anything you can do in a bank branch, you can now do by telephone. You just can't deposit cash and you can't get into a safe-deposit box," said Book Booker, senior vice president for customer services at Richmond, Va.-based Crestar Financial Corp., where about 20% of the bank's loan business is generated over the phone.

Part of the reason for the growth in telephone banking is that advances in technology have made the software easier for bank employees to use and allows them instant access to a complete profile of a customer, right down to the reason that person last phoned the bank.

For the most part, phone banking is still relatively inexpensive, but consumer advocates warn that may not be true for long.

"My concern is that banks are saving money through this kind of automation, yet they will be raising fees," said Ed Mierzwinski, consumer program director for the Washington-based U.S. Public Interest Research Group.

In fact, at banks with more than $1 billion in assets, a retail inquiry costs the bank $2.93 at a branch, $1.82 at a staffed call center and just 24 cents if handled by an automated response system, according to last year's retail banking survey by the ABA.

Mierzwinski said part of the reason phone banking has become so popular among bankers is that it gets customers out of costly branches. Institutions should be mindful of that, he argues, and pass along those savings.

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