THE VIRGINIAN-PILOT
Copyright (c) 1996, Landmark Communications, Inc.
DATE: Saturday, July 27, 1996 TAG: 9607270205
SECTION: BUSINESS PAGE: D1 EDITION: FINAL
SOURCE: ASSOCIATED PRESS
DATELINE: CHARLOTTE LENGTH: 100 lines
Hugh McColl is an ex-Marine who keeps a hand grenade in his office and gives no quarter when it comes to mergers and acquisitions.
So what makes the usually fearless chairman and chief executive of NationsBank Corp. tremble in fear?
Technology.
McColl believes that technological change threatens to remake the banking industry - and might even crumble the banking empire he has built.
``This thing is like a tidal wave,'' he says. ``If you fail in the game, you're going to be dead.''
Across the country, thousands of chief executives are facing similar scares, the Wall Street Journal reported Thursday.
Once, mastering technology meant learning to use a personal computer and figuring out how to tweak productivity gains. Now it means rethinking corporate strategies.
McColl, 61, is busy trying to figure out how to navigate this new world.
``What is it I'm afraid of?'' he asks. ``I'm afraid of losing time - you can't get it back. I know that I've got competitors out there in the high-tech area, not the banking area, who are working this very minute to build a better mousetrap and drive me out of business.''
Once a no-nonsense, in-charge CEO, McColl is having to teach himself to trust subordinates when it comes to high-tech and its implications.
``I'm more dependent on others than I've ever been in my life,'' he says. ``It doesn't feel good.''
Today, McColl calls mergers and acquisitions the ``old paradigm''; instead, he is pushing for ``strategic alliances'' with other banks. He has been one of the biggest backers of Inet, a soon-to-be-announced joint venture among several big banks and International Business Machines Corp. to create a complete home-banking service.
NationsBank has started selling its PC-banking software in four of its nine states. It is one of three banks participating in the first U.S. launch of ``stored-value'' cash cards for the Olympics. By the first quarter of next year, the bank plans to offer certain account transactions over the Internet.
This year, NationsBank will spend $1.4 billion on operations and technology, including $400 million for discretionary projects and $136 million for telecommunications.
McColl says he was never in doubt about the strategy of bold acquisitions that made NationsBank into the country's fifth-largest, with $192 billion in assets. He knew, for example, that interstate competition was inevitable and that banks had to grow big or become fodder for other banks.
But with technological change, he laments, the logic ``is not so clear - there are a lot of unknowns.''
Right now, banking via home computer seems to be a hot prospect. Yet only a fraction of the population - about 1 percent - is using PC banking. Meanwhile, telephone banking is soaring - Nations-Bank expects to handle 115 million calls this year at its phone banking centers.
Should the bank put most of its money in phone banking? What about alternatives such as interactive television, a kind of in-home ATM screen? What about electronic cash, with customers carrying around ``smart cards'' that hold cash, medical records and lots more?
Some of McColl's competitors think the best strategy is to watch changes carefully and wait for answers to emerge. ``You can be on the leading edge of losing your you-know-what if you're not careful,'' says James B. Williams, chairman and chief executive of Atlanta-based SunTrust Banks Inc.
Some of McColl's top lieutenants believe they can cover all bases with small, strategic investments in each delivery system. Kenneth Lewis, the president, says changes in technology ``may not be an issue of survival, but the difference between high performance and mediocre performance.''
McColl, however, sees technology as fundamentally changing the industry, perhaps destroying it. In an era when speed and convenience are more important than a friendly banker, banks could become nothing more than a commodity, handling the behind-the-scenes, low-profit transactions for a high-profit electronic ``store'' controlled by Microsoft Corp. or some other technological giant.
McColl is trying to stay ahead by relying on a team of lieutenants more technologically savvy than he is. NationsBank's purchase - along with BankAmerica Corp. - of Meca Software LLC, the maker of Managing Your Money, was the brainchild of a marketing executive who pushed the idea to her bosses.
Two years ago, McColl hired Janey Place, a former Wells Fargo & Co. executive with a Ph.D. in semiology, the science of systems. Place heads the company's strategic technology group, a team of 95 executives who track emerging opportunities in technology and act as the bank's internal consultants.
And since early this year, McColl has been taking regular computer classes, learning how to use the Internet and on-line services. In a recent interview, he could barely contain his excitement. ``Finally,'' he said. ``They're letting me take my computer home today.'' MEMO: NATIONSBANK IN HAMPTON ROADS
NationsBank has 2,650 employees in Hampton Roads, including 1,600 at
its credit-card processing center in downtown Norfolk. The bank
operates 51 branch offices in the region.
One of NationsBank's predecessor companies, C&S/Sovran Corp., had
headquarters offices in Norfolk and Atlanta before becoming part of
NationsBank in 1991. ILLUSTRATION: Photo
``This thing is like a tidal wave. If you fail in the game, you're
going to be dead.'' - Hugh McColl by CNB