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When Louis V. Gerstner Jr. became chairman of IBM, skepticism abounded in the industry about how this techno-babe-in-the-woods might fare as head of the world's largest technology company. Well, it turns out the gang can learn a lot from a guy like Gerstner.

Consider, for example, how his unfamiliarity with PC software wound up putting IBM in the middle of a massive online banking consortium. Back in late 1994, Gerstner visited the CEOs of two of the largest banks in the U.S. As he sometimes does, he asked the execs who they thought their biggest future rival would be. Gerstner says he figured the answer would be Merrill Lynch or Fidelity or American Express. It wasn't any of them. Both CEOs mentioned Intuit Inc., a maker of home-finance software that had just agreed to be acquired by Microsoft Corp. Gerstner was surprised. ''I had never heard of Intuit. I mean, I had to fake it with the first guy,'' he says, smiling.

Gerstner got a copy of Intuit's Quicken program and started playing around with it. He realized that companies such as Intuit would soon be able to do what banks should have been doing: offer home banking and other financial services to PC users. Unless the banks caught up, he reasoned, Microsoft and others could easily wedge their way between the banks and their customers.

Next, Gerstner called Robert M. Howe. The former Booz, Allen & Hamilton Inc. partner, hired in 1991 to build up IBM's consulting business, heads its $9 billion financial-services organization. Howe was told that IBM had better start thinking about what the banks needed to do to compete in the new environment.

Howe and his people spent the next 18 months working out a way to help banks provide online services. Howe saw a nifty opportunity: IBM could create a national network that all the banks could share. The banks could own the system jointly with IBM, split the costs, and avoid the hassle of inventing their own system. IBM would also be paid a fee for each transaction. Howe hit the road to drum up support among bankers.

So did Gerstner, who stayed in constant touch with Howe. ''We always talked about the strategy,'' says Howe. ''Hell, he helped me sell a number of the CEOs.'' Indeed, after getting Howe's unit on the case, the IBM chairman was on a trip with Hugh L. McColl Jr., chairman of NationsBank Corp. Gerstner recalls saying: ''You know, you guys have got to do something here. You've got to help us.'' NationsBank became an early partner.

SHOP TALK. Gerstner reeled in John B. McCoy, chairman of Banc One Corp., during a golf tournament last winter. The two were part of a foursome, and, through three holes, McCoy recalls, Gerstner kept talking about this great electronic banking consortium. Exasperated, McCoy finally asked if they could just play some golf. However, Banc One did join the consortium.

On Sept. 9, Gerstner and the CEOs of 15 banks with 60 million depositors--including Banc One, NationsBank, and Bank of America--announced Integrion Financial Network, the electronic-banking consortium. The first services to be offered are scheduled for the first quarter of next year. Meanwhile, IBM is creating a similar nationwide service for banks in Brazil. Sometimes, it's the simple questions that provide the far-reaching answers.

By Ira Sager in Armonk, N.Y.

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Updated June 14, 1997 by bwwebmaster
Copyright 1996, Bloomberg L.P.
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