Hail, Columbus

Charting the financial future

As soon as John G. McCoy took over from his father in 1958 as head of the City National Bank and Trust Co. in Columbus, he asked the board of directors to spend 3% of each year's profit on research and development. The directors responded: "This is a bank. Why do you need research?" Explained McCoy: "I don't know. That's what I want to find out."

What McCoy, now 68, discovered has made his bank perhaps the most advanced financial institution in the U.S. The company, which has a 30-acre data processing center outside Columbus, has earned a king-size reputation as an innovator in financial services and electronic banking. And, even though it is only the 77th largest in the U.S., McCoy's bank during the past seven years has ranked among the top four in return on assets. Symbolic of the changes, McCoy renamed the parent bank holding company Banc One (Ohio law does not permit the word bank in the title of a holding company). The 25 affiliates in the state are named Bank One. Says he: "I don't think the best bank in the country has to be in San Francisco or New York City."

Banc One, for example, was one of the first financial institutions to see the potential in bank credit cards. In 1966 McCoy persuaded giant Bank of America to extend its California-based BankAmericard to nationwide use and to let Banc One handle the mountain of paperwork. At first Bank of America dismissed the notion that an unknown outfit from Ohio's corn belt could act as a clearing house for a national credit card system. But McCoy persisted and eventually got the job. BankAmericard evolved into Visa, and Banc One today is the third largest credit card processor in the U.S. It serves 160 financial institutions in 28 states, performing more than 100 million transactions annually for 2 million cardholders.

In 1970, Banc One became the first American financial institution to install cash-dispensing automatic tellers. At the time, many bankers believed that customers would never give up human tellers for inanimate machines. But today, bankers big and small are rushing to install automatic tellers in their branches.

McCoy's biggest success to date has been providing banking services for Merrill Lynch's Cash Management Account, which allows customers to write checks or use a Visa card against a money market account. Begun in 1977, the CMA has escalated into a $25 billion business with nearly 400,000 accounts. Other brokerage houses, including Dean Witter Reynolds, A.G. Edwards and Charles Schwab, are now preparing to offer clones of the CMA, and they have asked Banc One to act as their banker.

Nonetheless, some of Banc One's innovations have flopped. Neither consumers nor merchants liked the point-of-sale terminals that the bank installed in 35 Columbus area stores in 1976. These allowed customers in stores to guarantee checks, charge purchases and obtain cash directly from their bank accounts. The experiment has so far cost the bank $500,000.

McCoy's latest venture into the financial future is the bank-at-home business. Banc One has successfully test-marketed a service known as Channel 2000 that allows customers to pay bills through a small computer terminal hooked up to their television sets. And now bankers from as far away as Sweden and Japan are making the pilgrimage to Columbus, to see the new system at Banc One.

This file is automatically generated by a robot program, so viewer discretion is required.