Seeking to capitalize on advances in client-server computing, Citicorp announced Thursday that it will install a new branch automation system from Olivetti North America throughout its U.S. retail banking network.
Citicorp contracted with the subsidiary of Ing. C. Olivetti of Italy to start rolling out thousands of personal computers and related software this year for 450 banking offices.
Olivetti did not disclose the value of the contract but said it is "one of the most important bank hardware and software installation orders" in company history.
Industry observers estimated the deal at between $40 million and $50 million. Olivetti has been a branch automation supplier to Citicorp for 14 years.
Aside from giving Olivetti a boost, the deal is a victory for Microsoft Corp. The Olivetti package will incorporate the software giant's Windows NT operating system, which is built for the increasingly popular client/server structure.
In client/server systems, information and transaction processing are spread throughout a network of personal computers, rather than being centralized on mainframe host units. The PCs are regarded as "clients" that are hooked in groups into larger "servers."
Citicorp is not alone among major banking companies investing sizable amounts in client/server conversions. But in choosing a Windows NT solution, Citicorp is diverging from companies like NationsBank Corp., First Interstate Bancorp, and Bank of Boston Corp. that have adopted branch systems based on International Business Machines Corp.'s OS/2 operating system.
A few others, most notably Wells Fargo & Co., have opted for branch computers based on the third major alternative, the Unix operating system.
Citicorp will be replacing a previous generation of Olivetti equipment bought four years ago for about $25 million. That branch system uses proprietary operating systems developed by Olivetti.
A Citicorp spokesman in New York, Ed Dixon, said bank executives knew years ago they would eventually need to move to a more "open architecture" branch system as client/server technology matured.
"Using NT, we will be able to make easier system upgrades and have a lot more flexibility in modifying our product delivery to our customers," Mr. Dixon said.
Ted DeMerritt, Olivetti North America's chairman and chief executive officer, said his company's decision in 1993 to build a branch system based on Windows NT, a variant of the original Microsoft Windows user interface, was a key to winning the Citicorp contract. Last month, Citicorp endorsed the Microsoft operating system for use throughout the entire bank.
"Their decision was independent of ours, but we both came to the same conclusions" about Windows NT's applicability, Mr. DeMerritt said. He added that the deal is "clearly a significant success for us."
Citicorp will install NT-based Olivetti workstations and branch servers starting in the third or fourth quarter of this year; it expects to complete the project in 12 months, Citicorp officials said. The 450 branch servers will use Intel Corp.'s Pentium microprocessors to route data traffic among tellers' and platform officers' PCs and the bank's mainframe computers.
Bob Landry, a technology analyst at the Tower Group in Wellesley, Mass., said Citicorp's decision to choose Windows NT over OS/2 could be partly attributed to a "desire to be different."
Until recently, Mr. Landry said, bankers had perceived NT to be more expensive than OS/2 because it required branch workstations to have larger system memory and faster microprocessors.
"As hardware prices fall, the cost differential is shrinking," he said. "Citicorp must think this is the better decision long-term."
