Ten of the nation's 25 largest banks are in the midst of projects to install new retail branch automation systems, according to a recent study by Tower Group.
Many of the remaining 15 banking companies have systems they feel reasonably comfortable with, and they do not feel any pressure to change, the study found.
Tower Group's findings follow those of other research groups, including Mentis Corp., Raleigh, N.C., that show a significant number of banks changing the branch systems.
A Mentis study showed that about 28% of banks with over $1 billion in assets planned to acquire or upgrade PC-based branch systems in 1995.
A majority of banks seem willing to wait till mid-1996 to make a decision about a new retail system.
By that time, a wider array of branch automation systems is expected to be available - especially for the operating systems from Microsoft Corp., Windows NT, and Windows 95.
Still, the study found that the top 25 retail banks have been slower - based on their number of branches - than many smaller banks to adopt sophisticated PC operating systems that allow employees to perform multiple computing tasks simultaneously.
"The merger activity, and the focus on cost reductions, is slowing many of the larger banks down," said Robert Landry, a technology analyst at Wellesley, Mass.-based Tower Group, and the author of that company's study.
However, he noted, "the banks that are strong financially are looking beyond their current cost structures to national banking, and they're looking to have a rational and consistent technology approach across the states."
Among the banks that are involved in current projects, Citibank is one of the highest in profile. The bank is installing a system using Microsoft Corp.'s Windows NT on its branch servers, which are the workstations that control applications on the desktop. The system already has been rolled out in Latin America.
NationsBank Corp. and Bank of Boston Corp. are installing branch hardware using OS/2 at both the client and server, providing advanced graphical capabilities at the desktop.
Bank of Boston is expected use its system at BayBanks Inc. as part of the proposed acquisition of its rival in the Boston market.
Wachovia Corp. is in a project to move to OS/2 at the client level.
Chase Manhattan Corp. is in the midst of a project to install Windows 3.1 in its branches. Some observers believe that both Chase and Chemical Banking Corp. will move to Windows as part of their merger.
PNC Bank Corp. and Keycorp are both rolling out new retail systems for their call centers and plan to extend them to their branches. PNC's system uses OS/2 on the client workstations; Keycorp's runs on Windows NT.
First Interstate Bancorp is installing OS/2 servers that use Windows, but that project is now in question because of Wells Fargo & Co.'s hostile takeover bid.
SunTrust Banks Inc. and U.S. Bancorp are taking the unusual step of developing their own platform systems using general development languages that let the banks define "objects" that can then be used across the bank.
Other banks now face systems decisions as a result of recent mergers.
Mr. Landry said he expects the battle over the desktop between IBM and Microsoft to continue for the next three years.
OS/2 is currently the most popular operating system in the branch automation market, at 24% of platform workstations and 12% of teller workstations.
Overall market share for OS/2 is expected to increase to 25% from 18% by the end of 1998, the study predicted.
Windows 3.1 has played a limited role in branch automation, restricted mostly to running DOS applications, Mr. Landry said.
In addition to Chase Manhattan, First Interstate, with OS/2 servers, and Centura Banks Inc., with Windows NT servers, have adopted Windows 3.1 at the desktop.
Thus far, Windows NT and Windows 95 have been slow to crack the branch automation market, but Mr. Landry projects the two operating systems will increase their market share to 18% over the next three years.
"A lot of people are waiting for Windows NT and Windows 95 to settle down before they make any decisions," said Mr. Landry. "By the middle of next year, there will be a tremendous amount of activity."
Those who chose OS/2 "did the right thing at the time," he said.
"You don't have to be a slave to technology to make business decisions."
In other findings, 32% of the top 25 retail banks (ranked by number of branches) have installed multitasking operating systems at the desktop, compared with 42% of the banks ranked from 51 to 100 in size.
"You'll find some innovative institutions with strong retail orientations below the top 25," Mr. Landry said, citing Star Banc Corp., Centura, and Provident Bancorp.