First Interstate Bancorp, Los Angeles, has purchased a centralized decision support and profitability management software from Treasury Services Corp.
Terms of the deal, which should rank among Treasury Services' largest installations, were not disclosed.
"The bank of the future must have the ability to evaluate performance, strategies, and risk," said Steven L. Scheid, an executive vice president of the $56 billion-asset bank.
The software is expected to let management "focus on the profitability of our business lines by market, product segment, and by geography," he said.
Treasury Services is based in Santa Monica, Calif.
First Interstate plans to install its transfer pricing, Treasury Manager, Query and Reporting, Performance Reporting, and budgeting and planning software modules. The bank also expects install Treasury Services' Administration, Balance, and Control module, and may also purchase its Option Adjusted Valuation software, which is used for securities valuations.
First Interstate's investment in a sophisticated data management system is part of a trend among large banks, according to Deborah Williams, an analyst with the Tower Group, a Wellesley, Mass.-based bank technology consulting firm.
"Banks continue to invest in profitability systems," Ms. Williams said. "They clearly see some value in them."
The systems are often supported by so-called data warehouses, which unify and organize data for more efficient use in sophisticated applications.
According to John Dorman, president of Treasury Services, many older data processing systems create pockets of information that are hard for banks to use efficiently.
This is the reason many financial institutions "are investing in client/server relational data base technology to bring these fragmented solutions back together," he said.
First Interstate plans to apply the systems next year to major business lines, including mortgages, credit cards, cash management, trust, and retail.
It is not clear how the bank's potential merger with Wells Fargo & Co. would affect the use of Treasury Services' software.
The initial installation will operate in a Unix operating system using servers from Sun Microsystems Inc., and data base technology from Oracle Corp.
However, First Interstate is considering a migration to a new hardware platform. Those in the running include AT&T Global Information Solutions, Hewlett Packard, Sequent, and Cray Research.
The bank also is weighing the relative merits of symmetric multiprocessing and massively parallel systems.
Symmetric multiprocessors can perform many different tasks in parallel. Massively parallel systems divide jobs into independent subtasks and operate on them simultaneously.
Bank officials predict that the implementation, including all the necessary "fine-tuning," will be completed in early 1998.
The installation of the Treasury Services software is part of the tail end of a systems reengineering project that began in 1991 with a common systems consolidation effort.
In four years the bank has converted disparate systems in 13 states to the common platform. The conversion affected data centers, check and trust operations, and commercial and retail deposit systems, among others.