Digital imaging has emerged as one of the key banking technologies for the 1990s.

In-house demand for the benefits of this technology is high. As a result, senior management must make a sequence of strategic decisions concerning their implementation plan. Banks that take the time to develop a strategic imaging plan and outline the basics of a bankwide imaging and information architecture may be the first to succeed.

For example, a key strategic issue is the speed-cost tradeoff, which affects whether one, a few, or many departments should participate. Before making the necessary resource commitments that flow from such decisions, it is helpful to obtain a more macrolevel view of the adoption patterns across the U.S. banking industry.

The purpose of this article is to discuss the results of a survey of banking institutions concerning their adoption patterns and experiences with imaging.

For purposes of the survey, a digital imaging application was defined as including a minimum configuration of five workstations networked together for office automation activities.

The survey population consisted of the Wp 250 banks listed in the Ward Business Directory. The two-page survey, conducted in mid-1993, addressed basic background and demographic information; awareness, level, and stage of diffusion of imaging in the organization; information on a specific imaging application; and future adoption plans

A total of 75 banking institutions completed the survey for a response rate of 30%. This response was higher than the 15% to 20% rate usually obtained for surveys of this. kind, and probably reflects the keen. interest that the banking industry currently has in imaging.

About 60% of the respondents were vice presidents, about 29% were managers, and all but one of the remaining respondents (11%) were CEOs. Although the responding organizations. varied in size, almost half have between 1,000 and 10,000 employees.

Forty percent of the respondents indicated that imaging systems are on-line in their organization. A statistical analysis of the study results showed that the reported adopters tend to be the larger banks.

But two other related results can help to clarify the meaning of this finding. First, analysis also revealed that the level of diffusion of imaging is less in larger than in smaller organizations. This would seem to imply that in general only Selected departments/operations thus far have implemented imaging in the larger adopting organizations.

Second, all of the current adopters -- and most (79.5%) of the nonadopters -- plan to use imaging in the future. These future applications varied significantly and included: check processing; loan handling, such as loan processing and trade finance, loan documentation, and commercial loan credit files; commercial credit, trust and credit card; mortgage processing; cash management; retail operations; tax documentation; and human resources management.

The impact of these future adoption plans can be understood more clearly by looking at the time of first adoption among the responding organizations. The period 1984-89 saw about one to two initial implementations per year, growing to five per year in 1990-91 and seven in 1992.

Taken together, these results seem to confirm that the industry is on the threshold of the rapidly escalating rate of adoption that has so often been conjectured.

Each adopter was asked to answer some questions with respect to a specific imaging implementation that was familiar to them. To improve customer satisfaction, the respondents reported using imaging for mortgage and consumer loan processing, and to replace microfiche, process credit cards, and checks, and verify signatures. To improve productivity within internal bank operations, the responding banks applied imaging to lockbox operations, and to the processing of tax documents, accounts payable, bank records, and dental/medical claims.

Two key questions were asked about the scope of the implementation process. The first addressed whether a pilot test was conducted prior to implementation; the second considered the degree to which the work processes were reengineered.

The results for pilot testing are clear: 83.3% of the respondents conducted a pilot test. The time interval for the pilot test varied from a few months to a full year or occasionally even longer.

The results for the second question were more dramatic: about 90% reengineered their work processes as part of their imaging implementation. This reengineering occurred at a somewhat better than moderate rate of change to existing processes on average (i.e., a 4.64 average on a seven-point scale).

The respondents were also asked to rate the degree to which the reported applications were successful. All rated their implementation as at least somewhat successful. The average level of success rating was quite high: 5.48 on a seven-point scale. While this result shows great satisfaction with the reported implementation, it is informative to determine if there is a positive relationship between the extent of the reengineering effort and the level of success of the implementation. As one might expect, a highly significant and very strong positive correlation was found between the extent of reengineering and the level of success. This result provides strong evidence to support the importance of simply not overlaying advanced technology on outdated or suboptimal work processes.

A similar question can be asked concerning the relationship between the length of the pilot and the level of success. Surprisingly, a statistically insignificant result was found for this relationship. Perhaps the length of the pilot is more closely related to the size and complexity of the imaging implementation rather than its eventual success.

The respondents were asked to list and rank the benefits realized in the reported implementation. Improved response time for inquiries ranked as the top benefit, followed closely by head count reduction. The results show that reduced storage space and workload capacity are next in importance.

Respondents were also asked to provided quantitative measures for each of the top three imaging benefits realized. Over 70% of the adopters were able to supply at least one quantitative measure, an impressive result. The ease with which most of the respondents were able to answer this question points out how focused they are on the benefits obtained from their respective imaging implementations. The implication, of course, is that specific benefit targets were established at the time the decision to implement imaging was made. Two examples follow.

In a consumer lending application, one respondent reported a reduction of 29 full-time employees (or 26% of total affected staff), estimated occupancy (space) savings of $106,000 per year, and a dramatic reduction in processing time of 90% of new applications from hours to 15 minutes.

In an accounts payable application, work volume was increased 10% without additional staff, head count was reduced by 1.5 people, item storage time decreased from two years to six months, and response time went from hours to 45 seconds.

Ms. Breem is a major-account executive with AT&T EasyLink Services, Bala Cynwyd, Pa. Prof. Liberatore is chairman of the department of management at Villanova University. Digital Imaging Benefits 1. Response speed 2. Head count reduction 3. Saves storage space 4. Work space capacity 5. Fewer misplaced documents 6. Operation accuracy 7. Job satisfaction

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