Departing from the strategy used by most institutions its size, a $377 million-asset Texas bank has purchased a core banking system that runs on personal computers.

Southside State Bank, based in Tyler, will use software from Perot Systems to run a local area network of personal computers, replacing its current system that operates on an NCR Corp. midrange computer.

The new system is designed to give customer service representatives a comprehensive picture of customers' banking relationships. Bank officials said that added flexibility was the software's most attractive feature.

"The system will allow us to get products to market a lot quicker than we could in the past," said Lee R. Gibson, executive vice president at Southside.

An Expanded Line

Mr. Gibson said the system will enable Southside to expand its range of retail products. The current system limits the number and complexity of products, such as certificates of deposit and money market accounts, that the bank can offer, Mr. Gibson said.

Despite the performance improvements that Mr. Gibson attributes to personal computer technology, most smaller institutions have yet to move completely to PCs for core banking applications.

According to the American Bankers Association's annual survey of banking automation, banks with between $300 million and $1 billion in assets still favor mainframe software for their on-line retail applications.

In fact, despite the rising power of the personal computer, about 60% of financial institutions with less than $1 billion in assets still use a mainframe or midrange to drive "dumb" terminals at the branch.

Complex Setup

The reason: Converting from a host computer to a LAN can be complex, and many smaller banks have been unable or unwilling to go through the trouble. But there are signs that is changing.

"Southside is a good candidate for the first installation of this software because they already had PC LANs in place when we got there," said a spokesman for Perot Systems, which is based in Dallas.

Southside expects the Perot system to bolster cross-selling and speed responses to customer inquiries.

Opportunities to cross-sell products will grow because of the broader range of customer information available to branch employees.

Relevant Data at Hand

For example, a customer with a large balance in a savings account might be a perfect candidate for a certificate of deposit or money market account.

Quicker responses are possible because the system enables bank employees to view on a single screen demand deposit accounts, CD and individual retirement accounts, loan relationships, and credit history.

Mr. Gibson indicated that the open-systems architecture of the Perot software makes these benefits easy to achieve.

"It's refreshing to find a system that provides product flexibility as a result of its design rather than by retrofitting features, as found in legacy systems," he said.

The system at Southside Bank consists of an NCR server, which supports two 486 personal computers acting as processors. Eventually, 150 terminals will be connected to this nerve center.

Imaging Capability

In addition to the applications from the Perot system, Southside Bank will also expect the branch PCs to handle images of signature verification cards and of actual certificates of deposit. The idea, again, is to speed customer service inquiries.

The Perot system is expected to be up and running by the end of September.

Perot declined to comment on the cost of the system, except to say that charges are based on the number of connected terminals. Banks with 100 or more users are considered the target customers.

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