The securities-custody units of Bankers Trust New York Corp. and Chemical Banking Corp. are deploying new computer systems that will transform masses of paper documents into digitized images.
The banks are among the first to use so-called document image management technology in securities custody, observers said. The technology should give them an edge in this competitive trust-services business, officials said.
"We think this is going to be one bit of competitive technology that should open the door for us" with clients, said Ronald DeRenzo, vice president of Chemical's Geoserve unit in New York.
At Bankers Trust, assistant vice president Roger Porcella said the bank's new document image management system will "improve the timeliness with which we can respond to client inquires."
Bankers Trust and Chemical, along with State Street Bank and Chase Manhattan Corp., are among the largest providers of custody and trust services in the nation.
Chemical Bank calls its system Geoview. The technology, developed by Manufacturers Hanover Trust before the merger, will be used by the combined banks' custody units.
Initially, Chemical plans to use Geoview to enhance its custody services for private placements, Mr. DeRenzo said.
Of the more than $1.3 trillion of assets the bank holds under custody, private-placement assets make up only $100 million, officials said. But Chemical wants to do more such business, as private placement is one of the few custody markets where the bank can differentiate its services from those of competitors, Mr. DeRenzo said.
One problem with custody services for private placements of securities is that a bank must keep the paper issues on its premises.
Unfortunately, owners of private placements need to periodically review these documents, Mr. DeRenzo said.
By contrast, owners of most publicly traded debt or equity issues either never receive paper copies or need not review them periodically, Mr. DeRenzo said.
Geoview is intended to make it easier for private placement owners to give their paper issues to a bank. This is because Chemical will use Geoview to give its clients optical disks with digitized images of the documents.
The clients will use Geoview software, which runs on personal computers, to display the electronic duplicates on computer screens.
Chemical is currently pitching the Geoview product to 21 clients. But none has yet agreed to use it, Mr. DeRenzo said.
Bankers Trust plans to use an image management system called Lotus Notes: Document Image to improve customer service and cut operating expenses. The system was developed by Lotus Development Corp., Cambridge, Mass., and Eastman Kodak Co., Rochester, N.Y.
Lotus Notes: Document Image is software that runs on personal computers in the bank's offices. Documents are coded on optical disks as electronic images that employees retrieve and integrate into electronic messages and text files.
The bank plans to begin using the software to view electronic images of custody documents in July.
By yearend, the computer system should be in full production at 65 workstations in operations centers in New York, Jersey City, and Nashville, Mr. Porcella said.
Retrieving documents electronically should enable service representatives to answer in a day questions that now require two to three days to resolve, Mr. Porcella said.
The new system will also let Bankers Trust save about $1 million a year in payroll costs, Mr. Porcella said, eliminating the jobs of dozens of employees who file and retrieve custody documents. The computer system will cost about $2 million to install, he said.