Chemical Banking Corp. announced an agreement Monday to buy $32 million of branch automation systems from NCR Corp.
Unifying its consumer operations in the wake of its consolidation with Manufacturers Hanover Corp., Chemical is buying hardware and related systems designed to deliver a common set of products throughout its 385 offices in New York.
The NCR equipment will include automated teller machines with touch-sensitive screens, a technology that rival Citibank introduced to the New York market, self-service terminals for inside banking lobbies, and about 6,600 powerful workstations for tellers and platform personnel.
Going Against Citibank
The contract reflects Chemical's emergence, in the retail operations context, from the period of uncertainty and inevitable confusion that followed the yearend 1991 megamerger with Manufacturers Hanover.
And the choice of touchscreen automated tellers symbolizes Chemical's competitiveness against Citibank, which shored up its No. 1 market position after blanketing its branch network with similar ATMs.
Chemical executives insist that the move to touch screens was not motivated by a desire to keep pace with the Citicorp unit. But some observers say it is no mere coincidence that the only two big users of touch-screen ATMs are in the same market.
"I don't know that this is simply a case of keeping up with the Joneses," said Richard Westelman, a senior consultant at Dove & Associates in Boston. "But competitive issues would certainly come into play if a bank is in the market for new machines, and there are these shiny, slick touch-screen ATMs right across the street."
Cards Can't Be |Eaten'
Chemical's new ATMs will have another aspect in common with Citibank's: card readers that allow customers to hold onto their cards. Citibank championed the "dipping" feature to eliminate customers' fears that cards would be "eaten" by conventional mechanical readers.
Aside from Transaction Technology Inc., the Citibank affiliate that designed its ATMs, Dayton. Ohio-based NCR Corp., a subsidiary of American Telephone and Telegraph Co., is the only major ATM vendor to manufacture such machines.
Nonetheless, U.S. bank technologists expect that by 1996, almost 10% of ATMs will have touch screens, up from 3% today, according to the soon-to-be-released American Banker/ Ernst & Young 1993 survey of technology and banking.
Mr. Westelman and other industry experts said that Chemical's new ATMs are not likely to have a serious impact on transaction volume. However, they said the terminals will certainly help the bank achieve its main goal of unifying its retail image.
Chemical will initially use the touch-screen units to replace aging terminals from Omron Corp., which account for about a third of the bank's total of 1,000. They should be installed by yearend.
Chemical will eventually equip all its ATMs with touch screens, bank officials said. They plan to add another 600 of the advanced ATMs by the end of 1994.
"Our new standard is touch screen and dip card," said James Springer, a vice president in electronic banking at Chemical.
Beyond ATMs, Chemical's postmerger renovation involves intelligent NCR workstations in all New York State branch offices.
Installation of about 6,600 workstations is expected to be completed by the second quarter of 1994. Some branches will have upwards of 50 stations, but most will average about 20, Chemical officials said.
The branch systems are based on an "open" computer architecture that allows Chemical to integrate software and hardware from a variety of vendors. The uniform system across the New York branch network also improves the bank's ability to develop new services.
"With the new system, we can introduce new products and services much faster than in the past," said Michael Papantoniou, a vice president at Chemical's service delivery systems unit. He added that the automated account-opening capabilities would eliminate much of the paper exchange that exists in the present branch environment.
Chemical's move toward intelligent branch workstations, instead of "dumb" terminals that rely on a host system for processing power, is consistent with industry trends.
According to Mentis Corp., a research firm in Eden, Md., the number of personal computers at teller stations has risen dramatically, to 41,000 in 1992 from 13,416 in 1989. New PC installations at platforms increased to 44,840 from 25,636 in 1989.
Of the teller terminals currently in use, 34% are personal computers, while half of the platform, terminals are intelligent workstations.