For years, bankers have talked about client-server computing as gaining ground against old-style legacy systems.

Slowly but surely, that's exactly what has been happening. About 34% of the 300 largest commercial banks now use networks of personal computers for applications once handled by mainframe computers, according to the 1996 American Banker survey of technology in banking.

The study, conducted by Payments Systems Inc., a Tampa research firm, indicated this was also true of 41% of community banks with assets of $100 to $500 million.

Client-server computing was also popular for new applications, the survey found. Among community banks, 41% chose distributed computing for new activities; among the top 300, 54% did so.

"The sophistication of the client-server world is rapidly approaching a mainframe," said Kathy DeWit, senior vice president of alternative delivery and planning at Norwest Bank in Minneapolis.

Growing confidence in client-server technology has continued a trend toward diminished dependence on the mainframe. Some executives are even predicting legacy systems will be obsolete at their banks within 10 years.

Ms. DeWit said Norwest's deployment of client-server systems has been concentrated on retail sales and service. As the technology continues to evolve, she added, it will also take on more attributes characteristic of mainframe processing, including centralized data management to ensure reliability and integrity. Meanwhile, she said, "the mainframe is becoming more of a server."

The survey found that client-server technology is being deployed for both corporate and retail banking functions, including lending, teller and platform support, and cash management. Respondents also cited management support, automated teller machine support, trust, and international banking.

Bill Bradway, a technology analyst at the Tower Group, a Wellesley, Mass., consulting firm, cited syndicated commercial lending as one area in which client-server systems have proved their mettle.

"A number of banks have decided that mainframe applications have not been able to keep up with the marketplace," he said.

To manage these complex transactions, several large banks have turned to networks of desktop machines. The two leading vendors in this area are International Business Machines Corp. and Advanced Information Resources.

Community banks have also been riding the client-server bandwagon. At DeMotte (Ind.) State Bank, for example, loan and deposit processing was once handled by a service bureau. Now, the $150 million-asset bank uses an in-house client-server system for those functions. It has also added interfaces for the payroll and general ledger.

"Client-server gives us a lot more options," said Mitch Van Kley, senior vice president. "We're not tied to one company."

"We need that edge in technology," Mr. Van Kley added. "We're competing with the big guys in all the communities we're in."

Steve Williams, managing director of M One, the Phoenix consulting firm, noted, "Community banks that have a strong desire to stay independent are very attracted to the client-server solution."

One selling point, he said, is the technology's flexibility; it does not require the hiring of many expensive programmers. "All you really need is someone good at PCs and networks," he said.

The Tower Group's Mr. Bradway suggested another attraction. Many community banks have relied on technology so old that vendors were no longer supporting it. Those banks needed to upgrade, he said, and personal computers were an obvious choice.

But while client-server technology is growing and maturing, banks have not abandoned mainframes, the "big iron." Just 12% of the top 300 banks said they had physically displaced mainframes, the survey indicated.

What's more, big banks' commitment to mainframes is so firm that capacity continues to grow. Fully two-fifths of the 300 largest banks - and 75% of the top 100 - said they continue to add power. Another three-fifths said they are adding data storage capacity.

And at the top 100 banks, fully half of software developed in 1996 was written in Cobol, the programming language of mainframe computers.

Industry consolidation is the key reason for expansion of mainframe capacity, said Mr. Bradway.

For example, he cited two banks that have been aggressive acquirers for years. "In 1986, Norwest and Banc One were both $20 billion in assets. Ten years later, Banc One is at $97 billion, and Norwest at $77 billion. So the number of transactions you're supporting just explodes."

And many bankers said they believe that reliance on mainframes will continue for years. Fewer than one-sixth of survey respondents said they expect client-server computing to replace mainframes completely by the year 2000, the survey found. But one-third of the top 300 expect client-server systems to be robust enough in 2000 to have displaced half the jobs now done on mainframes.

Beyond the turn of the century, bankers foresee an acceleration in the migration from mainframe computers.

By 2005, about 33% of the 300 largest banks said, they will have phased out mainframe processing. About twice as many community banks expect to have completely switched to client-server systems by then, the survey found. And an equal split of processing between mainframe and client-server systems by 2005 is expected at 60% of large banks and 85% of community banks.

Mr. Bradway doubted the change would be that rapid. "That's really aggressive," he said. "I don't think it will happen that fast."

More likely, he said, client-server systems would be used for most processing applications and mainframes would be repositioned as data base servers.

Ms. Monahan is a freelance writer based in New York.

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