Data Nets Called Pivotal In Raising Banks' Profits

Greater use of computer networks will pave the way to improved profitability for the financial industry, according to bankers polled in a recent survey.

The survey was conducted by Racal-Datacom, a data communications subsidiary of the Racal Corp., based in New York. Racal-Datacom questioned 104 data-communications and data-processing executives and 47 senior management and financial officers about data networks in banks.

Of the bankers questioned, 59% said computer networks are an essential element in stabilizing and improving profitability of banks.

Key Role for Productivity

A majority believed that improving employee productivity would be the single biggest factor in improving profitability.

About 66% of the financial managers surveyed thought improving productivity was the answer, against 9% of the financial managers who cited new services.

Computer networks contribute to the bottom line in two ways: They can improve staff productivity by making data-sharing easier; and they improve the information available to managers, so they can sell products more aggressively and can better assess the performance of products and individuals.

Mellon's Project on Track

Mellon Bank said nearly all its computers will be networked by midyear 1993. "As the result of putting [networks of personal computers] out there, we're seeing 15% productivity gains," said David A. Moore, senior vice president and manager of the information processing group at Mellon.

"And from a business unit management perspective, [networking] gives you a tighter grip on spending," Mr. Moore said.

Technology spending will continue to go up, the bankers said. About half of the financial managers and 60% of the information systems professionals said they expect their technology budgets to rise by about 10% in 1992.

Layoffs Widely Shunned

A majority of bankers believe current levels of networking are inadequate. A little over half of computers are now linked in networks in banks, but that figure is expected to rise to 90% by the end of the decade, the bankers said.

Bankers expressed some ambivalence about staff reductions: 70% said staff could be reduced further if computers were used more efficiently. However, most said they would prefer to buy new equipment rather than lay off staff.

About 74% of the bankers questioned said that if they had $500,000 to spend on either computer equipment or staff, they would choose to buy the equipment.

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