Banks' use of mainframe systems continues to grow, despite the industry's obsession with personal computers, according to consultants and bankers.
Tower Group, a research firm based in Wellesley, Mass., said bank purchases of mainframe capacity (measured in millions of instructions per second, or MIPS) grew 16% in 1995.
Banking MIPS are expected to grow 18% this year and 20% next year.
"Mainframes are still the workhorses of the banking industry," said George Kivel, a technology analyst at the Tower Group.
Banks - particularly big ones - rely on mainframes mostly for core processing.
But the large-scale computers are also critical components of newer applications for data warehousing, the Internet, and for "intranets," which are computer networks maintained by individual corporations for the exclusive use of their customers and employees.
Mainframes are considered ideal for these applications because of their secure architectures and large input/output communications capacities, said Ali Jenab, director of compatible systems marketing at Amdahl Corp., based in Sunnyvale, Calif.
"As the Internet evolves from an information distribution medium to one that is transaction-based, mainframes will become more critical," he said.
"The reliability and security of mainframes will also be needed to establish intranets for sharing mission-critical information."
Bank of Montreal concurs with Amdahl's vision of the mainframe's role in its business.
The $100 billion-asset bank is creating an intranet designed to give its four million to five million customers access to account information through PCs and other devices.
Richard Gascoyne, vice president in networks and systems at Bank of Montreal, said the strong security capability of mainframes make them essential components of an intranet.
"The benefit of an intranet over other channels, such as the on-line services or the Internet, is that the only users are the bank and its customers, so you can guarantee the security of the information," he said.
"The mainframe vendors have had military-strength security for years."
The bank is looking for either Amdahl or International Business Machines Corp. to provide a hardware upgrade.
Historically, IBM has been the leading provider of mainframes to banks.
Amdahl provides a number of banking clients with mainframe computer systems. It recently unveiled a new mainframe system that it considers well-suited to support banking's newest applications.
The system, part of Amdahl's Millennium line of large-scale computers, puts the processing power of two mainframes into one machine.
Along with its new system, Amdahl has introduced a number of enhancements, including the ability to quickly upgrade its systems with extra processing capacity to meet unexpected demand.
The new system also permits the substitution of an unused processor for one needing repair so that full capacity can be restored with minimal downtime.
Amdahl's Millennium systems, like the large-scale computers of its competitors, IBM and Hitachi, are based on a new mainframe technology known as CMOS that offers more flexibility when upgrading, along with built-in backup.
Ms. Tucker is a freelance writer based in Hazlet, N.J.
