About one in 10 financial institutions plans to install document imaging software in its branch offices by 1996, according to two recent studies.

Separate research by the American Bankers Association and Mentis Corp. in Eden, Md., have found that document imaging is an integral part of the branch automation upgrade boom that has seized the banking industry in recent years.

Imaging systems, which convert paper documents into digitized images that can be accessed by personal computer, have become more popular for check processing applications but few institutions are currently using the technology to reduce the volume of paper and microfiche in their file cabinets.

Low Percentage Expected to Jump

According to Mentis, only about 2% of banks and shifts with less than $1 billion of assets use imaging to streamline such functions as credit applications and signature verification. And only about 7% of financial institutions with more than $1 billion in assets are using imaging at the branch level.

In terms of absolute numbers, this means that only about 300 of the nation's more than 13,000 financial institutions are currently employing document-imaging applications in branches. But according to both Mentis and a recent ABA bank automation survey, financial institutions -- both large and small -- are now ready to embrace imaging technology in the hopes that it can make branch workers more productive.

The ABA's annual retail operation and automation survey found that more than 13% of U.S. financial institutions plan to invest in branch-based image applications within two years.

Percentage Higher at Bigger Banks

Similarly, Mentis found that 17% of banks with more than $1 billion of assets will buy imaging systems, as will 7% of banks with less than $1 billion of assets.

The average of these projections, culled from surveys of more than 2,000 financial institutions, indicates that about 10% of U.S. institutions -- about 1,300 banks and thrifts -- will be using document imaging applications by 1996.

The most important development spurring the move to imaging in branches is the rising number of personal computers at teller and platform locations. According to Mentis, more than 71% of all branch workstations installed last year were personal computers -- as opposed to "dumb" terminals, which rely on a host computer for processing power.

PCs are ideal for imaging applications because they allow the user to rotate and otherwise manipulate document images on the screen. Such capabilities on a dumb terminal would require a significant amount of host computer programming.

"The arrival of the PC will almost certainly boost the amount of imaging that we'll see at the branch level," said Stanley E. Miltko, an imaging consultant at Littlewood, Shain & Co., based in Exton, Pa.

According to Mentis, institutions with assets ranging from $500 million to $1 billion will be the most aggressive implementers of branch imaging applications. Just 1.5% of those institutions currently employ imaging in branches. But by 1996, that percentage is expected to climb to 27%. Smaller banks will be much slower to install the technology, Mentis found.

The most common imaging systems installed at branches were for loan applications and signature verification.

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