Technology that allows credit unions to share branch offices is garnering interest from some commercial banks, according to representatives of Electronic Data Systems Corp.

Plano, Tex.-based EDS, one of several companies that run electronic switches allowing a single branch to serve multiple institutions, said the technology would allow branches of a commercial bank to serve both its original customers and those from an acquired institution within a few weeks of the finalization of a merger.

"Frequently, it can take months or even years following a merger before the branches of the acquirer and acquiree come around to running on the same system," said Neil Marcous, general manager of EDS' electronic commerce division, which is run out of Clinton, N.J.

|Can Be Very Frustrating'

"It doesn't take a genius to realize that this can be very frustrating to customers who use the branch."

Mr. Marcous said several West Coast institutions, which he declined to name, have expressed interest in using branch-sharing techniques as a stopgap measure for reducing merger-related customer confusion.

A branch using such a technique would actually be running two separate core banking systems. By making both of those systems available to tellers at their personal computers, the technology enables customers to use branches of either institution for any teller transaction.

Comparable to ATM Sharing

The technology that would allow data from two systems to be distributed in such a manner is comparable to that which enables banks to share automated teller machines.

As with ATM transaction switching, EDS and Deluxe Data Systems Inc., Milwaukee, are two of the largest players in switching branch transactions between the core systems of different financial institutions.

While experts said that commercial banks are unlikely to use the branch-related services of EDS and Deluxe for purposes beyond improving merger-related customer relations, many credit unions have begun to actually share branches.

Several credit unions in Michigan have been sharing branches for more than a decade. On a larger scale, the Credit Union Service Corp., an Atlanta-based firm that is assembling a national shared credit union branch network, expects that more than 300 branches will be participating by 1998.

Relatively Simple Technology

One of the most recent entrants, Sunshine State Credit Union in Tallahassee, Fla., said the technology that will allow it to share a branch with two other institutions is relatively simple.

With the technology already proven, and with the fast merger pace expected to continue for some years to come, EDS feels that an increasing number of commercial banks will be interested in employing the branch techniques in the coming year.

At most institutions, it would only take a few weeks to install the necessary communications lines.

Subscribe Now

Access to authoritative analysis and perspective and our data-driven report series.

14-Day Free Trial

No credit card required. Complete access to articles, breaking news and industry data.