These days, more and more bankers are talking about the key role investments in systems play in beating the competition.

David Rahn doesn't disagree. If you don't do it, you'll be out of business, said the senior vice president and chief operating officer at First American Trust Co.

The subsidiary of First American Financial Corp., a Santa Ana, Calif.-based title insurance company, is now in the midst of an effort to streamline its operations and improve customer service.

In the last three years, the trust company has replaced so-called dumb terminals with personal computers and built a local area network. And this year, it has been piloting client/server technology linking the front and back offices. It also has stepped up training efforts to acquaint employees with the new systems.

The models that we all have to follow, and the people we are really competing against, are the mutual fund companies, said Mr. Rahn. They have very low overhead relative to banks and trust companies. And they (already) have many of these systems in place.

Thus far, First American's effort has a price tag of $1.3 million, primarily for the local area network. It's been a very large commitment for a company our size, said Mr. Rahn.

First American has about $800 million of assets under management. About two-thirds is in personal trust, with the remainder in employee benefit trust.

While it's too early to see bottom-line benefits from the new systems, First American can point to improvements in service. We've basically gone full circle from being highly centralized to being almost completely decentralized, putting the information at the fingertips of the people who need to use it to serve the customers, said Mr. Rahn.

Our cost benchmarking program has clearly shown that an efficient, integrated system is essential to compete in today's environment, said Hal McIntyre, managing partner with the Summit Group, a New York-based consulting firm. Where systems could once differentiate firms and create competitive advantage, today they are a fundamental requirement to be in the business.

In the past, a First American trust administrator or assistant had to fill out up to 10 different forms when a new account was opened. Those forms were then sent to Santa Ana, where data entry operators keyed in the information.

Now, instead of filling out the forms, the administrator just sits out at their terminal and actually creates the account record online, said Mr. Rahn. So we are able to more quickly document the fact that the account has been added, and what the ongoing status of the account is.

That streamlining required a local area network. National Computer Systems Inc., which supplied First American's trust accounting system, assisted in developing the LAN.

We spent a lot of time talking to their technical folks trying to figure out how to make a system in the Vax world talk to a system that was being run on a DOS-based system, Mr. Rahn said.

And last October, First American agreed to pilot a client/server system, called NSC Desktop, from the Minneapolis-based vendor.

The new Desktop product, which is kind of a label for many different products that they are offering through the LAN now, allows us to complete that decentralization in a way that's friendly to the endpoint user, he said. And makes it easier for us to track what they are putting into the system.

The new system may also represent a big step forward for National Computer Systems. In 1993, Bankers Trust scuttled a multimillion dollar software development project it was working on with the vendor, which later took the software, called Ultrust, off the market.

The Windows-based Desktop software is designed to harness marketing data for more efficient customer prospecting and administrative tasks.

Mr. Rahn said that as First American builds its customer data base, it has begun to identify pockets of wealth about which it was previously unaware.

We are going to find a lot of fee revenue that we were missing because we are asking the clients questions that we need to fill out our data base, he said.

Still, First American has yet to reap all the benefits of the new client/server technology. The three elements of NSC Desktop are not expected to be fully rolled out throughout the organization until November.

And the trust company plans to add other systems as well, including document imaging technology.

We will be developing and implementing some sort of imaging system in the next six to eight months which will allow us to pull up on the screen copies of all the hard copy documents that we've accumulated, said Mr. Rahn. And then probably our biggest foray will be to develop some sort of data interchange, very likely using Lotus Notes, to allow us to establish data bases of our customer profiles.

The aim is to allow employees to more easily share client contact information.

One hurdle First American has encountered is employee training. In the past, trust administrators had to have only a vague understanding of the core trust system. Now, the staff must understand it better, and learn how to use Windows-based software.

Training has been the most difficult aspect of really bringing up a decentralized environment, said Mr. Rahn.

If you have a team pulling the wagon, you've got some on the front leading the wagon, and you've got the rest that are hanging onto the back trying to stop the wagon, he continued. And then you've got everybody else who is on board going along for the ride.

But overall, he said, we continue to move forward.

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