First Union Seeks Edge in Lending

Searching for ways to support more aggressive lending, First Union Corp. is working on a computer system that pulls together all available information on corporate customers' accounts.

The Charlotte, N.C., banking company believes that the new customer information system, scheduled for rollout in mid-1992, will improve its ability to service customers and enable it to gain market share.

The bank said the customer information system is a cornerstone of an extensive automation project aimed at making loans more profitable and at better management of the entire loan portfolio.

|An Absolute Necessity'

"All banks have to move in the direction of enhanced efficiency, and this is a means of accomplishing that," said Robert W. Helms, executive vice president. "For my money, this is an absolute necessity."

First Union, observers say, is part of a growing cadre of banks applying technology to improve the management of corporate lending.

"Most banks are thinking about improving the risk-management aspects of the commercial lending department," said William E. Storts, head of the banking practice at Andersen Consulting.

Some Rush to Workbenches

Among those banks that believe technology can help, projects are under way to provide personal computers to lenders so that they can easily access customer information and credit analytics. These integrating systems, designed for lending officers, are sometimes referred to as workbenches.

"First Union and some other leading-edge thinkers are trying to package a new risk management attitude about commercial lending in a workbench environment," said Mr. Storts.

Over the past few years, First Union has been building computer systems to support lenders and credit managers. The bank has a global exposure system that tracks the credit exposure of customers. The project under way, a customer information system, extends that risk exposure beyond lending. A loan officer can use a personal computer to gather information on a corporate customer's accounts as well as the accounts of the company's principals.

Broad Coverage of Data

These data include the fees they pay for cash management, their average balance of deposits, outstanding letters of credit, and what personal loans and investments the executives have.

In the next phase of this project, this customer information will form the base of a portfolio management system that is aimed at limiting the bank's risk in markets. Only a few banks have adopted this sophisticated approach to managing their loan portfolios. Also in the second phase, First Union will add systems for profitability analysis and sales tracking.

But Mr. Helms expects immediate benefits from the customer information system. For a loan officer at First Union preparing to make a call on a customer or to answer questions from customers, the ability to quickly assemble the information can be a boon. Currently, lenders must rifle through paper files or ask colleagues in other departments to get information on all of a customer's relationships.

Customer View Interpreted

"We think our customers demand that our commercial bankers have all the information available quickly about the total account relationship," said Austin A. Adams, executive vice president for automation and operations. The new system is expected to quicken lenders' responses to customer queries - cutting, for example, eight hours out of the time it takes to prepare a typical loan package.

"We are confident we can make better pricing and marketing decisions by having current, easily accessible information," Mr. Adams said.

Loan officers will be able to gather the customer information via a personal computer that is tied into existing systems. As a result, the customer information system does not require its own client data base.

1,000 PCs Will Be Needed

The year-old-project uses IBM PS/2 personal computers and the OS/2 operating system. Under the plan, 1,000 lenders and support people will get PCs.

To make sure the lenders accepted the new technology, Mr. Adams said, they helped design the way the system looks. He said a protoype of the system was up and running.

PHOTO : Robert W. Helms Calls system a necessity

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