Fleet Invests in Lending System

Seen as Aiding the Integration of Acquired Banks

Fleet/Norstar Financial Group is developing a multi-million-dollar lending system for consumer and commercial banking, aimed at tightening management control and boosting operational efficiency.

The software is designed to automate the origination, underwriting, and documentation of loans, while storing all information in a single data base.

Testing for the software is scheduled to begin in January 1992. Plans call for the bank to roll the system out to more than 900 branches, including those that were part of the bank's acquisition of assets of the failed Bank of New England.

Common Approach to Lending

The new system, called Pedestal by its manufacturer, Denver-based Formation Technologies Inc., will also aid Fleet/Norstar in the integration of acquired banks. By supplying the lenders in an acquired institution with the Pedestal system, Fleet can ensure a common approach to lending procedures and standards throughout the banking company.

Fleet/Norstar joins a growing number of banks investing heavily in automating loan origination. The banks vary in the route - which software they choose, for example - but the goal is the same: give lenders personal computers that can tap into customer information files and software packages that can aid in creating loan documents and analyzing financial stability.

High Price Tag

However, a steep price tag is preventing many banks from attempting this type of wide-scale automation projects for lenders. In Fleet/Norstar's case, giving about 1,000 bankers their own PCs can cost several million dollars, even before software and other expenses are considered.

Among the leading banks in loan processing are Norwest Financial Corp., Dominion Bancshares, and Meridian Bancorp. Meridian, for example, has been working with IBM on a a project called Officers Workbench.

The workbench - or personal computer - provides access to software for loan origination, credit analysis, and profitability. Meridian, however, has yet to sign a contract to purchase the system, which has been under development for several years.

Executives at Fleet declined to talk about the new computer system. But Formation Technologies said the system will be tested in commercial lending in January, with consumer lending to follow much later in the year. The software company will begin developing the consumer portion of the system next month.

Creating One Data Base

Formation will provide the software to take a loan from origination through document preparation, making it easier to create a single data base. That approach differs from Meridian's plan, which calls for the integration of software from a variety of vendors into one data base, a much more challenging task.

Bankers from Fleet are working with Formation to develop the system, which is based on the software company's loan origination software.

Fleet is also considering creating electronic images of loan documents, Formation officials said. Those electronic files make it easy for lenders to store and amend loan documents. Managers could review these computerized documents on a PC, rather than waiting for voluminous files to be brought to them.

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