NationsBank Corp. has embarked on what will probably be the most extensive branch automation overhaul in U.S. banking.

Moving to create a consistent nationwide delivery system, NationsBank will pay $100 million over four years to International Business Machines Corp., the project's lead vendor, for 15,000 to 20,000 file servers, workstations, and associated consulting services.

Other key technology suppliers include Argo Data Resource Corp. for the platform system and Alltel Information Services Inc. for core application development software.

Covering nearly 2,000 branches in nine states, the automation package will bring to fruition what NationsBank calls "Model Banking" - the standardization of management procedures, products, services, and technology in a far-flung retail business cobbled together from numerous acquisitions that lacked common systems.

"Our goals are to become a nationwide financial institution that's diversified, integrated, not limited by geographical boundaries, and able to provide a common customer experience across the organization," said Amy W. Brinkley, executive vice president, and marketing executive in charge of the Model Banking program.

Branch automation experts view Model Banking as one of the most ambitious operational undertakings in the industry's history, but other major banks are likely to start similar initiatives.

First Interstate Bancorp of Los Angeles is nearing completion of a similar multiyear effort to give its 1,100 branches in 13 western states the look and feel of a single bank.

"Other large banks . . . will have to tie their systems together to gain economies of scale and provide a common way of dealing with customers across their organizations, " said Bob Landry, technology analyst at Tower Group in Wellesley, Mass.

"This is especially important in light of interstate banking," he said.

In bank technology circles, NationsBank's commitment is seen as a big win for IBM and its OS/2 operating system.

This workstations and servers will form the core of a client/server environment, the trendy system configuration that relies more on networks of small computers than on the traditional, all-powerful mainframe processor.

Coming out of its mainframe-oriented heritage, IBM faces competitive threats from other client/server approaches in branch automation, including Microsoft Corp.'s Windows NT software and the Unix operating system, noted for its "openness" to multiple computers. Unix has made its way into some large, retail-oriented institutions, including Wells Fargo & Co.

NationsBank evaluated all these operating systems before settling on OS/2. The $170 billion-asset bank, based in Charlotte, N.C., was attracted to its multiprocessing capabilities and its ability to handle mission- critical tasks, according to Steve Callaghan, a NationsBank executive vice president.

Relying on IBM's ability to provide installation and management on a grand scale, the bank designed "a bulletproof operating environment," Mr. Callaghan said.

The new systems will automate and simplify many functions, and the bank therefore expects a 30% to 50% improvement in efficiency across all tasks, said Ms. Brinkley.

The efficiencies are expected to help the bank focus its branches and personnel better on selling, and reduce the time it takes to handle routine transactions.

The OS/2 platform will also provide a foundation for the bank's continuing move toward alternative delivery channels, including telephones, PCs, and automated teller machines.

Bob Berini, IBM retail banking executive, said NationsBank's goals are very much in line with those of many other financial institutions: to reengineer branch operations while developing alternative delivery systems.

All banks are "trying to determine the right mix of delivery channels for their customers and demographics," he said. "They're experimenting, piloting, and partnering at an almost frenetic pace."

Mr. Berini said the NationsBank project is distinctive because of its approach to automation.

Many banks merely automate manual procedures, failing to fix inefficiencies inherent in certian processes. "The NationsBank project is more far-reaching," Mr. Berini said. "They started with business initiatives and are using technology as an enabler."

The rollout of the new retail technology has already begun. Georgia will be the first state to install new applications and systems, and the project there is expected to be completed by yearend.

NationsBank executives said Model Banking will be implemented in the rest of their states no later than 1997.

"Model Banking creates a foundation from which we have the ability to move into other markets much more quickly," said Ms. Brinkley. "The new technology is able to erase (geographical and organizational) boundaries and will help us to become more integrated across business lines."

Robert Burkhard, IBM senior client representative, pledged that IBM will work contructively with the other vendors on the project.

Big Blue brings to the partnership years of expertise in designing and implementing branch systems. Executives there are quick to point out that IBM has updated its skills to adapt to the more central role of personal computers.

"It's easy to assume we're stuck in the old paradigm," said Mr. Berini. "But we realize the industry is shifting to multiple channels, and we're moving to accommodate that.''

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